Loan officers (you and me) have tough deals under our belt. My toughest deal ever was for a high-ranking elected official who helped MAKE THE RULES we live by.
The Scenario:
My client used to be a high ranking elected government official. He served during the age of financial reform after the 2008 market meltdown and was involved in creating the laws we (lenders) all must abide by.
As many former government officials have done, he went into the business of lobbying after his term was up.
Problem #1. His lobbying clients were in the marijuana business, which is/was not a bankable business. They operated with cash and paid HIM in cash.
Problem #2. He used that cash as the down payment when he executed a lease/option purchase contract, and throughout the 4 years he was in that lease/option, he was making lump-sum additional down payments using cash. I was going back 4 years trying to document cash transactions for an FHA underwriter.
Problem #3. He used an attorney to draft his lease/option agreement. I’ve never seen such a vague, excruciatingly terrible contract in my entire 30 years of lending. The attorney kept sending me “payoff” statements and calculations with per diem figures as if we were refinancing a land contract, which didn’t match with the contract he’d crafted. Even better, this attorney’s default setting was “combative”. He was truly impossible to deal with.
After a month of work and documentation, I determined that the original contract could not work for our deal. I took it upon myself to rewrite the contract in a way that would work for all parties. We were FHA so, this simply became a purchase transaction with a reduced purchase price, 3.5% down and seller concessions instead of trying to apply credits from 4 years ago that could not be sourced.
Famous last words from my client: “Why is this so hard?”
In my mind, I’m screaming “IT’S YOU! YOU WERE IN CHARGE OF THE DOCUMENTATION RULES WE HAVE TO FOLLOW!” It’s funny now, but was infuriating at the time.
What does your toughest deal look like?
Why this might matter
There are times a deal just doesn’t work and you need to pass the baton. It happens to us all at some point. Most times, it’s a relief to get the deal off of your desk.
Work with me
Do you have a deal that you think might be approvable but doesn’t fit in the box at your bank or credit union? Reply to this email or call/text me at 616.298.2743 for a same-day answer.
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