Mortgage Epistles from the Great Recession | Ari Allyn-Feuer | The Hypocrite Reader

Ari Allyn-Feuer

Mortgage Epistles from the Great Recession

ISSUE 74 | CORRESPONDENCES | APR 2017
In 2011, during the recession, I finished college and went to graduate school. Armed with a 22-year-old’s confidence and naiveté, and my graduate stipend, I decided to buy a house in the nearby town of Ypsilanti, a place littered with the empty, hulking victims of the mortgage crisis.

What followed was an extraordinary odyssey, my small part in the national drama of finance and real estate which unfolded in the great recession. With the outcome of my mortgage application long since decided, I would like you to live through it with me, in this compendium of the actual emails I exchanged with the employees and the executives of a midsized American bank.

Reading it now, I wonder if my reading of the bank’s motivations from the time was on point. Was malice present, and if so, when? What was obstinacy, and what incompetence? Did their feelings and thinking ever change? Did mine?

As you read, think about the fact that all the players in this story are not just the roles they play in the machinery of finance, but people as well. Witness the human drama of my mortgage application from 2011, and learn something about who we all were, in the great recession.

June 27.

Ari,

I will need to finish this up tomorrow, but wanted to give you a chance to get a few things. I will need the Purchase agreement.

Copy of your transcripts from the University of Chicago
Copy of you confirmation of your new job at the U of M
Copy of your W-2 for 2009 and 2010 if you have one.
Copy of your bank statement of where you have your savings and checking account, (30 day all pages, even if blank) I need to show your assets, so if you have more than one, please give me all you have, even 401-k’s
Copy of your estimates of each repair being done.
Copy of your driver’s license (front and back)

I am sure there is more, but this will get us started. I will send you the cost illustration tomorrow.

Thank You,

Sherry [Redacted]

June 27.

Sherry,

Attached please find:

A collection of documents containing the purchase agreement, my tax returns, bank statements, driver's license, and confirmation letter of my job and salary at the University of Michigan.

My complete transcript from the University of Chicago, showing bachelors' degrees in Biology and Mathematics.

A collection of bids, and cover letter, for the appraiser. The bids total [Redacted], which, with the cost of appliances and the trees and bushes I plan to plant in the yard, brings the cost of renovation to [Redacted]. The needed appraisal value is thus [Redacted].

Looking forward to hearing back from you,

Cheers,
Ari.

June 29.

Sherry,

Thank you for your informative phone call yesterday.

I would like to directly address the key point of your call, which was your specific opinion that my University of Michigan Bioinformatics Ph.D. stipend (salary, income) would not count as a valid source of income for the purpose of processing a mortgage application with [Redacted] based upon FNMA underwriting or other policy. You also expressed your recommendation that I not apply for an [Redacted] Renovation or FNMA Renovation Mortgage from [Redacted] based upon this opinion.

After investigating the matter, I feel that this opinion is incorrect. Please note the following:

First:

Stipend income falls within the usual definition of salary income. Stipend income is reported to the IRS on a W2 form. It is taxable 1040 income, the same as wages and salaries. In fact, the very concepts of "stipend" and "salary" are not very distinct. They appear as synonyms in the Merriam-Webster thesaurus. The Wikipedia page on "stipend" begins with "A stipend is a form of salary." The Oxford English Dictionary defines a stipend as "A salary or fixed periodical payment, made (annually or at shorter intervals)...in requital of...services" and as "Payment for services, wages" and simply as "Income." The University of Michigan is paying me a stipend, i.e. a salary, for the performance of services, i.e. my tenure as a graduate researcher and instructor, just as with any other job.

Second:

FNMA Underwriting Guidelines http://www.pnlending.com/esource/FE/FEU1.htm specify a wide variety of income types which are acceptable, including:

While stipend income is not explicitly listed as acceptable, the only unacceptable income listed is "Income received from any source that is not verifiable, stable, predictable or likely to continue in the foreseeable future." My stipend income is verifiable (W2 form, letter from employer), stable (fixed amount which can't decrease), predictable (same employer for 5-7 years), and likely to continue (will continue for 5-7 years, with cost of living adjustments). Thus, this income should be acceptable to FNMA and to you.

Moreover, this is not a temporary or obscure arrangement. My Ph.D. stipend at the University of Michigan will last 5-7 years before the completion of my degree. It is taxable earned income. It is full time employment. After this, I will re-emerge into the job market in a good position, with a Ph.D. in Bioinformatics (a very hot field, with entry-level median salaries exceeding $75,000) from one of the top Bioinformatics Ph.D. programs in the world.

Third:

Refusal to consider stipend income for the purposes of housing lending is expressly illegal.

  1. Chapter [Redacted] of the municipal code of the City of [Redacted], where your offices are, prohibits discriminatory practices on the basis of source of lawful income on the part of real estate lenders for both home purchases and renovation financing. [Redacted]

  2. Section [Redacted] of the Municipal Code of [Redacted], where the home is located, does the same.

  3. The Department of Housing and Urban Development has announced that under the Fair Housing Act, all underwriters of FHA loans and other HUD programs must comply with state and local laws outlawing discrimination by source of income.

    HUD bulletin dated Jun 11 2010. “…HUD will now require [compliance]... with state and local anti-discrimination laws that prohibit housing discrimination against persons based on their lawful source of income.

    HUD Secretary Shaun Donovan: “A familys [sic] source of income should never be used as a basis to discriminate against them, We are sending a very clear message ….that we intend to stand up for the cause of civil rights and expect them to do the same.”

  4. FHA policy mirrors FNMA underwriting standards: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/buying/buyhm “WHAT QUALIFIES AS AN INCOME SOURCE FOR THE FHA? Seasonal pay, child support, retirement pension payments, unemployment compensation, VA benefits, military pay, Social Security income, alimony, and rent paid by family all qualify as income sources. Part-time pay, overtime, and bonus pay also count as long as they are steady. Special savings plans-such as those set up by a church or community association - qualify, too. Income type is not as important as income steadiness with the FHA.”

  5. Technically, even discouraging someone from applying for housing or loans for housing based upon source of income (by suggesting they’d be turned down anyway because that source of income is invalid) is, in itself, a violation of various legal statutes.

Clearly, [Redacted] cannot have a formal, written policy which systematically discriminates against people based upon source of income in such a flagrantly illegal manner.

Your opinion that my income would be discriminated against by either [Redacted] or FMNA must be mistaken. If you believe there is such a policy, I hereby request a written copy of this policy.

On this basis, I am convinced that my income from The University of Michigan will be and should be counted as income for the purposes of my loan application, and would like to continue with the application process.

Sincerely,
Ari Allyn-Feuer

June 30.

Ari,

I understand your explanation and your concern on this issue, however, the source of the income is not acceptable. There is nothing I can do about this.

The only way I see around this is to try using a co-signer on this mortgage. If you would like to continue please have the cosigner call me or e-mail me.

If you have any questions, please either e-mail me or call me.

Sherry [Redacted]

June 30.

Sherry,

Is there a written policy of [Redacted] covering stipend income? If so, may I see it?

Thank you,
Ari.

June 30.

Ari,

It is not a policy of [Redacted]. We follow all Fannie and Freddie rulings. They will not approve stipend as a source of income. Believe me, we want to make loans, if there was anyway we could do this we would. If you want to move forward on this please send the cosigner information to me.

Sherry [Redacted]

June 30.

Sherry,

Who is the head of Mortgage Lending at [Redacted]? Is there an email address for their office?

Thanks,
Ari.

July 1.

Tom, Meg, and Sherry,

For Tom's benefit, I will summarize events up to now. I have applied for an [Redacted] Renovation Mortgage, and been told it cannot be approved, because my income is a University of Michigan Graduate Program Stipend. I have pointed out that based on my reading of FNMA standards, this income should be acceptable, that it is stable and verifiable and very likely to continue, and that rejection, refusal to process, or discouragement of a mortgage application based on legal source of income is illegal under Chapter [Redacted] of the Municipal Code of the City of [Redacted], among other relevant jurisdictions. The email chain is reproduced below. It is important to note that my letters on the subject, based on the legal statutes of [Redacted] and [Redacted], and the written policies of FNMA, the US Department of Housing and Urban Development, and the Federal Housing Administration, have been both long and specific. All the communication I have received to this time has been completely unresponsive to the arguments and information I have presented.

I took a very interesting call from Meg at about 10:30 Central Time this morning, and spent about fifteen minutes on the phone talking about this loan issue. I took the following points away from the call.

This leads us to the FNMA underwriting standards. I have consulted them, and in the 1,240 page bulk of the standards, the word "stipend" appears nowhere. The section on acceptable sources of income lists a vast variety of income sources which are acceptable, many of which are less verifiable and less stable than academic stipend salaries. No form of income is explicitly rejected except those which are unstable, unverifiable, or unlikely to continue, none of which is true about my stipend. Therefore, stipend income, by virtue of not being listed as unacceptable, and being more stable and secure than many forms of income which are acceptable, should be acceptable.

In fact, because stipends are typically counted under wage and salary income (and come with health insurance benefits like other salaries), I am not clear on what basis, other than the mere presence of the word "stipend," they can be reasonably distinguished from other forms of salary income. Thus, to the closest reading of FNMA's actual underwriting guidelines, not only should this income be acceptable, there is no reason to think it should receive special scrutiny.

If FNMA is telling you (and apparently telling you repeatedly; each phone call from you references yet another confirmation from them) that stipend income is not acceptable, I hereby request a copy of the ruling from them that you've received, in writing.

Violations of anti-discrimination law in housing and housing lending are a serious matter. Federal, state, and local authorities have aggressive enforcement programs for these statutes. I am committed to ensuring that my loan application is processed fairly, and that my income receives the consideration that it is due under applicable laws. I hope that [Redacted] is also committed to following the law.

Thank you,
Ari Allyn-Feuer.

July 1.

Good Afternoon Mr. Feuer –

As I stated in our conversation earlier today, FNMA will not accept stipend income to be used for qualifying purposes on a mortgage transaction. The HomePath Renovation loan that you applied for is a FNMA product and as such we must conform with their requirements when reviewing mortgage applications for approval. Today we also ran your application through FNMA’s Automated Underwriting System, and that system would also not approve the loan due to additional risk factors that include a high loan to value and lack of credit profile/history.

Tom [Redacted] has issued a formal denial letter that will be mailed to you . If you have any questions regarding this, please contact Tom directly at [Redacted].

I apologize that [Redacted] was unable to provide you with mortgage financing at this time. If in the future your situation changes please do not hesitate to contact us again as we would be happy to reassess your credit and income at that time.

Sincerely,
Meg [Redacted], Vice President for Mortgage Lending

July 1.

Meg,

Thank you for this response. For the record, my last name is Allyn-Feuer, not Feuer. Please use it.

The mortgage I applied for was not an FNMA product. It was the [Redacted] Renovation Mortgage. This is reflected in the application materials I submitted, which (in the packet of bids and appraiser cover letter) featured [Redacted] in renovation expenses (versus the [Redacted] maximum in HomePath Renovation) and a minimum appraisal based on renovation expenses of 50% of as-completed appraised value (versus 35% in HomePath Renovation). I specifically discussed the differences between FNMA HomePath Renovation Mortgage and [Redacted] Renovation Mortgage with Sherry on two occasions, and we decided together that the [Redacted] product would be more suited to my needs.

Moreover, the excuse of high loan-to-value is incorrect. I have demonstrated sufficient funds to cover a down payment of 20% or higher, which is not a high loan-to-value ratio.

However, if there is an FNMA policy which disallows stipend income for mortgage products, I hereby request, for the fourth time, to see a written copy of this policy. My research into FNMA underwriting standards has indicated that the opposite is true, and I have documented this in writing to you. You have not responded to this at all, and have evaded the subject, while refusing to document your contrary claims about FNMA underwriting standards.

You have also been non-responsive about your responsibility to follow the law. Specifically, my citation of [Redacted] Municipal Code Chapter [Redacted], which makes non-consideration of a legal source of income for home lending illegal, has gone completely unanswered. Moreover, the US Department of Housing and Urban Development requires FHA mortgage issuers to comply with state and local laws about source-of-income discrimination (as I have documented), so your non-consideration of stipend income is also a violation of HUD directives, i.e. federal law. Whether or not FNMA will buy mortgages underwritten on the basis of stipend income (and I have shown evidence that they will), you have an obligation to follow the laws of the jurisdictions in which your company operates, but in our communication this point has seemingly gone completely unconsidered.

In our first communication regarding Tom [Redacted], you gave me his email address and encouraged me to correspond with him in writing. Does this switch to an insistence on telephone conversation constitute an evasive attitude toward written communication?

Thank you,
Ari Allyn-Feuer

July 1.

Ari

I thought I would quick e-mail you back, since everyone has left for the weekend. You and I did talk about the [Redacted] Renovation program, but they still use the same Fannie and Freddie guidelines. So if we were to run it through the system for approval with 20% down, we would still have the issue of the income.

As for not getting back to you about the written policy, unfortunately not every situation is printed out in detail in the Fannie approval process. All we can say is how Fannie has handled this source of income. I really did not want to take your $350.00 up front and try running it through the system, so that is why I went directly to the Fannie underwriters. We have however, e-mailed Fannie to see if they could give us some direction on this matter and to see if they can provide us something in writing. Unfortunately, we have not heard back from them as yet. As soon as we do, we will contact you on how they want to handle this question of income.

Sherry [Redacted]

July 6. Sherry,

Thank you for clarifying that I applied for the [Redacted] Renovation Mortgage, not the FNMA HomePath Renovation Mortgage, and that this is not a high loan-to-value ratio application.

I appreciate that you're looking into FNMA policy on the subject. This morning, I spoke on the phone with Mario of the FNMA Resource Center, Level II, employee #A350. He told me that "Stipend income is acceptable." When I asked for written documentation of this ruling, he referred me to the "other sources of income" section in the FNMA Underwriting Guidelines, the very section I cited to you, and said the acceptability of stipend income was "a clear consequence" of this section. Since FNMA has specifically and expressly clarified that stipend income is acceptable, I look forward to hearing that you will consider my stipend income, as authorized by FNMA policy and required by law.

It is also worth noting that although FNMA policy allows stipend income, even if it did not, discrimination based on source of income is still illegal under [Redacted] Municipal Code Chapter [Redacted]. Your intention to resell the loan to FNMA is not a substitute for underwriting your loans in the manner required by law. Chapter [Redacted] of the [Redacted] specifies judicial discretion on the penalties for violating the source-of-income rules in Chapter [Redacted], and says judges of the city courts can levy fines, expenses, and damages in any amount they see fit, with no statutory limits.

Sincerely,
Ari Allyn-Feuer.

July 6.

Ari,

I heard from the underwriter today. They also heard back from the Fannie underwriters guidelines. Fannie will accept stipend income , but the requirements are very specific. I showed the letter you sent to me, as proof of income and employment and they are saying that this letter will not qualify. It has to be much for specific.

We will need to provide them with the exact date you will begin working, Then we must show that you are working before we close on your loan.

They will need to show that the [Redacted] income will continue for the seven year period. The issue they will have is the sentence that states "provided satisfactory student progress is made, he is guaranteed to receive full tuition waiver and annual stipend income of [Redacted]". If the studies are not "satisfactory" the income would stop and this is what will not be acceptable to them I am afraid.

You get me this and I will forward your application on to the underwriters for further review. My only other concern is that you do not have sufficient credit history, and I am not sure how they will react to that, but we can run it through the system and see what the findings tell us.

I am going to be out of the office on Thursday and Friday. I will be back to complete everything on Monday. I am also coping Meg and Tom on this as well. If you need me before Monday, you may call my cell phone: [Redacted]

Sherry [Redacted]

July 7.

Sherry,

The starting date of my position is Monday, July 11, 2011.

It's highly curious that you now say FNMA changed their ruling on the subject of stipend income. You have related to me three occasions on which FNMA supposedly told you stipend income was "unacceptable," first by telephone, a second time in your first email afterward, and a third time in Meg's first email. If this extraordinary reversal has somehow occurred, I hereby request to see it documented.

In fact, however, there has been no change in FNMA policy. The only thing that has changed has been your representation. And if you had been mistaken about FNMA policy due to a state of benign ignorance, you would not have 1) been completely unreceptive to my citations of written FNMA policy which indicated stipends would be acceptable, or 2) not once, not twice, but three times told me you had checked with FNMA and received an express assurance that stipend income was "unacceptable." You have repeatedly misrepresented FNMA policy as an excuse to illegally discriminate against me.

Your assertion that FNMA requires a "very specific" set of higher standards for stipend income is incorrect. The information I received from FNMA contained no reference to a special higher standard. Stipend income is acceptable, full stop. If FNMA has given you something else, something "very specific," I hereby request, for the fifth time, to see it in writing.

The standard of "satisfactory performance" is not a lofty or unusual one. As is shown in the statistics I provided earlier, the number of Bioscience Ph.D. students ejected from their programs for nonperformance is miniscule. Moreover, the standard of satisfactory performance of one's duties is a condition of every form of employment income. No loan applicant will be able to show his income will continue even if he doesn't perform the job for which he is employed. You have continued to erect an artificially high discriminatory standard on the basis of my source of income, which is neither legal, nor in accord with the FNMA standards as FNMA has related them to me.

Moreover, even if FNMA standards somehow contained these absurd discriminatory standards (and they do not), you cannot use them as an excuse to perform illegal acts of discrimination on your own part.

Finally, you say "You get me this and I will forward your application on to the underwriters for further review." This constitutes a continuing refusal to accept a loan application from me on the basis of my source of income, i.e. a continuing violation of the law.

That you have begun to attempt to hide your discriminatory practices behind a series of absurd excuses is no substitute for compliance with the law. The violation has already occurred. You have repeatedly discouraged me from applying for a loan based on my source of income. You have repeatedly told me my application would be rejected based on my source of income. You have repeatedly refused to allow me to apply for a loan based on my source of income. You have rejected me from a loan for which you refused to let me apply based on my source of income. You have repeatedly misrepresented FNMA underwriting guidelines to me. You have repeatedly refused to provide me with written documentation of the wildly implausible policy statements in your supposed correspondence with FNMA. And you have done all of this after being informed in writing that these actions were violations of statute.

Since your discriminatory action has already occurred, and in writing, a rejection of my loan application on a flimsy pretense is not a satisfactory conclusion to this episode. The only thing which could possibly convince me, or any reasonable observer, that the discriminatory practices at [Redacted] have been concluded, would be the actual writing of the loan for the property at [Redacted].

For this reason, I have brought the matter to the attention of the Office of [Redacted] at the City of [Redacted]. Our correspondence has been examined, and the [Redacted] has seen fit to refer the matter to the Enforcement Division of the Office of the City Attorney. In the event that [Redacted] receives a subpoena for documents, or a summons to a hearing on this matter, I suggest that you treat it with greater gravity than you have treated your prior legal obligations.

Sincerely,
Ari Allyn-Feuer

July 8.

Dear Mr. Allyn-Feuer,

I am responded to your email since Sherry is out on vacation until Monday. I want to let you know that all avenues will be pursued to determine if [Redacted] is able to meet your financing needs.

Before I can give you any specific’s I need to meet with Sherry to determine the actual product that you are requesting. Per the emails it appears you are looking for a FNMA HomePath Renovation mortgage or the [Redacted] renovation program.

I would like to confirm that you are requesting the [Redacted] renovation program with 20% down. If so, I will get with Sherry on Monday morning to discuss all the specifics to continue processing your mortgage application.

Thank you,
Thomas [Redacted], Director of Underwriting

July 8.

Tom,

As per my previous emails and my original application, the answer is yes.

Ari.

July 8.

Thank you,

Thomas [Redacted] Director of Underwriting

July 12

Ari,

I would like to talk with you to go over the numbers and see if you want me to lock in your loan. I have completed the loan application as a [Redacted] renovation. I am using [Redacted] as the purchase price and [Redacted] for the renovations. I can send you a cost illustration. I am preparing the mortgage package for you to sign, but I need to know if you want to lock your loan in at this time or do you want to float the rate. I need to talk to you in person to lock the loan in. At that time when we lock, I will need to collect $350.00 up front cost, (part of the closing cost). Then we will send out a appraiser along with your estimates to appraise the home.

I need the following:

At this point, I think this is all I need. After the underwriters are finished they will let me know if we need anything else.

Sherry [Redacted]

July 16.

Dear Sherry,

Before we continue with the collection of additional documents, I would like to successfully resolve the central issue which has been impeding the progress of this application. [Redacted] has been discriminating against my stipend income, which is a violation of the law. After a vigorous and prolonged campaign of letters on my part beseeching [Redacted] to comply with its legal obligations, you finally backed down, admitting that your prior citation of FNMA policy had been incorrect, and that stipend income was acceptable under FNMA policy.

But despite this, you have now erected an artificially high discriminatory standard for the security of my income, which is also a violation of the law. No other employment income can be guaranteed to continue regardless of job performance, or is guaranteed against downsizing, market conditions, or other possibilities of termination. In this respect my income is more secure than most other forms of employment. My income is rock solid for 7 years and will go up with cost of living. The University of Michigan is not going to end my program. My income is secure. And I am a top candidate, coming from a top University, in an elite and growing field of study, for which "satisfactory" performance is assured at a level exceeding and commensurate with any employment position.

Law enforcement will not be fooled by your repeated evasions of this central issue, or by the superficial appearance that the loan application is proceeding, only to be turned down on some other thinly veiled pretense. Investigators will see that your latest letter still contains an artificially high, indeed impossibly high, standard for income security based on income source (not applied to other forms of income), i.e. continuing acts of discrimination. They will see that none of my requests for clarification have been answered, and that [Redacted] continues to evade its obligation to treat my income fairly under the law.

I can't proceed with an application for this loan until several things happen. I need to hear from you that my income as it exists, as you know it to exist, as the documents you have in your possession clearly state, is fully acceptable. I now ask you to clearly state that you will not discriminate against my income, and will treat it as it is, as a form of permanent, full time employment income. Without this assurance, if I continue do seek a loan from you, I risk damages beyond those that I have already incurred. Unless this is done, I would consider my $350 and the effort of applying to be a waste of resources down a discriminatory sinkhole, a sure journey directly to a summary and prejudicial rejection on a flimsy pretext as a means of attempting to sweep this matter under the rug.

Thus, until I am convinced [Redacted] is in compliance with the law and will treat my application fairly, my complaint to the city, and more broadly, my efforts to attain a just conclusion to this matter, will continue to progress.

Sincerely,
Ari Allyn-Feuer.

July 22.

Dear Mr. Allyn-Feuer:

Your real estate mortgage application for renovation loan was forwarded to me for review. There have been numerous conversations between yourself and various members of [Redacted] and it is our sincere desire to provide the mortgage financing that meets your requirements. As a result of my review and the various emails, I would like to detail our commitment to you regarding the application along with the requirements to obtain both the final approval and the subsequent renovation process.

Loan terms:
[Redacted]
Renovation terms:
[Redacted]

The final approval and closing date for the renovation will be determined upon completion of the applicable items as described above. A copy of the closing documents will be sent to you at least 48 hours before closing to allow for your review. Any redrawing of the closing documents may result in additional fees.

After closing of the renovation loan, all future correspondence will be directed to Craig [Redacted], Construction Specialist at [Redacted]. Craig may be reached at [Redacted].

If the above requirements are acceptable, please sign and date your acknowledgement as shown below.

If you have any questions regarding this letter or our commitment, please contact myself or Meg [Redacted] at [Redacted].

Sincerely,
Richard [Redacted]
Vice President for Credit Risk
[Redacted]

August 1.

Richard,

I'm pleased, though cautiously so, at receiving your letter in the mail this weekend. I, too, am sincerely interested in closing this loan and purchasing the property at [Redacted], as has been my goal all along. I am most glad to hear your representation that my income from The University of Michigan is acceptable to qualify for mortgages from [Redacted]. Therefore, I will continue to apply for the [Redacted] Renovation Mortgage.

This evening I will assemble and mail the documentation you have requested. I will enclose a check for the $350 application fee, your letter with a dated signature to indicate my agreement to the loan terms, a photocopied pay stub from my University of Michigan paycheck, and a letter from the [Redacted] realtor acknowledging receipt of a check in redemption of my earnest money promissory note. The Purchase Agreement has been extended to July 31, but due to the delay in financing by [Redacted], this extension has been exhausted. I am in communication with the realtor requesting a second extension and will inform you (and send a copy of the updated purchase agreement) when it is granted.

I note that [Redacted] requires a 10% contingency reserve, in excess of the total renovation cost, in the renovation escrow account, and that this amount may be financed into the loan. I would like to finance the contingency reserve into the loan.

Regards,
Ari Allyn-Feuer

August 4.

Richard,

I'm working to assemble the necessary supplemental documents. Attached is a pay stub from UM. Also attached is a signed copy of your letter to me. Also attached is my 2009 tax return and W2 forms. Also attached is a copy of an email from [Redacted] acknowledging receipt of my EMD check.

I have solicited a bind for hazard insurance from [Redacted] and will have them contact you.

I note that your letter says "acceptable documentation must be provided to show that any mold has been removed." As reflected in my original application materials, the removal of mold, and necessary health authority documentation, will occur as part of the renovation process. The house is being sold in as-is condition.

I note further that FNMA has expressed a desire for the house to close by August 12. I am working to acquire a copy of the purchase agreement which reflects this extended date. If, as seems possible due to the process, [Redacted] is unable to close by this time, some action on your part in helping me to reassure FNMA that the deal is going to close and that the extension is worth granting, would be most welcome.

The application fee check is forthcoming.

Looking forward to continuing,
Ari.

August 4.

Richard,

Attached please find the quote from [Redacted], office of [Redacted]. You can contact them about the binder. If they need me to verify, or do anything, I'd be pleased to.

Regards,
Ari.

August 4.

Richard,

The check has been mailed. I have received word from the realtor that they are not even willing to write a purchase agreement extension unless the lender tells them it's feasible to close. Some intervention from you in the service of this loan will thus be very useful in correcting the complications caused by the long delay.

Regards,

Ari.

August 8.
Richard,

I was pleased to hear in your letter almost two weeks ago that [Redacted] is willing to accept my income for a mortgage application. However, the future progress of our relationship stands at a crossroads. I have been attempting to reach you, or someone in authority at [Redacted], by email and telephone for more than a week, but have been unable to do so, and offer this letter instead.

As I explained in an earlier email, the many delays in the loan process have caused the realtor and FNMA to become skittish. They are refusing to extend the purchase agreement, and say that if the deal does not close by August 12, the deal is through and the property at [Redacted] will be marketed to other purchasers.

If this happens, I will have lost the house at [Redacted] as a direct result of [Redacted]'s illegal mortgage discrimination. This would be a substantial form of damage I would have suffered as a direct result of your actions. The opportunity for [Redacted] to make me whole through specific performance, moreover, would be permanently expired.

Since I want to close on the property at [Redacted]on, and you presumably wish to avoid the liabilities which the loss of this deal due to your illegal discrimination would place on you, the best course of action for both of us is to do everything we can to close the deal. While I understand that renovation loans usually cannot close on such a timetable, if we do not succeed in either closing within the deadline or convincing the seller to extend the purchase agreement, your apparent reversal in policy will have been wholly moot, for the damage will have already been done.

Therefore, I suggest that you move the paperwork on this forward as quickly as possible, and contact the realtor to let them know that the deal is ready to go through. I stand ready to provide whatever documents or other measures are needed.

Regards,
Ari Allyn-Feuer.

August 8, Mr. Allyn-Feuer, I did receive your phone call on Friday (08/05/11). I have left you two messages on your answering machine per your request and have not received a call back. In the letter that you referenced below is a detailed list of items that are needed to move forward with the application process. Please sign and return the letter, with all supporting documentation and your application fee to the attention of “Sherry [Redacted]” at [Redacted]. Once this information is received we can continue with the process of your application. If you have any questions, please let us know. Thomas [Redacted], Director of Underwriting

August 8. Tom,

Thank you for your reply. I am glad we are in communication again.

I have sent many of the requested items directly to Richard [Redacted], from whom I received the letter. I will forward them to Sherry [Redacted] and to you. Attached please find the signed letter, 2009 tax return and W2 forms, pay stub, insurance quote, and a letter from the realtor confirming receipt of my EMD deposit. A check for $350 made out to [Redacted] was mailed directly to Richard [Redacted] last week. Please let me know if you require anything else.

While I would ordinarily be entirely satisfied with the resumption of the [Redacted] Renovation Mortgage process at its usual pace, we are both aware that the initiation, at this late hour, of the normal weeks-long process for such a loan would result only in the expiration of the purchase agreement and the loss of the property, with the resultant negative consequences for both of us.

Thus, in addition to the resumption of this process, I request that, in an attempt to repair the delay which has taken place, you both expedite, to whatever extent possible, the loan underwriting process (schedule appraisal ASAP, etc) and contact the realtor to reassure them and assist me in obtaining an extension of the purchase agreement.

Regards,
Ari Allyn-Feuer

August 8.

Mr. Allyn-Feur,

Thank you for the attached information. Sherry will review and let you know if the documentation provided is acceptable and if any additional information is required. Sherry, please order the appraisal ASAP with a “rush” so that we can get the appraisal received within a timely fashion.

If you have any other questions, please let me know.

Thomas [Redacted], Director of Underwriting

August 8.

Sherry,

I was pleased to take your call this afternoon. As you requested, I will:

Let the the contractors and realtor know they should expect to hear from you.
Tell the insurance company to send a binder over.
Open checking and savings accounts with [Redacted].
Get you a more detailed statement on the bank account at [Redacted].

I'll look forward to hearing from you about your progress with the realtor (it's very important that you attempt to influence them into making the extension) and the rest of the details, including the cost estimate and confirmations that everything is going OK with the contractors and insurance.

Regards,
Ari.

August 8.

Sherry,

Attached please find my updated bank statement. It should have the 30 day history you need.

Ari.

August 10.

Ari,

I am mailing out your mortgage application. You will need to sign and return asap. The appraisal has been ordered. I have also sent your realtor, Andy, a detailed e-mail of our process and see if they will do a amendment to your purchase agreement.

I do have a few questions that I need to clear up.

You will need to open up a savings account with [Redacted], and a checking account if you decide to take advantage of the auto deduct mortgage payment. Can you also send a scanned copy of the back side of your drivers license. We received the front, but I also need the back side.

I think this is all for now. I will be in touch.

Sherry [Redacted]

August 10.

Sherry,

Thank you. It's gratifying that the appraisal has been ordered. I will sign and return the mortgage application as soon as I receive it. Is electronic return acceptable, or must I mail it back?

I'll look forward to hearing back from the realtor about the extension. Let's cross our fingers.

I have applied for checking and savings accounts online; they want a utility bill to verify my address. I will scan one tonight, and make arrangements for the ALS donation. After this, the accounts will be open. I would like to set up the auto-withdraw and receive the rate deduction.

Locking the rate now is acceptable. Is that 4.875% without the eighth-point deduction for direct-withdraw, i.e. 4.75% with the deduction?

I will scan the driver's license reverse side tonight, at the same time as the utility bill, and send it to you.

Regards,
Ari.

August 10.

Your rate will be 4.75% on auto deduct, 30 year. Do you want me to lock you in?

Sherry [Redacted]

August 10.

Sherry,

Let me confirm again, this is fixed rate? If so, please feel free to lock the rate.

Thank you,
Ari.

August 10.

Sherry,

Attached please find a scan of the reverse of my driver's license.

Cheers,
Ari.

Sherry,

I'm working on the [Redacted] account application. Mandy, who I'm corresponding with, has received copies of my utility bills and my driver's license. I think we need to arrange for me to donate to the ALS fund and I'll be all set. Then I'll arrange for money in the accounts and we'll be good.

I stopped by the house at [Redacted] this morning and took a little stroll around the property, to get a feel for the effect my landscaping improvements would have and think about the tools I'll need to get rid of the tree stumps, things like that. I ran into a very nice woman named Edith and started asking some questions about the property. Turns out Edith has lived across the street from [Redacted] all her life. Back in the 1970s and 1980s it was owned by George D. Goodman, who spent ten years as Mayor of Ypsilanti from 1972 to 1982. So, once upon a time, this was the Mayor's house. Apparently the one-bedroom addition that I plan on living in was built for the Mayor and his wife to live in, while his parents lived in the large main unit. From what I read online, George Goodman is quite an accomplished man, and was a capable mayor for the city. It makes me feel proud that I'm trying to rescue the house with such an interesting history, and inaugurate a new chapter for the venerable structure rather than let it continue to deteriorate.

It turned out further that Edith's brother-in-law, a Kenny [Redacted], used to own the property at [Redacted] before it was foreclosed on. I got an opportunity to speak to him, and was very interested in seeing if I could flush out the story of the foreclosure. From what I could gather, it seemed like there was an income falloff in Mr. [Redacted]’s construction business, and that [Redacted] was successfully rented until it was foreclosed on, i.e. that the property itself is rentable and didn't contribute to the foreclosure. We discussed rents, and Mr. [Redacted] said the rents he'd charged were comparable to the ones I had estimated, and that keeping the place rented wasn't too much work. I also found out that the subdivision involved (1st precinct of the 1st ward or thereabouts) was originally an orchard, and that many of the houses there used to have fruit trees inherited from the old orchard. Apples, pears, peaches. I'm pleased, because this means the soil is right for growing fruit, which is something I was considering doing.

I also got a bit of a sense for the neighborhood. While we were talking, multiple people said hello while walking by; it seems like everyone knows each other. The area, or so I was told, has been very slow-moving, most people keeping their houses for decades. There were children around, too. I very much got the sense that this was a nice, quiet place to live. Safe, relaxed, comfortable. Friendly people.

This visit has reaffirmed my interest in [Redacted], and my confidence that this deal will be a good one for both of us.

Let me know if there's anything I can do to hurry matters along.

Thanks,
Ari.

August 12.

Sherry,

I just got off the phone with [Redacted] insurance. They balked at the renovation, and expressed unwillingness to insure the house while it was under renovation. I'm getting a quote from [Redacted] instead. As soon as the quote arrives, I'll move them as quickly as I can toward the closing documents. I don't expect this to be a major delay.

Thanks,
Ari.

August 15.

Sherry,

The application came this afternoon. I've signed all the pages and filled in a few things, scanned and combined into one PDF file, attached.

The [Redacted] quote arrived today, and it's significantly lower than the example calculation. I'll get you some information very soon.

Incidentally, I've received a second copy of Richard [Redacted]'s letter by certified mail. I've already signed and returned it, so I presume no further action is necessary on the basis of the second copy.

Cheers,
Ari.

August 22.

Sherry,

I've submitted the new offer to the realtor, with the same terms as the original offer, but specifying a conventional renovation mortgage instead of an FNMA Homepath Renovation mortgage. We should know fairly soon if it's been accepted, and the realtor assures me he is pulling for it.

Any news on the the progress of my application and the appraisal? Anything I can do to speed the process along?

Thanks,
Ari.

August 22.

I have not heard as of yet. I believe your mortgage is with our underwriters.

Sherry [Redacted]

August 24.

Sherry,

Mike [Redacted] needs a pre-approval letter. I would like a copy as well.

Thank you,
Ari.

August 25.

Sherry,

I've just received word that the new offer has been accepted. Please keep me updated as to the progress of the mortgage application.

Regards,
Ari.

August 25.

I will. Did you sign a new purchase agreement? If you did, please send. I will keep you posted.

Sherry [Redacted]

August 25.

Richard and Meg,

I was pleased to take your call this afternoon. It was somewhat dismaying to hear that the appraisal came in so low, if I recall correctly the number you mentioned on the phone was [Redacted] based largely on analysis of comparables. Of course, it will be difficult to comment on this without seeing a copy of the appraisal, so, as I mentioned on the phone, I'd like a copy of that by email as soon as possible.

In addition, please send cost estimates and other appropriate details for the lower-loan-value financing you suggested, both the 75% LTV option and the 80%-primary-10%-secondary option.

Thank you,
Ari.

August 26.

Richard,

What is the reason for the delay in your sending a copy of the Appraisal Report that was discussed on the conference call with you and with Meg [Redacted] yesterday? It's been more than a full day since the call. I would assume that, with two vice presidents on the call, you are able to have a copy of the appraisal report promptly delivered to me by email, as we agreed on the phone and as I specified in my loan application package. Of course, the FNMA Home Valuation Code of Conduct, Section II, requires you to provide me with a copy promptly upon completion.

I will continue to look forward to receiving a copy of this most important document.

Thank you,
Ari.

August 26.

Good Afternoon-

Mr. [Redacted] is out of the office today and must not have been able to send the appraisal out prior to leaving last night. I apologize for the delay. Here is a copy of the requested appraisal. Thank you.

August 26.

Meg,

Thank you for sending this file.

The file you've sent has a file size of 0 bytes, and, being empty, will not open with Adobe Reader.

Would you please send a working copy of the appraisal?

Thank you,
Ari.

August 26.

Hello-

Let me try this again. I am able to open it in Adobe Reader so hopefully you will be able to as well.

Thank you

August 26.

Meg,

It appears to be coming through. Thank you.

Ari.

August 27.

Meg and Richard,

I have examined the appraisal carefully, and have located several issues which justify referring the appraisal back to [Redacted] to correct objective material errors, or perhaps measures of greater gravity.

There are some subjective problems with the appraisal, viz:

The neighborhood around the property is zoned for one and two unit dwellings, but [Redacted] has a legal nonconforming "grandfather" exemption allowing the three units to be separately occupied by different households. [Redacted] asserts that, by virtue of having been vacant for a period of time, [Redacted] has lost its legal nonconforming status, and that the third unit, while no longer rentable, "can be used by units 1 and 2." To my reading of the municipal code, it is very likely that this status has not been lost and can be salvaged under the code section covering repair of damaged nonconforming properties to their original nonconforming use, or a use with a lesser degree of noncompliance. The damage occurred while the legal nonconforming status was in effect, and is being repaired promptly after the property's sale.

Moreover, the comparables chosen are extremely poor, as is the manner in which they are adjusted. Of the 8 sale comparables listed, the average gross building area is exactly half that of [Redacted], the average lot area is significantly less than half, while 7 out of 8 lack garages and 6 out of 8 lack central air conditioning. The average adjustment for these major differences in the properties is adjusted at a mere $837 average for the extra building area, $437 average for the land area, $500 for the central air conditioning, and $2000 for the garage. Where, I ask you, is the family who will be indifferent to 2,000 extra square feet of living space, a quarter acre of land, central air conditioning, and a two car garage for an extra $3750? What justification is there for a doubling of the size and lot area of a house, along with substantially increased living amenities, to increase its value by less than 10%? These comparables are not comparable at all; they are a totally different form of dwelling.

Mr. [Redacted] redoubles his misunderstanding by stating the "overimprovement" of the property would have a negative impact on marketability. What a bizarre notion, that a larger house, garage, air conditioning, land, and a guest cottage are not considered valuable improvements, but instead a burden of "overimprovement." Mr. [Redacted] should note that average house sizes for new construction have doubled in the last 40 years, and garages and central air conditioning have become standard, precisely because people find them more desirable and more valuable. Median lot sizes have also significantly increased since the neighborhood at [Redacted] was laid down. [Redacted] is not an overdeveloped albatross, it is a larger, nicer house, and its historic character as the dwelling of Charles Goodman, the first black mayor of Ypsilanti, underscores this point.

Finally, of course, the property sold in 2002 for [Redacted], and in 2010 for [Redacted], values triple the assessment value, or more than this. Are we to believe that the property market is sinking so rapidly that in one year, a property may lose 70% of its value despite the addition of expensive and value-adding renovations? Something is very much amiss here.

But all of this is subjective, and of course, Mr. [Redacted] is being hired partly for the trustworthiness of his judgment. There is room for honest and well-meaning disagreement between competent and well informed people on the subject of all of these matters, and thus, I will leave them aside for now. What I cannot leave aside are the numerous objective and factual errors in the appraisal report, and instances of extremely shoddy data. These errors must be corrected, and the appraisal adjusted to account for them.

Mr. [Redacted] uses an incorrect value for the total land area on [Redacted]. The property listing, city records, and my own measurements all show that the property is divided into two lots, with a total area of .45 acres, whereas Mr. [Redacted]'s appraisal lists an area of only .29 acres on a single lot. The appraisal should be adjusted upward, in the amount of the value of one buildable lot. A comparable sale of buildable property in Ypsilanti [Redacted] would imply that this .16 acre lot would be worth about [Redacted], while the lot at [Redacted] is appraised by the city for a likely sale value of [Redacted].

Mr. [Redacted] uses an incorrect value for the gross building area of [Redacted]. His figure of 3,098 square feet neglects both the third unit/guest cottage, and the third floor of the main unit. The gross building area should be adjusted to account for these omissions, and the comparable adjustments appropriately modified, or new comparables selected.

Mr. [Redacted] short-changes the main unit in selecting an appropriate rental value. Including the bedroom on the third floor, and the living area of the guest cottage, the main unit is a 5 bedroom, 2 bathroom unit of more than 3,000 square feet, yet Mr. [Redacted] counts it as a 3 bedroom, 1 bathroom apartment of 1,900 square feet. In addition, the total room count of the main unit is too low, even when accounting for the omission of the third floor and guest cottage. Above, in excising the third unit from the rent roll, Mr. [Redacted] astutely pointed out that this space could be used by the other two units, but now appraises the property as if it did not exist. This should be corrected, and a new rent comparable, with either a guest cottage or an extra bedroom and bathroom, replacing the rent comparable for unit 1.

Mr. [Redacted] completely ignores the income approach to valuation. In his commentary on the selection of comparables, he acknowledges a shortage of suitable comparables, forcing him to include sales running all the way back to 2009. Even with this measure, the comparables he chooses are unsuitable, with less than half the gross building area and lot size of [Redacted]. In light of the relatively poor comparables, the income approach to valuation should be given a great deal of weight, perhaps the controlling weight, in the appraisal. Instead, Mr. [Redacted] ignores it completely, adopting the [Redacted] figure suggested by his comparables, and declaring that the [Redacted] figure suggested by the income approach "lends additional support" to a figure which is 20% lower. In addition, by virtue of the higher valuation thereby obtained, it is clear that income property is the highest and best use of the property, and thus the most appropriate use to assume for the purposes of valuation. As a rental property by construction, by prior use, and by the current plan for renovation, this property clearly deserves a great deal of consideration to the income approach, while none is given. This should be corrected.

Finally, the comparables are subject to a strange and debilitating error. All eight of them, and [Redacted] itself, are listed as having a rental value of $1525 on the comparable comparison. [Redacted] itself is listed with a rental value of $1850 elsewhere in the document, while the comparables range from 4 to 6 bedrooms in 2 or 3 units with significantly differing building areas, lot sizes, and amenities. It strains credulity to believe that all eight of these properties have precisely equal rental values, and indeed, this bizarre similarity is evocative of outright fabrication. This point is extremely important. It is the rental value of these properties which renders them most closely comparable to the property at [Redacted], and the Gross Rent Multipliers of these properties which provide the baseline for the income valuation. Without good data on the rental value of the comparables, or a market-based Gross Rent Multiplier to be used in income valuation, what value can this appraisal have? Clearly, the report must be modified to include correct and substantiated rental values for comparables, particularly those used to establish a GRM for the income valuation.

It is imperative that an appraisal be obtained which does not make these errors. Either Mr. [Redacted] should be tasked with the revision of his appraisal to appropriately account for all five errors above (land area, building area, room counts, highest and best use, and rental value), or, having shown himself of poor judgment and questionable integrity by producing an appraisal riddled with gross factual errors, he should be relieved of any influence, and a new appraisal ordered from someone of greater competence. This should be done immediately, as time is still of the essence in closing this long-delayed deal. Once an appraisal based on correct information is in hand, we may continue with the selection of an appropriate loan product.

Best regards,
Ari Allyn-Feuer.

August 28.

Meg and Richard,

Intrigued by the wildly implausible convergence of supposed rental value between 9 dissimilar properties in Ypsilanti, I began researching these properties, and discovered some very interesting information.

Mr. [Redacted]'s appraisal lists 8 Ballard as a pair of 2-bedroom apartments with a total rental value of $1525. However, rental listings show the property at Ballard as a 2-bedroom apartment listed at $650, and a 3-bedroom apartment rented as a boarding house, listed at $350 per bedroom, for a total rental value of $1700. The appraisal was thus wrong on both the rental value and configuration of this building.

Mr. [Redacted]'s appraisal lists 712 N. River St. as a sale comparable in condition to [Redacted] post-renovation. However, the sale listing notes that River St. was approved for FNMA Homepath Renovation financing, i.e. required renovation in order to be habitable. Moreover, the owner is claiming the Homestead exemption on his property taxes, so it's not clear on what basis a post-sale rental value can be established, as the property does not appear to be being rented.

Mr. [Redacted]'s appraisal lists 507 Pearl as a pair of 3-bedroom apartments with a total rental value of $1525, in comparable condition to [Redacted] post-renovation. However, I have spoken with the owner on the phone, and he tells me that the property is divided into 2 2-bedroom and a 1-bedroom apartment with a total rental value of $1650, and that the property required extensive renovation before being rent ready.

Mr. [Redacted]'s appraisal lists 420 S. Huron St. as a pair of 2-bedroom apartments with a total rental value of $1525. However, the owner's address of record is 420 S. Huron St, and he claims the homestead exemption on the property. The upstairs apartment is listed for rent at $750, but the downstairs one appears to be owner occupied, leaving little basis on which to establish a rental value for the building as a whole.

Mr. [Redacted]'s appraisal lists 501 Washtenaw as a pair of three-bedroom apartments with a total rental value of $1525. However, rental listings from before the sale indicate that it was an 8-bedroom property being rented as a boarding house at $380 per bedroom. It was purchased by University Management over a year ago in an "as-is" sale, and is still not listed as a rental property on their website, i.e. is probably being renovated and was not rent-ready at time of purchase.

Mr. [Redacted]'s appraisal lists 804 W. Michigan Ave. as one 3-bedroom and one 2-bedroom apartment with a total rental value of $1525. Rental listings indicate that the building is in fact composed of one 3-bedroom, one 2-bedroom, and one 1-bedroom apartment. The 3-bedroom is listed for rent at $850, suggesting a higher rent total for the whole building than Mr. [Redacted]'s appraisal lists. Finally, the apartments are being advertised as "newly renovated," which indicates that 804 Michigan required renovation immediately after purchase.

Mr. [Redacted]'s appraisal lists 215 S. Washington St. as being in comparable condition to [Redacted] post-renovation, requiring only a modest adjustment in the appraisal for building condition. However, minutes from the Ypsilanti City Council in March indicate that the owner was seeking a building permit for replacement of the roof, siding, doors, and gates, with request for comment on restoration of "the house itself," indicating that an interior renovation was also needed. It is thus clear that this property was in need of heavy renovation at the time of purchase, and thus not at all comparable to [Redacted] post-renovation.

My initial doubts about the comparables have been borne out. It is now clear that Mr. [Redacted]'s implausible rental value numbers are in many cases incorrect, and in other cases impossible to substantiate because the properties are owner-occupied. It is clear that many of the properties are not as described in the appraisal, containing different numbers and configurations of rental units. Moreover, it is clear that many of them required heavy renovation immediately after purchase in order to be made habitable, and thus are not at all comparable in condition to [Redacted] as newly renovated.

This new information reinforces the urgent necessity of a new or modified appraisal to correct these serious objective material errors and factual inaccuracies.

Best regards,
Ari Allyn-Feuer.

August 29.

Good morning! I have received your emails regarding your thoughts on the appraisal. The appraisal was ordered through an appraisal management firm who locates an appraiser who knowledgeable in the market area of the subject property. As a part of their service, I have forwarded your comments to their review appraiser for review. I will keep you informed of an estimated time for completion of review as it becomes known.

If you have any questions, please contact me.

Thank you!
Richard [Redacted]

August 29.

Richard,

Good. I take it the review appraiser will have access to the original bids from the packet I prepared, as well?

Thank you,
Ari.

August 29.

The review appraiser has access to all of the information that the original appraiser used in preparation of the appraisal.

Richard [Redacted]

August 29.

Sherry,

New purchase agreement has been signed. Agreement and addendum attached. The realtor wants the pre-approval.

Thank you,
Ari.

August 30.

The appraisal management company has advised me that the review of your comments will be completed not later than Thursday of this week. Your comments have been forwarded to the original appraiser for his review and response. I will keep you informed as more information becomes available. Thank you! Richard [Redacted] September 1. Sherry,

It has been nine days since I requested the pre-approval, and seventeen days since I submitted a completed loan application package. Where is the pre-approval? What is the reason for this long delay?

Thank you,

Ari Allyn-Feuer

September 1.

Richard,

I am looking forward to receiving a copy of the appraisal review. Please send me a copy when it becomes available.

Thank you,

Ari Allyn-Feuer.

September 2.

Richard and Meg,

I note that the appraisal review still has not arrived. Since the review appraiser seems still to be busily occupied assimilating the numerous errors (if errors they were) in the original appraisal, I have taken a second examination of the appraisal, and note some additional discrepancies. Please relay them to the review appraiser and to Mr. [Redacted].

Mr. [Redacted]'s appraisal claims to have employed the cost approach and used the Age/Life method, with construction costs taken from the Marshall and Swift handbook. It says "The Cost Approach was given supportive consideration" and gives the income GRM approach only "additional support." He appraises the estimated remaining economic life of the property at 20 years (curious for a newly renovated property) and its effective age at 30 years. These many details make it clear that the cost approach is in play. And yet on the cost approach worksheet, the only mark is "site value $10,000" and this figure is given as the cost approach figure. Did Mr. [Redacted] mistakenly fully depreciate all the property's improvements despite his choice of a remaining economic life 40% of useful life and the linear depreciation method? Did he mistakenly believe that the improvements were of zero economic value in the first place? Did he claim to develop, describe details of, and claim to give weight to a cost approach estimate which he actually never performed? Did he honestly intend to develop the cost approach, but simply forget?

Mr. [Redacted]'s appraisal lists [Redacted]'s flooring as "carpet/hardwood." Of course, both carpet and hardwood exist, although the more desirable hardwood covers almost 90% of the gross living area at [Redacted]. Critically, though, the "carpet/hardwood" designation is incorrect for the portion of the property Mr. [Redacted] chose to appraise, since the carpet is in the third unit which he inexplicably chose to ignore. He thus shortchanges the amenities in even that portion of the house he chose to appraise, rendering his designation of [Redacted] as "average" quality of construction somewhat questionable.

Mr. [Redacted]'s appraisal lists evidence of "dampness" and "settlement" in the foundation and ranks the roof condition "average" instead of "new," and describes the bathrooms as "average" (as vs. "updated" for all the rent comparables), conditions which will be alleviated by the renovation and are thus incorrect terms for the as-completed appraisal.

Mr. [Redacted] describes [Redacted]'s driveway as being suited for one car, when in fact the driveway not only contains space for two cars in front of the garage, but an additional two in another pulloff before the garage, and several more on the driveway which joins the two pulloffs to the street. I don't know how precisely driveway spaces are counted for this purpose, so the full seven spaces may not all be countable, but at the very minimum, if only those spaces are counted which allow all cars, including those in the garage, unimpeded access to the street, [Redacted] still has a two car driveway.

Mr. [Redacted]'s appraisal describes [Redacted] as being adjacent to a gravel alley, when in fact it is bordered on two sides by asphalt streets with concrete sidewalks and grass strips, and on the other two sides by other houses' yards across a chain link fence. Where did Mr. [Redacted] observe a gravel alley?

Mr. [Redacted] describes the third floor of [Redacted] as a "Scuttle attic." Unfamiliar with the term, I looked it up. A Scuttle is a vertical trap door between the top floor and the attic, which has no ladder or stairs attached to it. [Redacted] has no such thing; instead, the master staircase continues up to the third floor, a wide hardwood staircase with a bannister, lighting, and a window on the landing, leading up to a large finished space with hardwood floors, drywall walls, a closet, windows, lighting, and electrical outlets. If Mr. [Redacted] visited the property, did he somehow fail to notice that the master staircase continued to the third floor? Did he see a Scuttle that did not exist? Or did he deliberately ignore the master staircase and third floor, and fabricate a scuttle which did not exist? I would be tempted to wonder whether Mr. [Redacted] visited the property at [Redacted] at all, but his photographs do not match those in the MLS. We must conclude, then, that Mr. [Redacted] either did not notice the staircase, and hallucinated a nonexistent scuttle, or that he deliberately described the house incorrectly.

I have also examined the scope of work of the appraisal, in which Mr. [Redacted] commits to "inspect each of the comparable sales from at least the street." However, upon examining the photographs of the sale comparables, it is apparent that none of them is current. Those numbered 1, 2, and 4 contain snow, and thus were taken this winter or earlier, while number 1 contains a "for sale" sign. Those numbered 3, 5, 6, 7, and 8 were taken directly from the MLS with the MLS watermark still attached. Of the rental property photographs, number 1 features a "for sale" sign, and number 3 features snow, while numbers 4 and 5 were taken directly from the MLS with the MLS watermark still attached. In conjunction with the numerous errors in the comparables which I described in my first two emails, this leads me to wonder if Mr. [Redacted] actually inspected the sale comparables and completed his described scope of work.

It seems fair to say that this appraisal could bear some very close examination by a competent professional.

Regards,

Ari Allyn-Feuer.

September 2.

I received the response late yesterday afternoon which I have attached. Based upon the appraiser response, the appraised value that [Redacted] will use for this transaction will be [Redacted]. If you would like to discuss various financing options based upon the [Redacted] value, please contact me.

If I do not hear from you by Wednesday, September 7th that you would like to proceed with the appraised value of [Redacted], [Redacted] will issue a denial based upon an appraisal insufficient for the request loan amount.

If you have any questions, please contact me.

Thank you!
Richard [Redacted]

Richard,

This is not an appraisal review, it is a rebuttal from the same appraiser. You twice told me in writing on August 29 that the appraisal would be reviewed by another appraiser, but now you present nothing more than a rebuttal letter from Mr. [Redacted]. Mr. [Redacted] is hardly in an ethical position to fully and objectively evaluate his own work, and this is clear from the numerous flaws in the rebuttal.

In his first point, Mr. [Redacted] says "The rebuttal makes several references to the $1525 as being rental income for each of the comparable sales. This was never stated or referenced in the OA." However, the rental value of $1525 is stated for each of the comparables, as the attached JPGs numbered one through three clearly show. Amusingly, Mr. [Redacted] contradicts himself in the very next sentence, saying "The original $1525 rental income established by the rental survey was used when a comparable sale did not have actual rental data." In fact, none of his eight comparables had actual rental values and this $1525 default value, which was simply a made-up value, not supported by rent comparables (and for an unrelated building!) was used for every one of the comparables.

Mr. [Redacted] says these rental values did not contribute to the GRM, and that the GRM was "established using market rental data" "found in the rent data on page two." The GRM is a ratio between selling price and gross rent, expressed in units of time, typically either months or years. The rental comparisons on page two do not have sale values, so how is a GRM supportable based on rental data with no sales data? In fact, the GRM comes directly from the sale prices associated with the made-up rent values. No GRM or GRM-related reasoning appears on page two, while the GRM rationale, immediately below the rent/GRM numbers in my three exhibits, states that "The GRM was established using market rental data, and the median GRM found above," as in image four. It is perfectly and abundantly clear that Mr. [Redacted] establishes a GRM using rental data which was, to put it charitably, estimated, and for a distantly related building.

Mr. [Redacted] compounds this problem by using the same method to calculate a new, lower GRM based on the same data in his rebuttal. Sales comparable data (not even adjusted!) with the new, and equally unjustified, across the board rent value of $1850, are used to indicate a GRM value of 30 months. With this new value, the income-approach value of the new property is [Redacted], matching the sales comparison approach. This new reasoning is entirely circular. With the rental value for the sales comparables established using that of the original property, and a GRM calculated using this value and the sale price of the comparables, of course using the same GRM with the original property will yield the same sales value as the comparables.

The point of the income valuation is for the GRM to be established using sales and rental data on the same property, and this GRM, along with rental data from a different property, used to establish an estimated sales data point for a different property. A rent value and a sale value produce a GRM, which is used with another rent value to come up with another likely sale value. The two rent values cannot be sourced from the exact same data. This is not a subtle point, it's elementary appraisal theory.

So, what is it? Was the $1525 value "never stated or referenced" or was it used for every one of the eight comparables? Was the GRM established "using rental data on page two" or using the made-up rent figure? Mr. [Redacted] says both things in this incoherent and contradictory response, but the original report is quite clear. It is not sufficient to rebut an appraisal critique by claiming the appraisal does not contain the incorrect facts and technique. They are right there in the report, and Mr. [Redacted] cannot change this merely by perjuring himself.

There are other problems in the rebuttal, including an assertion that "all comparables have to be bracketed" while gross living area and lot size adjustments are not bracketed in the original appraisal, and indeed are not within 30% of being bracketed, and some very dubious responses to my comments about the comparables, as well as a total failure to address many of my points. In addition, the rebuttal contains incorrect details about the third story staircase, along with a heartwarming anecdote about ducking to avoid the light fixtures on the third floor. Why did the original appraisal specify a scuttle attic? Mr. [Redacted] claims to have climbed the staircase and inspected the third floor, so what is the grounds for claiming the property has a scuttle attic? I have contacted the realtor for a confirmation that the legal description covers both lots, and could cover all the other remaining problems with the rebuttal in greater length, but there is no need to cover them now.

It is abundantly clear, from the flaws I have articulated in the original report, and from the appraiser's bizarre response to a grievous mistake pointed out above in this email, that the appraisal is not of a suitable character to be relied on by [Redacted] for making lending decisions. It is thus critical that [Redacted] order a new appraisal, or at the very least the independent appraisal review which was originally promised. Although [Redacted] cannot be held responsible for the original appraisal, you can be held to answer for the way you react when I inform you that it is riddled with errors. Continuing to rely on the original appraisal, whose flaws have only been thrown into sharper relief by Mr. [Redacted]'s evasions and contradictions in his rebuttal, and withdrawing your original promise of a review by another appraiser, is not appropriate. It is a choice which may prove to be of great consequence. Regulators and law enforcement will not miss the gross errors and apparent fraud in the original appraisal and response. Mr. [Redacted] cannot cure the errors by claiming they never occurred, since they are in the original report, and by standing by them, Mr. [Redacted] may well have put his license in danger. Rather than joining him in this, [Redacted] must order a new appraisal or an independent review.

If this is not done, and if [Redacted] stands by this terminally flawed appraisal, this, along with Sherry Richards stonewalling me about the pre-approval for the last eleven days, will constitute an organized effort to scuttle this loan, in continuation of [Redacted]'s original discriminatory policy, and I will take action on this basis.

Regards,

Ari Allyn-Feuer

September 2.

The response was reviewed by the appraisal management firm that hired the appraiser. This appraisal management firm has skilled review appraiser that are very knowledgeable regarding appraisals. Based upon their review of the appraiser’s comments, the value will remain at [Redacted]. As such, [Redacted] will use the [Redacted] value in making the final determination in proceeding with the loan. We will not order another appraisal.

As I stated in my previous email, there are financing options available at [Redacted] value which we can discuss. If you do not want to proceed with the [Redacted] value, we have no other choice but to decline the loan based upon an appraised value that does not support the application. The declination will be issued next Wednesday, September 7th.

Please let me know if you would like to discuss financing options based upon the [Redacted] value.

Thank you!
Richard C. [Redacted]

September 2.

Richard,

You say that "This appraisal management firm has skilled review appraiser that are very knowledgeable regarding appraisals" and that "Based upon their review of the appraiser’s comments, the value will remain." Does this mean that an appraisal review was conducted by another appraiser at [Redacted], and that review information has been provided to [Redacted] of which I have not been given a copy?

If so, please send a copy without delay.

If not, your promise of a review conducted by another appraiser remains unfulfilled, and all the points in my letter of this morning stand unaltered.

Regards,

Ari Allyn-Feuer.

September 2.

Richard,

Please send cost estimates for the loan options based on the [Redacted] value, including the 80 Primary/10 Secondary option you mentioned on the phone call last Thursday. I will evaluate them.

Regards,

Ari.

September 6.

I will work with Sherry to prepare the different loan options which will be sent by the end of the day.

If you have any questions, please contact me.

Thank you!
Richard [Redacted]

September 6.

Richard,

Thank you. I will look forward to receiving this information.

Ari.

September 6. I have attached a spreadsheet showing three different options based upon an appraised value of [Redacted]. The spreadsheet is for illustration purposes only and is subject to change. If you have any questions, please contact me. Thank you! Richard [Redacted] September 7. Richard,

I still protest [Redacted]'s sanction of an appraisal based on incorrect information, but it looks as though the last of the three options, the 80/10 primary/secondary, may be workable.

How do we proceed?

Ari.

September 8.

Before we can proceed with changing all the documentation to a 80/10, I must receive acknowledgement that you are accepting that value for the transaction. Your comment below states “may be workable” which an acceptance remains in doubt.

Once you have accepted the counteroffer as I proposed, we will need to provide the proper disclosures for the 1st and 2nd mortgage.

Since you will need to bring more funds to closing which is estimated at [Redacted], you will need to provide acceptable documentation for the funds. At the current time, we have only verified [Redacted] in the [Redacted] account dated July 14th. An updated bank statement will be required. All funds for closing must be your funds or from a source acceptable to [Redacted]. If you have any questions, please contact me.

Thank you!

Richard [Redacted]

September 8.

Richard,

I am aware that [Redacted] has decided to use a [Redacted] valuation for the purposes of underwriting the loan. I am willing to borrow money on these terms to buy the property at [Redacted], if this is possible, because purchasing [Redacted] and making the payments is all I'm after. What is not entirely certain, the workability question, is my ability to make the extra down payment. Mustering [Redacted] down for a [Redacted] purchase wasn't part of my original plan. I am owed money by a member of my family and am attempting to call in the loan. When this happens, (shortly), I will be able to make the down payment on the 80/10 loan.

I am also aware that [Redacted] is knowingly using an appraised value from an appraisal with incorrect information and inappropriate technique, that you have refused to order an independent review, and that this is not an appropriate course of action for you to have taken.

Please send the disclosures. I am doing what I can to collect on the money I am owed and ready the down payment. I will confirm with documentation as soon as this is done.

Regards,

Ari.

September 8.

I will have the Sherry [Redacted] prepare new disclosures for a 80/10 mortgage based upon the [Redacted] appraised value.

For the funds from a loan repayment to be an acceptable source of funds, the documentation will have to be provided that shows that you loaned the money to the relative plus the source of those funds and complete documentation for the repayment from that relative.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

September 9.

The disclosures for the 1st and 2nd mortgage will be sent to you not later than Monday, September 12th.

As a reminder, the mortgage commitment that I sent to you previously addressed that any improvements to the property must be fixed and must to contribute to the value. As such appliances will not be allowed to part of the improvements. In addition, landscaping items such as fruit trees or fruit shrubs normally do not contribute the overall value of the property. If you have any questions, please contact me.

Thank you!

Richard [Redacted]

September 9.

Richard,

I look forward to receiving the disclosures not later than Monday.

Thank you for bringing my attention to the condition of fixedness. I will purchase appliances with my own money rather than renovation loan money.

There is a great deal of evidence that landscaping enhances home values. A study of consumer preferences from the Department of Horticulture at Virginia Tech indicated that of seven states tested, Michigan showed the highest preference for attractive landscaping, at a 12.7% increase in value. http://pubs.ext.vt.edu/426/426-087/426-087_pdf.pdf A peer-reviewed study of actual home selling prices in South Carolina, published in the Journal Of Environmental Horticulture, found that upgrading a home's landscaping from "average" to "excellent" boosted sale prices by more than 10%. http://actrees.org/files/Research/landscaping_house_prices.pdf For this reason, I had assumed that landscaping met the "improvement of value" standard in your letter. However, since [Redacted]'s opinion is that landscaping does not increase value, I will be happy to withdraw these improvements from my loan-funded renovation plan as well.

Accordingly, then, my renovation needs have been reduced from [Redacted] to [Redacted], and the total value of purchase price, renovation, and 10% renovation contingency will go down by more than $4,000. This amount can be subtracted from the renovation and contingency amount in the documents, which will also lower the down payment by more than $4,000. Please ensure that the documents reflect this change in the plans.

Thank you,

Ari.

September 9.

There may be some type of landscaping that will increase value. However, I doubt that fruit trees and shrubs do. If you would like to reduce the overall improvements by those landscaping that may not increase value that is acceptable. Please list the items to be reduced such as appliances and fruit trees and the overall funds to close can be reduced. I will review the file and provide you a list likewise so we can compare and be in agreement with the reduction. Since you commented in a previous email that additional funds to close may be challenging, I may recommend that you review the overall improvements to see if there are non-essential improvements that could be deleted that may not affect the overall value and reduce funds to close. Any change in improvements have to reviewed by the appraiser to make sure that it does not affect value.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

September 9.

Richard,

I would like to omit the following: everything from the work-to-be-performed addendum at the end of the list of bids. This includes the appliances (3 stoves, 3 refrigerators, 1 dishwasher, 2 washers, 2 dryers) and all landscaping (laurel hedge, flowering shrubs, shade trees, fruit trees, berry bushes) mentioned in the package of bids, and totals [Redacted]. Removing this total, and its associated share of the 10% contingency, for a total of [Redacted], from the renovation total should be possible without any modifications to the projected value. Appliances are not part of the appraised value of a house, and thus cannot contribute to it. [Redacted] has already declared its opinion that landscaping does not add value, with sufficient firmness as to refuse to lend on these improvements, and I am ready to accept this opinion for these purposes. Moreover, you have already refused to have the appraisal reviewed or adjusted to correct objective material errors such as the presence or absence of a third floor, so a landscaping adjustment the value of which you have already impugned should certainly not be afforded greater significance.

The rest of the renovation would be difficult to trim. Almost all of it (mold remediation, roof, paint, windows, kitchens, bathroom floors, garage doors) is necessary to make the house ready for habitation and renting. I will leave the rest, [Redacted] plus contingency, in place.

News of successful collection on the debt I am owed is forthcoming.

Regards,

Ari Allyn-Feuer.

September 12.

Ari

Enclosed is the new Good Faith and Truth and Lending on your new numbers. Currently I show approximately [Redacted] to close. I have verified the [Redacted]. Can you let me know where you will be coming up with the difference.

I have also included the auto deduct form for the 2nd mortgage. This payment can also be deducted from your checking account here at [Redacted].

Please sign these and send these back to me. Please contact me if you have any questions.

Sherry [Redacted]

September 13.

Sherry,

Thank you.

The extra funds are coming from the repayment of a debt I am owed by a member of my family. Years ago, my father sold short using stock held in trust in a brokerage account under my name, and is making good on the short sale, in the cash equivalent of the shares borrowed. This will occur next week. So, this is own-funds, but I hadn't felt the need to recall the loan until the appraisal-related complication [Redacted] chose to embroil us in necessitated extra funds.

I have some questions about the terms described in your documents.

I see you're charging me $1045 in points for the interest rate of 4.75%. What would the interest rate be if I elected not to pay points? The worksheet on page three is empty.

I see there is an appraisal fee of $500 listed. Since the appraisal was included in the loan application fee, is it customary to charge an extra fee for this service? What is the justification for doing so?

I see you have hazard insurance listed at $1104. I have obtained a quote from [Redacted] for insurance on the property at [Redacted], at $610 per year. The agent is [Redacted]. Their number is [Redacted], and the quote number is [Redacted]. I will call them tomorrow and tell them to prepare a binder.

I see the auto-deduct agreement for the second mortgage, but no good faith estimate or other documentation detailing balances, interest rates, payments, or other information. When will I receive these?

Thank you,

Ari.

September 14.

Sherry,

In the purchase agreement between myself and FNMA of which you have a copy, in section 9, it is specified that FNMA will provide me with a title insurance commitment and policy as a condition of the sale. I understand this is customary in Michigan. This means no purchaser's title insurance costs should appear on the new term sheet, once it has been updated in response to this update and my questions above. This will reduce my closing costs by $631.75.

Thank you,

Ari.

September 14.

Sherry,

Is the transaction going to close in escrow, and if so, when will an escrow be opened? In Oregon that's how real estate transactions close; I don't know what's typical in Michigan. If now, how will this close?

Thank you,

Ari.

September 14.

Ari,

Escrow-we set up a escrow account and with each payment we will deposit into that account. You can see the escrow pre-paid on the good Faith. In July we send out the summer tax and in December we send out the winter tax. Your home owners insurance will be paid out each year in September or October when ever we close. We collect for your home owners insurance up front. We can include that in your cash to close or you can pay it before close. The reason I have 1014.00 in their is because that is the last cost I received. Before we close you will have to present the insurance binder and it will be at that time when we make the correction.

Title insurance-Their will be title insurance on the sellers side, of which we must show that on the Good Faith. You will see that it comes right back off. You are responsible for the buyers side. You are not being charged the 631.75 in the total.

Points-Yes there are points involved in this mortgage as there are in every mortgage. With every rate there are price adjustment. We can up the rate to get rid of the points. If you would like to do that let me know. You either pay for the points in closing or we make the adjustment in the rate to cover those adjustments.

Fee-This 500.00 fee is a cost because it is considered a construction loan. Every time you complete a project and the builder wants to get paid, we need to send the appraiser back out to make sure the items are completed and then it is sent to the title company to make sure all payments have been made to the contractors on the job.

Second Mortgage-You should be receiving the 2nd mortgage package soon. The one question they had was if you wanted that on auto deduct as well. Remember that if your loan payment comes out of your checking account here at the credit union then you receive a .125 off the rate. This also applies on the 2nd mortgage.

Account-Have you opened up the savings account and checking account yet.

Down Payment-This is not as simple as you are thinking. These funds need to be verified. If you are receiving these funds there are two ways you can do this.

If these are your funds and you are getting paid back from a family member, then I need the paper trail. So if these came from a Trust, I need to see when you took these funds out of the trust, so we will need a statement of when you took these funds out and gave it to the family member. I need to see a copy of that check, (front and back). Then I need to show a statement of where these funds were deposited from family member, (statement is all pages even if blank). Then since you are being paid back, then I need to see documentation of where the family member is giving you this back. Also, we will need a copy of the agreement signed where you lent this family member a loan, (any agreement that he/her signed). Once you receive these funds from the family member take copy of the check and then I need verification of where you are depositing these funds (30 day history).

Or, this part of the down payment can be gifted to you. This family member would need to sign a gift letter, show a bank statement of where these funds are coming from. Then, have him/her give you a cashiers check, take copy of front and back before depositing into your account then get me a bank statement (30 days worth) to show the money going into your account.

Sherry [Redacted]

Sherry,

Thank you for this response.

It's good to hear that I am not being charged for title insurance, and that the documents for the second mortgage are forthcoming.

I may be interested in accepting a higher interest rate in exchange for foregoing the points. Please provide information on the tradeoff between the points paid, and the interest rate and its effect on the payment.

I have opened both checking and savings accounts at [Redacted]. I would like to set up the auto-deduct for the second mortgage as well.

I will happy to provide the paper trail on the loan which is being repaid. Expect it tomorrow.

Have you contacted, or heard from, [Redacted] insurance about the binder? The quote specifies quarterly payments, i.e. $152.50 due at closing for insurance.

Regards,

Ari.

September 15.

I will have this for you tomorrow. I will also send you a pre-approval letter.

Sherry [Redacted]

September 15.

Sherry,

I have asked about this numerous times over a span of weeks, in writing and on the phone. We're in the final stages of actually doing the loan, and it's urgent that the realtors have the pre-approval. It's been urgent for a while, and this delay is inexplicable and inappropriate.

Please send the pre-approval to the realtor and to me.

Thank you,

Ari.

September 19.

Sherry,

We cannot stress this enough. Where is the letter?

Ari.

September 19.

“Subject line: Pre-Approval”

Sherry [Redacted]

September 19.

Sherry,

Thank you.

Ari.

September 23. Sherry,

Attached please find two documents which should verify that the funds are present and in order:

A statement from [Redacted] showing account balances totaling [Redacted], sufficient to cover the new, expanded down payment.

A package of documents including the short sale agreement between myself and [Redacted], the stock certificates which were borrowed for short sale, and a check in partial redemption of the debt owed for the short sale. As of now, the as-converted value of the [Redacted] shares (now [Redacted] shares) is [Redacted]. The check is in the amount of [Redacted].

I will tell the insurance company to send a binder.

Seven days ago, I was told there would be documents on the secondary mortgage, and information on the tradeoff between points and the interest rate and payment. I'm still looking forward to receiving them.

At this point, what, if anything, remains before we can schedule a closing date?

Thank you,

Ari.

September 26.

Sherry,

Please confirm that you have received the proof of funds and source-of-funds records in my email of four days ago.

I have put you in contact with an agent for [Redacted] insurance, who has a hazard insurance quote for the property at [Redacted] in hand. Please make sure the lower insurance value is reflected in the new GFE. I would like you to do whatever they require to ensure that a binder is prepared and that this quote is integrated into the closing documents.

It has been eleven days, and I am still waiting for a GFE on the secondary mortgage, information on the tradeoff between points and the monthly payment, and news on what remains before we can set a closing date. This long-delayed loan should close as soon as possible. Since [Redacted] has represented to me that you are interested in closing this loan, you should be making efforts to minimize the delays involved.

I look forward to hearing from you without delay.

Regards,

Ari Allyn-Feuer.

September 30.

Sherry,

I have received the GFE on the second loan. Thank you.

I am still waiting for information on the tradeoff between points and the monthly payment, and news on what, if anything, remains before we can set a closing date. It is urgent that we schedule a date as soon as possible. Also, you should update the realtors in response to their email of three days ago, and inform them of the progress we are making.

Let's set a closing date, finalize the documents, and close this loan.

Regards,

Ari.

September 30.

When I left my voice mail the other day, I commented about the lack of title commitment. Etitle who is providing the title insurance on this property will not issue a title commitment until there is a valid contract. I would recommend contacting your real estate agent to assist. The only thing we are waiting on for closing is the title commitment.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

October 3.

Sherry,

Can you confirm that Andy is waiting on an update from you? What kind of update? When will you get back to him?

Thank you,
Ari.

October 7.

All,

What is the delay? Sherry tells me she needs the updated PA, and Andy tells me he needs information from Sherry.

Let's hurry this along and close it.

Ari

October 7.

Sherry,

I don't mean to be negative, but this is not the time for one of [Redacted]'s trademark two-week lapses in communication.

Let's close this.
Ari.

October 7.

The purchase agreement addendum has been sent to the title company to obtain the title commitment. We have asked for a status on soon we can get it. Once we can get the title commitment, then we can proceed with closing.

If you have any other questions, please contact me.

Thank you!
Richard [Redacted]

October 7.

Ari,

I just heard back for our loan coordinator, and she had forwarded the PA on to the title company. We are waiting for a title commitment. I will e-mail Andy also, to see if they can hurry up on their end.

Sherry [Redacted]

October 7.

Ari,

We were waiting for a up dated title commitment from e-Title. Rose, the coordinator on this mortgage, was in touch with E-Title today. She is wrapping up what she needs with them. I also e-mailed Andy this afternoon.

I am not going to be in the office next week, but Richard and Rose will be coordinating the loan while I am gone. Know that they are working on this and will do there best to wrap this up.

If you have questions please refer these questions to Richard. He will get with Rose. I will be back on the 17th if you need anything from me.

Sherry [Redacted]

October 10.

Every email I send to sherry gets returned undeliverable

Andy

October 10.

Andy,

I'm sorry you're having trouble emailing Sherry. My emails have been going through, to her email address at [Redacted]. I've CCed Sherry, and her superior, Vice President Richard [Redacted], on this email. If you continue having any trouble, please email Mr. [Redacted]. I'm told he will be happy to help advance the paperwork.

Regards,
Ari.

October 10.

Good afternoon! We have received the title commitment however the insured amount is wrong ([Redacted]). The coordinator will be contacting the title company for a correction.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

October 10.

See...

Andy [Redacted]

---------- Forwarded message ----------
From: "Mail Delivery Subsystem"
Date: Oct 10, 2011 4:12 PM
Subject: Delivery Status Notification (Failure)
To: <[Redacted]>

Delivery to the following recipient failed permanently:

October 10.

Andy,

This is indeed perplexing. I have no idea what form of breakdown could be causing such a series of communication failures.

As an emergency measure, then, I will forward to you all relevant communications I receive from Sherry and Richard, and will gladly forward to them anything you instruct me to.

Regards,
Ari.

October 11.

Good morning! Depending upon the email, it could be blocked as a form of “spam”. In fact, my personal email will not come into the credit union. I will verify with my IS department.

Richard [Redacted]

October 11.

Good morning! I had my coordinator call the title company to find out several possible closing dates as we are ready to close your loan. Rose was informed late yesterday from Etitle that they will not schedule a closing until there is an extension on the contract. As we work through this latest development, can you provide me days of the week and times that meets your schedule so we can identify several different times to close your loan?

I am sure that your real estate agent needs to assist in obtaining this extension.

If you have any questions, please contact me.

Tks!

Richard [Redacted]

October 11.

Richard –

I tried to call Sherry but she is apparently off all week.

My asset manager wants to know when you can get this file closed. She wants/needs an ACTUAL date.

She wants it closed by the 20th – can you make this happen?

Andy [Redacted]

October 11.

Richard,

It's time to clear the delays and close. [Redacted]'s record on this file is far from clean. You have knowingly engaged in illegal source-of-income discrimination. You have refused to seek an appraisal review in the face of what you knew was a grossly flawed, perhaps fraudulent, appraisal. You have engaged in a pattern of communication falloffs comprehensible only as evidence of an attempt to evade the writing of this loan. These things are in the record.

I don't know why you have been doing this. Perhaps [Redacted] never relented and is continuing to discriminate against my source of income, covertly. Perhaps you bear personal animosity against me because I exposed your earlier discriminatory actions and brought them to the attention of law enforcement. Perhaps you have something against the neighborhood around [Redacted]. Whatever the real motivation was or is, [Redacted] has a choice to make. Whether your past actions will appear to be well-meaning mistakes, or deliberate and illegal discrimination, will be determined by what you do next.

The best way forward, both for me and for [Redacted], is for you to close this loan. Now.

If you choose to obstruct the loan further, I wish to assure you that this matter will not go away just because you stall for nine more days. You will hear about this again, and not just from me.

Regards,
Ari Allyn-Feuer.

October 11.

It is unfortunate that you have chosen to take this tactic as [Redacted] desires to close this mortgage loan.

Unfortunately, we cannot close the mortgage loan without Etitle authorization as they will not schedule a closing until there is a valid extension to the purchase agreement. We did not chose Etitle on your transaction but are required to work with them due the seller’s requirements whom you have the contract.

Any assistance that your realtor can provide in obtaining a valid extension to the purchase agreement.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

October 11.

Andy,

Richard tells me that eTitle, their title insurance company, can't proceed until the updated PA is in hand. He tells me that use of eTitle is mandated by FNMA in their capacity as the seller, and that they therefore can't choose another title company.

I have sent you the documents; where is the updated purchase agreement?

Ari.

October 11.

eTitle has emailed me about 5 times on this file today and have made no mention of needing anything other than an extension.

My asset manager will not grant the extension until we know a date from Lender, and I haven’t heard back from Richard today for that answer and Sherry is out of the office all week.

Andy [Redacted]

October 11.

Richard,

Ordinarily, I hesitate to introduce a harsh or negative tone into any discussion. I have valued the cordial tone that you personally have taken throughout the course of these events. However, I feel it is important, at this crucial juncture, to clarify the meaning of the choice you are about to make. Yes, it's unfortunate that tension exists between myself and [Redacted]. It was unfortunate that [Redacted] chose to engage in the illegal discrimination, questionable appraisal practices, and stonewalling that created this tension. And it would be unfortunate if [Redacted] escalated this tension by sinking the loan.

If you desire to close the loan, show it. Close the loan. The updated purchase agreement is coming. But title commitment is clearly not PA-based delay. Yesterday, one day ago, less than 24 hours prior to now, you sent me an email saying the title commitment had come in with the wrong figure for insured value. You had it, and all that was needed was a number substitution, of the proper value, [Redacted], for the current one, [Redacted]. Today you say it can't come in until the updated PA is in hand. How can these two emails be reconciled?

What the realtor needs is nothing more than your assurance that you want to close the loan and will be closing it soon. Tell him what you've told me: that [Redacted] wants to close this loan. That when the updated PA comes, a closing date will be arranged immediately, and the closing will happen soon.

If you refuse to reassure him, if you stall, and FNMA's asset manager decides to back out of the deal, you will have made an intentional decision to sink the loan. If what you say is true, and [Redacted] wants to write the loan, you know what to do.

Regards,
Ari.

October 11.

Your loan has been issued a final approval and is available to close. The next step for us is schedule the closing with ETitle. As a matter of practice, Etitle requires the closing package at least 24 hours for review and then must submit it to Fannie Mae for review. It is my understanding that Fannie Mae’s review may take 48 to 72 hours. Both of these reviews [Redacted] has NO control.

When we are negotiating a closing date, my closing department must have 48 hours to draw closing documents. I ask you in a previous email which you have not answered dates and times.

Communication between us is an important part of finalizing this loan. Making repetitive negative statements and threats is counter productive that does not serve in getting your loan closed. I do not intend to address your comments going further and will only limit my comments to closing of the loan along with the renovation process.

If you want to proceed with closing of the loan, you must completely adhere to the my commitment letter which was acknowledged by yourself. Failure to follow this commitment will only result in further frustration on your part. Once the loan is closed, there will be specific requirements that must be met to meet the renovation process. This process was specifically addressed in the commitment and it is not subject to debate nor deviation!

At this point, I do not see that we are able to meet your expectations on this loan and will only result in further frustrations.

If you would like to cancel this loan, I will return your application deposit and cancel the loan.

Please let me know how you would like to proceed with the loan or would to cancel the transaction.

Thank you!

Richard [Redacted]

October 11.

Richard,

I also see no need for repetitive negative statements. You are aware of the impact your prior actions have had.

What I want is to purchase [Redacted], renovate it as described in the bids, live in it, and make the payments on my loan from [Redacted]. Since you represent that this loan has been subject to final approval, and can close, I have no interest in cancelling it at this time.

It sounds as though, once the purchase agreement is in hand, it can be expected that ETitle can return the closing package within two days, FNMA within three days, and your own office can produce the closing documents within two days. This sums to seven days. It would thus seem possible to schedule a closing date within the time period Andy has expressed interest in. You should reassure him about this.

As to my own scheduling needs, I can close on any day, at any time of the day or night. Obviously time to review documents beforehand is appreciated. The most convenient days for me, generally speaking, are Saturday, Sunday, Monday, and Wednesday. If you propose a time, I can comment on it.

Let's close.

Ari.

October 11.

Any communication regarding your loan will be you only not to your realtor. If you want to share information, that will be your decision.

As soon as Etitle gives an acceptable closing date, we will proceed with drawing the closing documents.

Richard [Redacted]

October 12.

I’ve still not gotten any reply from the lender.

We need immediate response to move this file along.

Andy [Redacted]

October 12.

A final approval has been issued and waiting the title company to schedule a closing. It is my understanding the last extension has expired. The new extension must have sufficient time to facilitate this closing.

Once a closing date can be scheduled, then [Redacted] can proceed with drawing the documents. At this point, closing is entirely contingent upon a valid contract. Failure to provide a valid contract will only continue to delay the process.

If you have any questions, please contact me.

Thank you!

Richard [Redacted]

October 12.

I’ve just gotten little to no communication with approval status, clear to close, anticipated closing timeline, etc.

I asked last week what an estimated date for a probably closing would be and got no reply.

I reiterated that again yesterday in an email – we are out of contract due to the prior statement that my asset manager won’t extend until her questions are answered.

So, again:

  1. When can this close? I need a date and a range. She wants it to close by the 20th.
  2. How long do you need for docs once we are clear to close?

Andy [Redacted]

October 12.

Andy,

Richard said this in an email to me yesterday:

"The next step for us is schedule the closing with ETitle. As a matter of practice, Etitle requires the closing package at least 24 hours for review and then must submit it to Fannie Mae for review. It is my understanding that Fannie Mae’s review may take 48 to 72 hours. Both of these reviews [Redacted] has NO control.

When we are negotiating a closing date, my closing department must have 48 hours to draw closing documents."

Hope this helps.

Ari.

October 12.

Ok, I will get on this for an extension until next Friday.

This should enable ample time for next week.

Andy [Redacted]

October 12.

Richard,

The signed extension.

Ari.

October 13.

I am forwarding comments from the coordinator regarding the extension.

Richard [Redacted]
From: Rose [Redacted]
Sent: Thursday, October 13, 2011 9:08 AM
To: Richard [Redacted]
Subject: RE: [Redacted] extension

That’s great that he signed but it’s not signed by FNMA yet.  Can you respond to him and tell him that its great he signed and now he needs to make sure his realtor submitted it to the listing agent to send to FNMA for their signature so we can finalize it? I am going to forward it to the listing agent myself as well.

I will email E Title and let them know we are now waiting for FNMA. I am not sure what their turn-around time is.

Thanks

October 13.

Richard,

I enclosed the earlier document to let you know action was being taken. Of course it's not valid with only one signature.

Here is the document with both signatures.

Please apprise me of developments and let me know if you need anything.

Ari.

October 13.

Your email did not contain an attachment showing the extension with both signatures.

Richard [Redacted]

October 13.

Richard,

My apologies.

Ari.

October 13.

The attached document did not contain any signatures from yourself or Fannie Mae. I have asked my coordinator to check with Etitle to see if they can schedule the closing, then we can draw documents.

My concern regarding the signatures on the extension is only related to Etitle’s requirement before scheduling a closing date.

If they provide the closing date, we can proceed with drawing documents.

Richard [Redacted]

October 13.

Richard,

There must be some confusion. When I open the document I sent in my last email, I see two signatures. One from me, electronic, dated 10-12-2011, and another, a stamp, from [Redacted], Assistant Vice President of FNMA, dated 10-13-2011.

Please confirm you are opening the document in a full featured PDF viewer.

Ari.

October 13.

We have all the latest software. I have forwarded back the 1 page document that does not show an signatures!

Richard [Redacted]

October 13.

Please send the right one with the signatures.

Richard [Redacted]

October 13.

Richard,

I have exported the document to JPEG. Hope that works better for you than PDF. :)

Ari.

October 13.

I will repeat myself form previous emails, the attached document is only 1 page and does not contain any signatures! Please make sure that you are attaching the right document.

Richard [Redacted]

October 13.

Richard,

This document is an addendum to the purchase agreement. The main purchase agreement document is already in your possession, but I will attach it again.

The one-page addendum has signatures. PDF viewers on restricted platforms like smartphones, and the OSX previewer, often miss annotations like signatures in PDF files. This has happened before with people at the realtor's office, which is why I asked about your PDF viewer. However, it strains credulity that your jpeg viewer has a flaw which allows you to see the document but not the signature. JPEG is a flat image format. However, in case this is the case, I attach the document in PNG format.

Ari.

October 13.

Rose, my coordinator is calling the title company to verify a closing date so we can start to draw the closing documents which I will forward when it is available.

Richard [Redacted]

October 13.

Richard,

Please confirm receipt of the purchase agreement and signed addendum.

Thank you,

Ari.

October 13.

Richard,

Please confirm receipt of the purchase agreement and signed addendum.

Thank you,

Ari.

October 13.

We are waiting on your realtor to schedule the closing. As I have consistently stated in previous emails, we must have 48 hours to draw closing documents. Until a date, time and place is scheduled, we will and cannot proceed with drawing of the closing documents.

Please contact your realtor.

Richard [Redacted]

October 13.

FYI! The 19th works for us. As soon as the place is determined, the closing documents can be drawn.

The extension is acceptable.

Richard [Redacted]

October 13.

Richard,

I am glad your computers are working.

The 19th works for me.

Where will the closing be?

Thank you,
Ari.

October 13.

We do not make that decision as you will have to talk to your realtor.

Richard [Redacted]

October 14.

We are in the process of drawing the documents right now and anticipate delivering them to the title company on Monday.

Richard [Redacted]

October 17.

We are CONFIRMED for a closing at 4pm on the 20th!!!

Andy [Redacted]

October 18.

Richard,

What is the status of the closing documents? Have they been completed and delivered?

If so, I would like to see a copy of the complete closing documents as soon as possible, so I can read and understand them before closing.

If not, of course, it is urgent that they be completed and delivered.

Regards,
Ari Allyn-Feuer.

October 18.

Good afternoon Ari -

Your loan closing package was delivered to E-Title Agency via e-mail this morning at 11:00am. A copy package may be provided to you from E-Title Agency. The contact number for E-Title Agency is: [Redacted].

Thank you! Have a great day!

Holly [Redacted]
Closing Department Supervisor
[Redacted]

October 18.

Holly,

Thanks for your message. It's good to hear that the documents were delivered.

I just got off the phone with E-Title, and they seem quite convinced that the lender is the appropriate source for a copy of the lending packet and HUD disclosures. They express confusion that the lender would have me ask them. They expressed tentative willingness to provide a copy of at least some of the documents, but only after some delay. They say it may be today, or perhaps not.

Since E-Title seems to believe that it's usual for the lender to provide copies of closing documents, and since you have such documents in your possession, I would expect you to be forthright about providing them.

Please send me a copy of the loan closing package as soon as possible.

Thank you,
Ari.

October 18.

Good afternoon Ari -

Hopefully you will understand, E-Title is not a closing company that we tend to use on a regular basis. The title companies that we normally use will prepare a copy package for our customers. I would be happy to send the closing documents to you first thing in the morning. When we send closing documents, we use a system called Client Portal, it is a secure e-mail website. I will get your e-mail address set up and will be able to send the closing documents to you right away in the morning.

Thank you and I apologize for the customer service provided by E-Title Agency.

Holly [Redacted]

October 18.

Holly,

Thank you. I look forward to receiving the documents.

Ari.

October 19.

Good afternoon Ari -

I have just sent a copy of the final approved HUD Settlement Statement from E Title Agency for your review. I have sent through Client Portal, the secure e-mail website. A copy package was also sent to you first thing this morning, just in case you have not seen it yet. The total amount that you will need to provide for closing is shown on the bottom of page 1 of the Settlement Statement, you will need to provide a certified check made out to E-Title agency in the amount of [Redacted]. If you have any questions regarding the figures on the Settlement Statement, please contact Sherry [Redacted] at [Redacted].

Thank you!

Holly [Redacted]

 

In the end, as you have read, I was able to buy the house, and have happily lived there ever since.

In November of 2011, as I was unpacking my boxes, the first mortgage statement arrived. It was marked “customer status: VIP.”