CitiMortgage and the Butterfly Effect
Read Time:5 Minute, 48 Second
They say that the ripple effect of one small, graceful flap of a butterfly’s wings has a subtle impact that magnifies, holding broad implications for those half a world away.
CitiMortgage may be more “corporate behemoth” than “gentle God’s creature,” but the butterfly effect still holds. This is the story of how one delay in paperwork can impact people, families, and businesses. I hope that Citi gets the message that paper files have a very real impact.
The Background
Perhaps against my better judgment, I recently (two months ago-admittedly infancy on a short sale timeline) wrote an offer on a house with two lien holders. Foolish? Maybe. But I was sucked in before realizing that it was a short sale. Sure, the home needs plenty of work. But who could resist the amazing Amish kitchen cabinetry? Sign me up.
My concerns about getting entangled in a short sale were ameliorated by a handful of promising details. The home had been on the market for several months; comparable homes were selling at low prices. The primary lien holder had recently ordered an appraisal, potentially cutting a month off the timeline. I was a “clean” borrower—good down payment, standard mortgage. The seller had extreme hardship, complete with a bankruptcy and a single father caring for, if I recall correctly, five children, at least one of whom is disabled. This was a prime setup for a smooth sale, or so I thought.
My offer was agreed upon by the seller and approved, a bit to my surprise, within a month by Bank of America. Let’s just say that BoA and I haven’t always been on the best of terms. Their willingness to work with a family in need, and respond fairly promptly to the paperwork, was a small movement toward their redemption in my grateful eyes.
BoA stated that for the deal to go through, we would need to close no later than November 16th. I was advised by the realtor to move quickly on my home loan. It was not unusual for 2nd lien holders to hold out for the maximum possible payout, but since they get nothing if there is a foreclosure, they usually agree to the sale closer to the closing date, and if my ducks didn’t fall in a row, the entire deal could be jeopardized.
The “CitiMortgage Limbo”
Here how the butterfly effect kicks in. I must give one month’s notice to leave my apartment, and can’t afford to carry both the apartment and a house for any significant period of time, so I give my notice—allowing a week buffer after the anticipated closing date, in case there are unexpected delays. In order to secure a home loan, I must arrange for homeowner’s insurance, and so I pay $567 in exchange for insurance (and a housewarming gift of a spatula blazoned with a State Farm logo). As the anticipated closing date approaches, I must be ready to move, so I schedule a mover. Less than a week before closing, I start packing my belongings, “just in case.”
I am scheduled to present at a conference out of state the morning after anticipated closing, so now my travel plans are on hold. Potential collaborators contact me to try to arrange meetings at the conference that I might or might not be able to attend, and I am unable to commit. The person I will be staying with wants to know when to expect me, and I don’t know what to say. I am unsure of whether I will still be in town, and thus whether or not to cancel my class of 50+ students, now placing the schedule of more than 50 others in limbo—including two whom have parents hospitalized, and could surely use the cancellation as impetus for an early trip home for the weekend. Petty, but emblematic of the pervasive impact of this situation, I know that I may be without a refrigerator for a few days once I move, so I am unsure of whether to buy groceries.
All of these details are minor when one contrasts to the family of 6 that must be prepared to vacate their home if closing goes through. Fortunately, in this case it appears they have access to a house where they can stay, but their new home required repairs before they could move in. From what I’ve heard, they kicked into high gear with repairs when BoA approved the offer. They started to move out two weeks before closing. My bank ordered an appraisal, and in the pictures, the stove and refrigerator are now gone; beds, clothing, removed from the home. Pictures and children’s artwork have been stripped from the walls where the family has built fourteen years of memories.
Today, one day before Bank of America’s deadline, CitiMortgage has yet to respond. CitiMortgage has had this paperwork for five weeks. They are holding out, from my understanding, over a reduction of $1,300 in what BoA has offered them (relative to a prior arrangement). That $1,300 is substantially less than the hit that BoA had to take on this home. It is about equivalent to the amount I will need to pay in rent for every month that CitiMortgage delays, because I am paying a premium for being on a month-to-month lease. It doesn’t account for the additional work now required of the title company, the realtors, my bank, and BoA as we work on extensions and rescheduling, with no idea as to when, or if, things will move forward.
Additional Human Cost
Most importantly, that $1,300 is incomparable to the stress and uncertainty of the family of six, displaced but in limbo, in an incredibly vulnerable position should I decide to walk from this deal because of CitiMortgage’s delays, or had BoA refused to extend their approval, or should CitiMortage decline to approve this offer. If this were to happen, the family will have moved just before Thanksgiving, forfeiting a final holiday season in their longtime home for nothing–still facing foreclosure and the financial ruin that results, now carrying the expenses of two homes until the financial anvil drops. Had they not had access to a place to stay, they would now be stuck in a lease, with mortgage bills continuing to come in monthly, or would have risked becoming homeless had the deal gone through without their having arranged for a home.
As CitiMortage stares at their accumulating files of homeowners in distress, I hope at some point they have an awakening of conscience, a realization of the real-world impact of their delays. After all, they’re one hell of a butterfly.
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G.L. it is the secret goal in the life of every big bank to make sure they screw with the life of people at every possible turn. Somewhere in the ether sits an evil neolithic leprechaun who decides which bank is going to screw with the people. He is always at his worse in cold weather, close to holidays, or when someone takes his Lucky Charms. 🙂
Lol! Maybe if I leave a box of Lucky Charms at the door of a CitiBank, as an offering….
Based upon my personal experience, this sounds more like BoA. I have no experience with CitiMortgage so they could be just as bad.
James, this is my second blast at big banks on MMA, the first having been BoA–you couldn’t pay me enough to bank with any of the big banks again after that. That said, I have to give BoA credit on this one, they responded relatively quickly and were also quick to extend their acceptance of my offer as we await word from Citi. This got me to start researching consumer complaints, and there are some truly awful stories out there of what people have been put through due to paperwork mixups and delays. I understand Citi is under no obligation to approve the deal, but without a response at all, it leaves everyone hanging in the balance. Like I said, if circumstances were slightly different, this same delay would have left the seller to gamble between getting buried under two homes or risking homelessness. Something isn’t right with that.
Wen I lived in Arizona, BoA was buying local banks. It seemed their technique was to buy a bank, then make all the employees part-time except for the branch manager. Then they didn’t have to provide benefits as long as they worked no more than 36 hours a week.
Not only did they defecate on the employees, the customers were treated no better. Services would decline and fees would increase. I would change banks, they would buy the new bank and I would change again. Finally, I told them, “if you want my account so badly, you don’t have to buy a bank, just treat me better.”