Wolfram Schlict, Loan Broker, ripoff, liar Valley Village California

This is an attempt to describe to the my best ability what transpired between me and my loan broker.

On August 29, 2003, I signed a purchase and sale agreement with Enterprise Realtors to purchase an investment property in Cordova, TN. I was able to obtain financing with First Guaranty Mortgage and the deal was schedule to close in mid October 2003. In early October, I notified Enterprise Realtors that I no longer could purchase the property due to an emergency that occurred in my family. I also notified First Guaranty Mortgage of the same news. Enterprise noted to me that the purchase and sale agreement that I signed was legally binding and that it contained a default clause that allowed the builder they were representing to sue me if they chose to. After several attempts to rectify the situation, including allowing them to keep my $1000 deposit, they did let me out of the contract.

On December 3, 2003, I spoke with my friend, Patrick Yu, about obtaining a loan to purchase an investment property in Cordova, TN. He mentioned to me that he isn't license to do loans for property outside of California but that he could find someone who could. I gave him a copy of the purchase and sale agreement I signed and was told he'll get back to me.

Around December 8, 2003, Wolfram contacted me and indicated that he was referred to me by Patrick and that he can help me obtain a loan to purchase the property only if Enterprise Realtors would agree to change some specifics in the contract. On December 10, 2003, he e-mailed me and indicated that Enterprise had agreed to change some specifics in the contract and that the new closing date would now be December 31, 2003. The terms were: 5% down payment, 4.75% adjustable rate, 1 to 1.5 points, 3 year fixed, and closing date of December 31, 2003 or they will take $50 per day from my deposit until January 14, 2004, in which time they will take all my deposit. I agreed and authorized him to go ahead with the deal.

Around December 14, 2003, I contacted Wolfram and indicated that I would like to change the terms of the deal. I wanted to change from an adjustable rate to 30 year fixed rate because I didn't want to refinance in a few years. He indicated to me that that entailed a higher interest rate, to about 6%, and he needed an additional week to close, about January 7, 2004. He said that would mean I would have to pay $50 per day from January 1, 2004 to January 7, 2004 for a total of $350 in late fees. I said that was ok and that I would pay the late fee of $350.

Around January 5-7 I received no indication on how the loan was going; no phone, no e-mail nothing. Then, between January 8-20, Wolfram and I had several exchanges. Wolfram changed the term several times, noting that he was having difficulties qualifying me for a loan. I didn't believe him. I had a perfect credit record and a 800 FICO score, any loan institution would have qualified me. I had no idea why he had so much difficulty or why the terms were changing so often. I told Patrick about this and he mentioned that I should not have these problems. I even had Patrick step in for me several times to help him out. Then I find out from Patrick that Wolfram had only been a loan broker for less than one year.

Whatever the term was going to be, in each of the exchange that I had with Wolfram, I specifically indicated that I wanted a 30 year fixed rate, not an adjustable, because I wanted to take advantage of the low rates for 30 years and I didn't want to have to refinance in a few years.

On January 20, 2004, Wolfram e-mailed me and again changing the terms. I contacted him directly and he said this was the best he could do: 5% down payment, 6% interest rate, 1.5 point total (he said this was total, not just to buydown the rate), and 30 year fixed. He then proceeds to tell me that I shouldn't even consider buying the property since this loan wasn't very good. He said several times that I should back out of the deal and that I should get the deposit back from Enterprise Realtors since no where in the contract states that I can't back out. I was furious. Enterprise Realtors was charging me $50 a day and holding my $1000 deposit. I showed him where the default clause was in the contract, which states they can bring a lawsuit against me for damages in the event that I backed out. He had no idea. I then demanded to know when he can close this deal. He said by next Tuesday, January 27. I demanded he close with the term that he offered me on his e-mail, ASAP. He agreed.

Another 2 weeks went by and I finally receive the final paper work from the escrow company on Saturday, February 7. The deal was totally opposite of what he promised me: 10% down payment, 6.125% adjustable interest rate, late fee of $2050.00 for not closing by December 31, and a $1700 for a buy down fee (which I never authorized) on top of the $1100 fee for Wolfram's service! Total cash required upfront: $17,800.00! as oppose to around $$8000.00 I was expecting! The paper work also noted that if the escrow office did not receive this back by Tuesday, February 10, they will continue to charge $50 per day to the sales price until the deal is closed. I contacted Wolfram with no success, so I left him several messages to return my call. To get this over with, I signed the papers. I am a first time home buyer and did not know the full ramification of signing a deal I didn't want. I find out later that I have no chance in small claims court because I agreed to the terms.

I left Wolfram several messages with no response. Finally, I was able to reach him on February 28, 2004. I express my displeasure with the deal to him and demanded to know why I was lied to. We went back and forth, but he never gave me a direct explanation. He told me that if I didn't like the deal, just refinance or sell the house. I just couldn't believe how this person was treating me. He was dishonest and he took advantage of the trust I placed on him. He got paid for a job that he didn't do.

My original intent was to give myself a $10,000 cushion in the event that I encounter some unexpected emergencies with the property in the future. A 5% down payment with 30 fixed loan would have given me that. Instead, all the savings that I had is basically gone. I had about $20,000 before this and now I am left with less that $3000 in my savings, plus an uncertain future of fluctuating interest rates. I contacted the lender to see if I can change the term from adjustable to 30 year fixed and they tell me that it will cost me $1400, plus 2 points, plus closing costs, plus two years of prepayment penalty to do this. Total cost: at least $7000.

Eric
Gardena, California
U.S.A.