How to handle HML, GC and conventional lender`s harassment ?

Question

I am looking for some help and idea to get out of the collaborative scam of HML, GC and Lender.

I bought a house from an agent, who is also a GC and owned the rehub work on this property. He arranged Hard money guy and then he latter introduced me to conventional lender. Re-hub is finally completed and appraise came little bit more than we expected.

Now all the hell on loose,

1. HML is putting some random fees and if I ask him, then his response is, if you will do this kind of nikkle and dime then no one will work you. and getting a response from him is just impossible, he sits on all email threads and no phone call at all.

2. GC gave the final bill with 33% over budget, but all the time he was working backwards meaning, he knew the target and he already broken that amount into what all things will be done and just after appraisal coming up 33% higher.

3. conventional lender - big mouth and unable to fulfill any promises.

Currently are in the process of loan closure and HML has already gave his numbers and recorded into CD.

I can clearly see that once appraisal came higher they are trying to milk all the possibilities.

Now I want to WRAP this and looking forward to get some help from this incredible group.

here is what I am thinking.

1. Complete the conventional loan process asap, but at this stage can HML send another charge as fee ?

2. What all things GC can do, given that he knew amount from day 1 and we never approved any extra budget or not even he spoke about it. Basically how to handle him.

Please tag other people who can help me on this.

Thanks and Happy holidays !

Ann Bellamy · Answer

Well, there are two principles here: What is right, and what is practical for you to do. You certainly can fight the HML if he is charging fees that you didn't agree to in the contract, but as a practical matter, it might cost you more than if you paid them. For instance, if you hold up the refinance while you refuse to pay the fees, the hard money interest will continue to accrue, which may end up costing more than the fees. I'm not saying the HML is right, far from it. But what is right and what is reality can be different. The HML will issue a payoff amount and send it to the closing title company when you refi with your conventional lender. Make sure you get a copy of that before closing and ask for a breakdown of fees. He shouldn't be charging any more than were specified in the loan docs when you closed on the purchase using the hard money. But he can refuse to discharge without receiving what he wants unless you can prove he is wrong. As for the contractor, didn't you have a contract for a set amount? Did you approve change orders? Or was it all loose and verbal? Again, the practical may outweight the just. What he can do is file a mechanic's lien against the property if you don't pay. The conventional lender will require that it is paid at their closing, which will reduce your proceeds. If don't have proper documentation to support your not owing what he says, you may spend more in legal fees to fight the lien than it costs you to pay it. Not saying it is right, but I'd go back to your contract and sit down with the contractor and negotiate. If you don't have a contract, you may not have documentation to fight it.The take away from all this is to take control of your own deal. It sounds as if you were allowing the realtor to handle all the arrangements for you, and didn't take control and do your own checking and negotiating. Maybe that's not true, but that's what I get from your post. It's also very common for an attorney to tell you " X contractor or X lender can't do that, you have the contract or the law on your side." But the reality is that to fight it, the cost in legal fees and time (interest accrued) can exceed the savings. So negotiating, even if it is difficult to accept, is often the cheaper option.Then go out and find your own contractors, hard money lenders and different real estate agents. Get referrals from people who have done deals with them. You will eventually find a network of honest people to do business with. Lenders who don't add on fees to the back end, and contractors who don't pile on the change orders. And hopefully there will be others who might have some more practical advise here for pushing back against the HML and contractor. I realize that my advice is to negotiate, which may not be what you want to hear.

Matthew Paul · Answer

Read your contracts with each party , that will tell you where you stand

Mike G. · Answer

Anyone else has any suggestions ?

Mike G. · Answer

Thanks @Ann Bellamy for practical suggestions. actually this is what I was looking far, a practical advise to handle this situation and yes you are correct actually my agent only lined up everyone else for me and now he and everyone else is trying to encash it

Mike G. · Answer

Thanks John ! actually he is putting random fee. say in the closing cost he rounded things up to higher value and when asked he said - remaining is processing fee and there is no break down details of those fee and there was no such thing mentioned in the contract.I am okay with that but can he deliberately push this conventional loan closing for couple months more by not submitting documents needed at the time of closing ?

John Thedford · Answer

The lender cannot charge anymore than what is allowed in the contract. Can you explain?

Mike G. · Answer

@Brandon Turner @Jay hinrichs @Jill DeWit