Bankers' Math -- Part Sept

The first blog in my Bankers' Math series was three years ago and dealt with some of the self-serving manipulations my bank went through when my wife and I refinanced our mortgage.  Since then I've documented several excesses of the financial industry that I've encountered first-hand, and you can find links to these blogs below if you haven't read them.  Caution -- those readers with high blood pressure are advised against exposure to this material.

In this installment of "what-are-the-folks-who brought-us-the-great-recession-up-to-now" we return to mortgage refinancing, an ordeal we have just undergone once more.  We chose to endure this again because we could get a new mortgage rate that is more than a percentage point less than our old rate. Most personal finance experts say a drop of this magnitude is worthwhile -- provided the length of time it takes to recoup the umpteen bank fees and charges is reasonable.

In January we contacted our bank (Bank of Hawaii) and started the process.  Because of my tendency toward obsessiveness when it comes to keeping financial and personal information, we quickly got all the required records together -- tax returns for the last two years, mutual fund and investment statements for all of 2011,  payment statements from our pension funds, birth certificates, life history, retinal scans, DNA samples, diplomas, fingerprints, Kirlian photographs, urine analyses, etc., etc.   We completed the application by the end of January.  After 2 1/2 months BOH finally deemed us worthy of their blessing and we "closed" -- the bank's term for an hour-long session in which you sign several thousand documents, all designed to give the bank every possible legal advantage over you.

Of the many irksome aspects of this process, one stands out.  It occurred when we received the official Loan Approval Notice which said:  "We are pleased to inform you that your application for a mortgage loan on the terms set forth is approved, provided the conditions and terms below outlined are satisfied prior to the expiration date of the loan approval and loan closing."  (In other words, keep jumping through hoops until we tell you to stop.)  Some of the conditions listed were simply not under our control, for example "Lender (my italics) will provide customer with an IRS 4506-T to be signed at closing."  Huh???

But one condition was truly rankling:  "Borrowers must provide proof of liquid assets required for closing."  (The money required for closing had been spelled out in the application and amounted to just a few thousand dollars.)  We puzzled over this because it seemed obvious to us that we had already documented all of our assets, including those that were liquid. But bankers apparently see the world differently than the rest of us....

In our view the documents we provided with the initial application established the following facts that would seem to be relevant to whether we would be able to show up at the closing with enough cash:

• Our financial records clearly indicated liquid assets five times greater than the value of the loan itself  and dozens of times greater than the estimated closing costs.
• We had been through this process twice before with BOH and both times we successfully paid the closing costs.
• For six+ years we'd faithfully made mortgage payments to BOH showing, one would think, that we have enough liquid assets to meet our financial obligations.
• The appraised value of our house is twice the value of the loan we were asking for, clearly indicating we were not in over our heads.
• We have no other debts of any kind -- no other obligations competing for our liquid assets.
• We both have credit scores over 800 -- only obtainable if financial obligations are fully met over a long period of time.

So what did we do?  We printed a screen shot of our Vanguard accounts showing the up-to-the-minute balances and wrote a letter suggesting that this "proved" we had enough money to cover the closing costs. This seemed to mollify the bank and we oozed closer to a closing date.

However, about a week from D-Day we got a message demanding the latest statement of some accounts Karen has with DWS, a mutual fund company.  We had furnished a summary with the initial (now accepted) application, but apparently someone decided that wasn't enough and now they wanted a recent detailed, transaction by transaction statement.  I quickly complied and just for good measure I also sent the latest monthly Vanguard Statement showing transactions for all the rest of our mutual funds, and I even threw in a copy of our 2011 Federal Tax Return that I had just filed.  Again, the bank bean-counters seemed mollified and we continued oozing.

Until four days later.  "Please furnish the most recent monthly statement for your......[wait for it]......Vanguard Accounts"  (!!!!!!)  Yes, the very same information I had given them four days earlier!

I drew their attention to the fact I had just given them this statement (with great restraint, I might add) and we moved forward.  I never received an apology, an explanation or even an acknowledgment that they might have made a mistake.  But it's clear they weren't really looking at the information we were providing to them.

It's over, and I'm very glad to have it behind us.  But I have to think that if this is how we were treated -- someone with excellent credit and a solid financial status -- then people with even slightly less fortunate circumstances must suffer tremendous insults during this process. 
____________________________________________
Other Blogs in the Bankers' Math Series:
Bankers' Math -- Part Six
Bankers' Math -- Part Cinq
Bankers' Math -- Part Quatre
Bankers' Math -- Part Trois
Bankers' Math -- Part Deux
Bankers' Math -- 29=31=$