Money, Mortgages - North American Mortgage Company trouble with mortgage

Complaints.com received the following e-message on July 11, 2001:

From:

RE: North American Mortgage Company Second try: It's a long story, so I hope your site can handle long, narrative

complaints.

Thanks,

Carlos Garcia

D. Wallace Colvard, Jr. July 1, 2001 Carlos E. Garcia

D. Wallace Colvard, Jr.

Los Angeles, CA 90027 To Whom It May Concern: This is a detailed complaint regarding unfair and misleading sales practices

and other questionable business tactics employed by North American Mortgage

Company as well as a listing of the failures in their service of our account. Not a Broker, a Loan Officer: When we were looking for a home, our buying agent, Rosemary Low, of DBL

Realtors, recommended Mauricio Durazo as a good loan broker. We later learned

that he was in fact a loan officer from North American Mortgage Company. We

have also learned of other cases where he was presented the same way. He

asked

for some preliminary tax and income information so we could have a

pre-qualifying letter to include in any offers we might tender on a property.

That was done and we were tentatively approved to borrow up to $1 million in

total home value. Escrow Starts We found a home we liked, submitted an offer with a 90 day escrow, it was

accepted, and we began the process of putting our then current homes on the

market. The pressure was on us because the offer was with no contingencies

and included stiff daily penalties if the escrow were to extend beyond 90 days. Wells Fargo Enters the Picture At the bank where Mr. Garcia’s company does business, we were encouraged to

consider Wells Fargo. We called them and were given a list of interest rates

with points that went with them, etc. When we told Ms. Low that we were

considering Wells Fargo, we soon got a call from Mauricio asking for a

meeting. We agreed, and he came over on a Sunday morning in early August to

Mr. Colvard’s home and we spoke. He pleaded with us vigorously to give him

the business, placing heavy emphasis on the pre-qual letter that he had done for

us. But we mentioned the deal points of the Wells Fargo loan and he stated

proudly that he could match beat every single one of them. Plus North

American would give us frequent flier points on United Airlines 1,000 points for every

$10,000 of loan. One Point Cap After Five Years Or Was That Two Points? The deal Mauricio spelled out to us called for a loan with a five-year fixed

rate, variable after that. It called for three-quarters of a point in fees.

These points matched Wells. Then he said that North American’s loan had, at

the end of the five year period, a one percentage point cap on the amount it

could raise as it entered the variable phase. Wells Fargo could not match

this figure, so this was a major reason we decided to go with NAMC. The loan Wells

offered had a two-percentage point cap. Much later we learned that the NAMC

loan also had a two point cap. The One Time Step Time Ploy Another big selling point was that NAMC could fix the rate for 90 days with a

one-time step down. That is, if we paid half of our points up front, we could

be guaranteed that the rate could not go up and if interest rates went down,

that we could take advantage of that but only once.

Pre-Payment Silence This sounded like a good deal to us and we agreed. At no point did Mauricio

EVER mention that the rate included a pre-payment penalty. In fact, at no

point in our discussions did the words pre-payment come up as he outlined the

various options and points and interest rates. Wells Fargo never mentioned it either. We never received a confirmation of the terms of our loan, and there are no

signed documents from us suggesting that we did. The first we heard of this

issue was the day escrow closed. Just before escrow closed we had to ask

several times to receive a breakdown of estimated closing costs and our

monthly payment and we finally did receive this by fax but it did not mention the

pre-payment penalty. Step-Down Joke The step down proved to be a joke. Literally. When two months of our escrow

with the one-time step-down in place had gone by without a single word from

North American, I placed several calls to Mr. Durazo to find out what had been

going on with rates but he did not return my calls. When I finally reached

him, he laughed out loud as if I had just said the funniest thing he had ever

heard. Then he proceeded to explain (while still chortling) that our loan was

at 7.825, and for our rate to actually drop, the going rates would have to

drop below 7.5. I was unable to get a satisfactory explanation as to why

something about super jumbo loan penalties on top of jumbo loan penalties that had never

been mentioned before. We were lead to believe that if the rates were to have

dropped below 7.825 that we would then be eligible to invoke the one-time

step-down. So their big selling point was just a big lie, just a trick to

oblige us to stick with them because we had already paid half of our points up

front. Needless to say we were never able to use the step-down. You’re Approved, But Prove It Again Very early in the process, we had assembled all of our papers, our pay stubs,

insurance docs, stock portfolio information, etc., and we were formally

approved for our loan. Fine. But two weeks prior to closing, while we

were in home selling and moving preparation hell (not to mention busy at work) we

get a fax telling us to resubmit a whole new set of pay stubs and bank balances and

other paperwork. At no point had we been told that we would need these

papers, and many things had been put away. Had we been properly advised, we would

have ordered updated documents from the various sources we needed. Instead we got

an unpleasant surprise and a sneer when we asked why. Of course everybody is

supposed to know that we would need these numbers at the close of a long

escrow. Really? It would have been nice to be warned. Close of Escrow The close of escrow was a monumentally stressful time for us. We were both

working extremely hard, we had one escrow that had just closed and most of Mr.

Garcia’s possessions were already in the new house. Plus we had two more

escrows (Mr. Colvard’s old house and this new house) closing on the same day

and we were moving our possessions into the new house that day also. Mr.

Garcia was out of town on an important business trip and unavailable so Carlos

signed power-of-attorney documents for Wallace who was then on his own. When Wallace gets to the escrow company’s office he is confronted with a

mountain of paperwork including the pre-payment penalty. Mr. Colvard had

never heard of this before but Mr. Garcia was unreachable. He is upset, but

exhausted, he didn’t know if Carlos had known about it, he had to get back

because the movers were packing his house, plus the delay penalty was pending,

so he reluctantly signed the loan docs with their nasty surprises because he

felt trapped. Aside from the pre-payment penalty, another surprise, a $1,750 fee is charged

for the rate lockdown. But in the greater scheme of things, he had no choice

but to sign and try to work these things out later. When Mr. Garcia finally got out of his meetings and called, Mr. Colvard asked

him about the pre-payment penalty. Mr. Garcia had never heard of this

either.

We were both extremely upset but decided we would take one monster on at a

time. So we finished moving and eventually we contacted NAMC.

Frequent Flier Points Debacle After checking our frequent flier accounts, more than two months after

close of escrow, Carlos called Mauricio and asked why our 70,000 points had not been

deposited into our accounts. Mauricio explained that there was in fact a

25,000 point cap on the promotion so he would deposit these instead. So

Carlos called United Airlines, found someone in promotions, and discovered that they

had no record of any such cap. They gave me the number of the promotions

department at North American, and they also had no record of any such cap. So

Carlos called Mauricio back and informed him of his error and gave him the

telephone number of his own promotions department that would confirm this.

Mr. Durazo apologized for his “mistake” and proceeded to take four more months to

settle this.

NAMC A New Word for a Stone Wall The people from North American had been difficult to reach prior to the close

of escrow, but after they became utterly unavailable. The mystery $1,750 fee,

the pre-payment rider, the 1 or 2% cap, the phantom step down, the frequent

flier points, all of these issues were pending. Finally Ms. Low was able to

arrange a meeting for herself and Mr. Garcia with Mauricio Durazo and the head

of his office, Oscar, at NAMC’s office in Montebello. Mr. Garcia arrived with this long list of lapses in service, misleading

statements, outright lies, the pre-payment surprise and several other specific

complaints. Oscar was ostensibly very concerned and listened attentively,

asked questions of Mr. Garcia, he asked Mr. Durazo questions and he asked Ms.

Low questions. When all was said and done he said in no uncertain terms that he was appalled,

and that he would make certain that we were 100% happy. He assured Ms. Low

and Mr. Garcia that he would get to the bottom of things and come up with a

solution that would satisfy us. When asked what would make us 100% happy, Mr.

Garcia said to be 100% happy that we wanted out of the loan, we wanted the

pre-payment penalty waived, and that we wanted the points we paid North

American to be refunded. Oscar did not promise specifically to meet those specifics, but again

reiterated, after hearing this wish list, that he would make certain we were

100% happy. He explained that he would check out the various complaints and

correct them and he would get back to me in two weeks. Besides, he insisted, rates had not gone anywhere and we would not find a

better loan than the one we were in. So he recognized at that point that our

complaints were not tied to the existence of better rates in the marketplace,

but simply the shoddy service and deceitful business practices of which we had

become victims. So, a few months later, we applied for and were approved for a refinance loan

with Wells Fargo. But when we asked for the payoff, we were informed that

North American wanted $22,000 in pre-payment penalties. We have still, to this date, more than four months later, not ever heard back

from Oscar. I gave him my business card, I left my numbers on various

answering machines, and still nothing. Finally Some Relief More than two months after this meeting in Montebello we finally received the

return of the $1,750. Mr. Durazo had acknowledged this mistake but getting

the check was a slow process. This was after umpteen promises and “The check

is in the mail” and “The accountant is on vacation” and “Someone’s kid got sick”

excuses. About two additional months after that the 70,000 frequent flier points were

finally deposited.

More Stonewalling After a series of frustrating calls, Mauricio promised that Oscar would call

back with an offer of a new North American loan that would have no pre-payment

penalty (Mr. Colvard was open to this idea but Mr. Garcia was still

indignant). After another series of calls, Mauricio explained Oscar’s silence

by saying Oscar was taking the question up the corporate ladder. More silence

followed. Finally Ms. Low got me the telephone number of Tom Hunt, who works at the

regional office. A call to Mr. Hunt was, astonishingly, returned. But all he

would do was to say that since the contract was signed he was powerless to do

anything and he refused to believe that we had not been informed. To prove

his

point he sent copies of the loan docs that Mr. Colvard had signed on the day

escrow closed and a copy of a rate lock and loan disclosure form dated August

10th, 2000 and addressed only to Mr. Colvard, not Mr. Garcia. This form had

places at the bottom for the signature of the buyers, but they are blank --

NO

SIGNATURES. Somehow he did not see this as odd. Mr. Hunt was civil but

unwilling to understand our position or to settle matters. He kept insisting

that North American couldn’t stay in business if people were allowed out of

their contracts, but I pointed out that North American couldn’t stay in

business if they had to resort to trickery and deception to get people into

contracts.

No Options So we are left with no options but to inform every regulatory agency of our

experience. This includes the local, state and federal level that regulate

financial institutions and consumer affairs. We will also inform Fannie Mae,

HUD, the Better Business Bureau, and will files complaints with every consumer

group on the web that monitors deceitful and fraudulent business practices. This is how the consumer can protect other consumers and force businesses to

deal honestly with the public. Thank you for your attention to this matter.

Carlos E. Garcia

D. Wallace Colvard, Jr.