Preferred Empire / Mary Testa / Marcia Kaufman Sloppy Work cost me $10,000 additional at closing Melville New York

My wife and I recently purchased our first home and were shocked at the number of errors this company made. We had chosen to use Preferred Empire, because my mother is a licensed associate broker with Prudential Douglas Elliman Realty (which owns Preferred Empire). Our intent was to avoid any last-minute surprises. Ultimately, nothing could have been further from the truth.

We met with Mary Testa, a Preferred Empire representative for approximately two hours on July 25, 2004 to determine what types of mortgages were available to us, and how much house we could afford. Based on this meeting, Mary told us we would easily qualify for a low-interest loan for 80 percent of the purchase price, and she advised us to consider a piggyback loan for 15 percent, requiring a down-payment of 5 percent of the purchase cost.

Mary also recommended that we file an application for the mortgage, to truly know what the specifics of our mortgage would be, and we made an appointment to come back later that week.

On this pre-approval, my wife and I went ahead and had the engineer's report performed on July 28. The following evening, July 29, we met with Mary to fill out the application paperwork. Mary inquired as to my employment status, and when I told her I'd been at my current position for less than a year, and had been unemployed and a student prior to that she told us that we would probably not get the mortgage she'd told us we would get. Ultimately, we did pursue the mortgage application, solely on my wife's salary.

Because we did not want to enter a contract if we were not receiving the mortgage we knew we needed, we decided to put the application in, before heading to a pre-committed convention. We told the sellers we would be signing contracts when we returned (since we'd have an answer on the mortgage at that time). Mary was also scheduled to be on vacation, but told us she would be dropping off the paperwork at her office to be processed and would inform the processors that the application needed to be rushed. She assured us that when we returned, we'd have an answer.

My wife delivered the papers to the Melville office on August 2. Mary called us to state that she needed additional papers on August 5, while we were away, and my wife hand-delivered the papers to the Melville office on August 9. My wife called on August 11, and was told that no one had told the processor that this was a rush job.'

The papers had sat in her inbox for nearly a week obviously, nothing had been processed. We did receive a full mortgage approval on August 16, but, by then, it was too late. The homeowners had elected to seek another buyer, the deal fell through, and we lost our engineer inspection fee.

The purchase price of this house was $349,000, which meant a downpayment of approximately $17,450 with a $279,200 primary mortgage and a $52,350 piggyback loan (these totals are important).

On November 4, we found another house (the house we did, ultimately, purchase). When it came time to apply for a mortgage, we continued to use Preferred Empire, since although there had been some errors, there had been nothing egregious. Rather, the errors were more of a nuisance. We felt there was nothing underhanded about the company.

We asked Mary if we could just update the previous application, but we were told that was impossible; that all paperwork from the first application was shredded when the deal fell through, and, therefore, all the information needed to be filled out again. Everything was completed and all relevant paperwork (W2s, tax returns, paystubs, etc.) was photocopied and submitted again.

A few days later, we received a phone call from Mary Testa, letting us know that everything had been approved. She relayed the correct amounts to my wife (purchase price: $360,000; primary mortgage: $288,000; Piggyback loan: $54,000; Cash required: $18,000).

A few days later, we received the Good Faith Estimate, which reflected the correct amounts. These two estimates became our bible, as we planned for the closing day, so we would know approximately how much we'd need to have on hand' that day.

Following the appraisal on December 2, 2004, my wife again spoke with Mary Testa, who again relayed the correct totals to my wife ($360,000, $288,000, $54,000, $18,000). On January 11, my wife spoke with Mary, once again, to lock in the mortgage. Again, the information relayed to my wife was for the correct totals. We locked in on January 11th at the rate of 5.875%. Our closing was scheduled for January 18th.

Prior to our closing, I had reviewed the good faith estimates, and deducted all the fees we had already paid, to determine the amount of cash we would need for our closing. The total was approximately $16,000. Our attorney, Scott Gordon, called my wife the morning of the closing, and told her the total was approximately $26,000. I called him back and we went over the figures. I noticed that the mortgage amount he had listed was incorrect he quoted a $279,200 mortgage, and I knew the mortgage should be $288,000.

Scott and I then called Preferred Empire on a conference call and spoke to Denise Hartman, a processor, who told us that, yes, we had been approved for $288,000, but for some reason only $279,200 was allocated. Although we were scheduled to close that afternoon, Denise told us there was no way we could do that it would take a few days to rectify this situation. My wife and mother were also calling various parties, trying to determine how this could be corrected.

Additionally, we were cognizant that there would be some legal liability if we did not close that day (since the sellers, who were moving off Long Island, had a closing on their new purchase scheduled the following day) and indirect overtures to that effect had been cast already.

No one at Preferred Empire offered any suggestions (or even remorse) about the errors, essentially more focused on shifting blame than dealing with the problem. We were told, explicitly, that day, that Corinne Slaughter, a Preferred Empire employee had entered the information incorrectly. Ultimately, my mother/realtor spoke to Pat Wyler at Preferred Empire, who assured us that something would be worked out after the closing. The closing began on January 18 and concluded on January 19.

During the closing, it was stated, explicitly, by both attorneys that the entire debacle had been caused by Mary Testa and Preferred Empire. Both attorneys, the bank attorney, the title broker, two realtors and four homeowners all agreed that the matter should never have happened and all agreed as to whom was at fault.

The last page to be signed during the closing the Housing and Urban Development page, like many other pages, had the wrong amounts listed both for the mortgage amount ($279,200) and for the purchase price ($349,000 again, the amount of the first house we had entertained purchasing which, apparently, came from the paperwork that Preferred Empire shredded, after we elected to not purchase the house).

The page was corrected onsite, but a problem emerged. The bank would not give approval to the signed paperwork without speaking to the mortgage company. As this was the end of the day, most businesses were closed. The day ended, concluding the closing, and the sellers were instructed to return the following morning (the same day they had another closing scheduled, eight hours away).

The following morning, my wife spoke to the bank attorney at 9:00am, who was still waiting for the fax from the bank. I received a phonecall from the bank at 9:45am, that my wife needed to send ALL paperwork over again to Preferred Empire, who apparently had now lost our entire file. Karen Diamond asked my wife to resubmit, via fax, all paystubs, tax returns, gift affidavits everything that had been sent previously for our application.

My wife explained that she was at work and wouldn't be able to fax this information until the next day but that the deal still needed to close because the sellers were now at risk of losing the house they had purchased. The only mistake these sellers had made was getting involved with us; and our only mistake, apparently, was using Preferred Empire as our mortgage company.

On a verbal approval, Karen Diamond was able to facilitate the deal. She then sent us an email imploring us to submit the information as quickly' as possible, as her company's reputation and her own reputation were on the line.

On January 20, my wife emailed Karen and explained that many of the papers had already been packed, and we would need a day or two to unpack boxes to get to them. We then spent the next two days opening every box we had previously packed (since we were moving) to locate the paperwork that Preferred Empire, for some reason, was incapable of retaining.

That afternoon, my wife spoke to Pat Wyler, who said Preferred Empire was looking for a program that would help us. She agreed that Mary Testa was at fault, but stopped short of offering any suggestions. Our own suggestions: To give us a lower rate on the first mortgage (in fact, this very day, the 30 year rate on Preferred Empire's site is listed as 5.5%); or to issue us Points on the mortgage and then, not charge us for them, were all rejected outright.

Pat's first proposal was to take the difference we had been shorted (approximately $8,500) and add that to the second mortgage, which would roll into a NEW second mortgage, at a higher rate. Specifically, instead of the $288,000 at 5.875% and $54,000 ARM (currently 6.0%) I would have been paying (approx: $1974 monthly), her proposal would result in $279,000 at 5.875% and $62,500 ARM (currently 6.5%) which would have been $1991 monthly, and growing.

We explained that any proposal that resulted in us paying MORE money was patently unacceptable. My wife asked if Preferred Empire could simply add the missing balance ($8,500) to the first mortgage, and she was told that would require reclosing, and Preferred Empire was not willing to do that. Pat became curt and said she was trying her best. My wife said things didn't sound promising and Pat did not disagree.

In early February, my wife called Pat again, and Pat said she was investigating other options, and to call back in a week. My wife tried to reach her three more times and was sent to voicemail each time. In her last message, she told Pat to call me directly.

On February 10, Pat called me, and said they had found a second mortgage at the same rate (6%), and they were willing to allocate the $62,500 to that loan. We had already received some paperwork on this new loan at our home, prior to Pat's phone call to me. I turned this offer down, and explained that we would not be signing the paperwork.

I explained to Pat that the additional $8,500 should be at 5.875% fixed, not 6% and climbing (now, actually, 6.5%). Pat explained she had done all she could and that everyone needed to share in the blame. I agreed, and asked how Preferred Empire was sharing in the blame, when the only proposals they had presented to me, ultimately, resulted in me spending more money than I had initially intended. Her answer was that they were not charging any closing costs on the second loan (but of course, as a home equity line-of-credit, there are no closing costs to be incurred).

She again reiterated that she had done all she could for us. I explained that I would have no choice but to look at other options. At that point, Pat said she would resume her efforts, in hopes of finding another solution. I did not heard back from her.

Despite our rejection, on March 2, my wife received a phone call from National City Bank to set up a closing date for our second mortgage (the one we had rejected). My wife explained that we had rejected the proposal from Preferred Empire. The bank explained that everything had been processed already (despite not having received even one single signed document from my wife and I). My wife instructed the person to speak to Pat, at Preferred Empire.

On March 30, we again received a phone call from National City Bank, asking when we would be able to set up the closing date. I called Pat Wyler, who explained that she was unaware that they had not been told we did not want the mortgage (apparently, despite the fact that I had told Pat, personally, on the phone, more than a month earlier).

She explained that even if she wanted to she would not be able to rectify this situation, because the interest rates had been rising recently. Once again, she stressed the importance of all of us sharing in the blame (which, of course, is a sheer fallacy, considering that the only party that had to alter anything has been my wife and me).

To be honest, the mere fact that Preferred Empire made an $8,000 commission on this deal is absolutely repulsive. It is incredulous that anyone could, in good conscience, receive a paycheck for the shoddy work performed on this purchase. Personally, the most equitable decision that could be made, at this late date, would be one where the commission was returned to my wife and I. Even though that amount did not equal the amount that my wife and I had to present on the closing date, it would have been a solution we would be amenable to.

I was finally able to speak with Marcia Kaufman, president of Preferred Empire, who rushed me off the phone and assured me she would look into the matter. However, in the interim, the interest rate on my second mortgage was rising considerably, so we refinanced that loan. Good thing I didn't wait to here back from Ms. Kaufman, as that conversation was over a year ago, and I've not heard from her since.

Chris
Ronkonkoma, New York
U.S.A.