UPDATED AUGUST 19, 2010 – See Below original article.
If you’ve been following this blog, you know that we’re really excited about our new facility construction project. SunTrust Bank and the SBA have helped us finance this venture. We’ve been banking with SunTrust for a number of years and if you saw the pictures of our Groundbreaking, you can see that our business banker joined us for the event. She was very instrumental in getting the loan moved through the process.
Over the past two weeks we’ve been informed that we owe an additional $XX,000 towards the project due to an omission during the loan closing. At first that number was double what we’re told now, but we’re utterly confused at this point how we owe this additional money.
Here’s the facts:
At Closing we were walked through the process by a lawyer chosen by the bank.
At Closing we were told to pay a specific amount to close the loan.
According to the Loan Closing Statement, this amount included $XX,000 of closing costs.
At Closing nobody disclosed verbally, or pointed us to any verbage in the documents stating that we would owe an additional $XX,000 when it came time for our first Draw against the loan. (When you do a construction loan, the bank does not just give you the money. They hold it and you make a draw periodically to pay contractors as they complete the work.)
Our business banker was present at the closing as was the SBA representative. Neither made any sort of a disclosure about additional monies being required in the future.
Two weeks ago we were informed that we now owe an additional $XX,000 towards the project. As I said earlier, at first the amount was double what we’re being told now.
As of today, my banker has told me we are going to have to pay this additional money. Even though it was not disclosed properly at the time of closing.
At first she told me it was for additional closing fees like Appraisal, Environment Review and other fees. I told her those are shown as part of the Closing Costs we paid at the time of closing. Then I was told it’s actually additional fees that are required for the building project. So I’m not exactly sure what this additional $XX,000 is going to pay for, I’ve been told multiple things.
It’s possible this information is buried somewhere in the pages we signed, but if any of you have ever had a house closing, you know you can’t really read all the paperwork because you’ll be there for days. The lawyer hands you a sheet, gives you the overview of what you are signing, and you sign.
I have informed our banker that of right now, will be pulling our accounts from the bank if not tomorrow, then by next week.
See the way I do business is that if I make a mistake, and I neglected to tell the client something, that’s my fault. If I make an error in a budget, that’s my fault and I correct it. I eat the costs, I make more copies, I fix the graphic, overnight new masters….. whatever the problem was, if it was created by me or my company, it’s corrected for the client. I do NOT go back to the client after a mistake has been made and ask for additional payment. Certainly not a 5 figure payment. What client in their right mind would return for business after a request like that?
For me it’s ethics. Your word is your word. You stand by your customer and take care of them so they will want to come back again and recommend you to others. The bank failed us and as a result, they broke their word. Time to move on.
AUGUST 19 UPDATE
Well we had a phone call with the Lawyer who handled the closing and my banker and now it’s being deemed a “misunderstanding.” The “misunderstanding” is that SunTrust never gave us our paperwork in advance so we could review the closing documents and the Lawyer made a mistake at the closing. Forgive me, she made a “misunderstanding” at the closing. So the lawyer and the bank are “graciously” giving us back our closing fees to help “make this right.” That will be a 5 figure amount, but won’t cover the whole thing. We still have to give up four figures in closing costs. The lawyer assured me this is a great “good faith gesture and I’ve never heard of a bank giving up its closing fees before.” Statements like that just ring hollow.
So over the course of three weeks we’ve been given multiple explanations as to the reasons why and where the money is supposed to go. None of the explanations make any sense, nor do they match. Now today we got the first draw request sort of kind of squared away and not surprisingly, we’re now left with a shortfall for the entire loan. I.E. anything above that amount we have to pay out of pocket. I wish I could share some of this paperwork online because the math and all the numbers change on an almost daily basis with SunTrust. And by now we’re so confused with everything going on, nothing at all even remotely matches the paperwork we signed.
We’ve purchased three homes personally, have had quite a few business loans and lines of credit and have never, EVER seen this level of failure from a bank. As I said previously, what client in their right mind would return for business after being treated like this? Not this one.
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