The Mystery Housebuyer

Part I: The hard truth about mortgages

San Francisco Assessor-Recorder Phil Ting announced in February that about 84% of the home mortgages that have been foreclosed on in the city contained at least one error in their documentation. I was not surprised, because early in my hunt for a home I had the displeasure of finding out just how many errors can creep into a mortgage agreement – and how little the lender seemed to care.

The lesson came in the form of an application for a preapproval. I filled out online applications for a handful of lenders.

We got some responses back, including from one company I’ll just call Bank X. I held a long phone conversation with Bank X to provide more information, and they said they’d send me a copy of the finished application for my signature. But when the application arrived, I was stunned to find it riddled with errors. I had somehow miraculously been given the title of “vice president of health” at my company, a title that does not even exist at my company.

There were more errors, several on very nearly every page. Addresses and phone numbers were incorrect, employment information simply fictional, dollar amounts were missing or incorrect. Only one error was justifiable; a street name that sounded very much like my company’s street was substituted.

But was it justifiable? Here was a company with whom I was proposing to enter into a decades-long business relationship worth a lot of money, but it doesn’t train its agents to repeat an address or phone number back to the caller to verify it? They told me they’d send a new application. Back came the application from the bank. They had made no changes; everything that was incorrect the previous time was incorrect this time. Perhaps they envisioned me being better able to make my mortgage payments if I were the vice president of health.

I was told to write the correct answers next to any errors on the form. That would have meant that someone, perhaps the same fact-challenged person who input the incorrect information in the first place, would interpret my handwriting and enter the corrections. To me this was the most important purchase agreement of my life; to Bank X, this was real estate Mad Libs. The form stayed where it had landed, on my desk, uncorrected. I found my loan with another lender.

Preapproval is a good stage in which you should start paying attention to details. Read the entire document. If you don’t understand something, ask questions and demand that the answers be in layman’s English. And keep copies of everything. If your bank doesn’t care enough at this point to get your information correct, they’re going to care even less when you’re trying to track down the errors discovered during a foreclosure or sale and you learn that the loan has been sold and resold to parties unknown.

Anonymous is anonymous. The Mystery Housebuyer is an ongoing chronicle of the joys and pitfalls of homebuying in the city.
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