Rant on Construction Lenders

Here's a heartwarming story about a bank trying to put it to a consumer (one of my customers and the largest builder of luxury homes in Somersett) building a $2M luxury home for his family!

First Horizon has decided to exit the construction lending business. They are leaving carnage in their wake. Contractual obligations are now becoming meaningless in today's brave new world. This is a material breach of contract. Even if a company discontinues business, especially in the banking world, prior commitments are still honored to avoid such potential legal action.

Here is a borrower, who qualified for a 1-Time Close construction loan, put over $200K of his own money into the project prior to the loan on a $2.2M property (value at time of OTC, current value unknown but surely less). Project is now complete and FH is not following through on their commitment. That simple. They tried to offer another program that would cost him more money, cost me as the pricing was above par. Not only trying to stick to the borrower, but the brokers, as well.

Initially, calls from the borrower to the modification department were not returned. When the borrower finally got through to someone (customer service, no where near the appropriate term), the borrower was told to contact his broker, as they could not help him. That as the first sign of trouble ahead. After repeated unanswered calls and emails to the construction rep at FH, I got him direct. He explain ‘our’ problem (now trying to share their failings with me. That’s rich!). They had 3 options: (1) take a horrible substitute program described above, (2) get a permanent loan somewhere else, or (3) see what he could do with senior management (another loose term). I informed him of a 4th: take the house back and face litigation and press.

That was 3 weeks ago. Still no resolution. Now they are trying to play the ‘the property won’t appraise now’ card. Again, trying to shirk their responsibility and commitment to the borrower.

I will continue to fight this on behalf of the borrower and in the essence of good will. I will also seek greater media attention, as this is unacceptable behavior for any business, let alone an organization that has the ability to financially cripple a consumer.

Hoping for a happy ending....