ComplaintsforSouthbridge Credit Union

• Initial Complaint

  09/14/2023

  Complaint Type:

  Order Issues

  Status:

  Answered

  More info

  Discussions started with Thomasina C in Mar 23' for a $1M construction loan where she outlined the general parameters of how SCU handles such loan stating any monies brought by myself could be used as I wished on the build prior to the loan kicking in. The loan value ($715k) would then be bound by four payment milestones. She supplied the milestone & with the above understanding, I felt comfortable moving forward with the application. July 23' SCU (Tiesha A) supplied the closing statement that showed a required value to close of ~$270k. I was flabbergasted. Tiesha stated this was provided during the initial application process, I checked, it was, although admitted I thought it was an error due to the size so had dismissed it. SCU then explained the initial overview of the loan was improperly communicated by Thomasina. They in fact require all capital needed for the build to be under their control. I was not comfortable with this as now the milestones were a major issue. Multiple conversations occurred between this time & closing where SCU repeatedly commented that this would not be an issue. They would work with me to ensure a successful build & that I should go ahead & close. We closed end of July 23'.I then contacted Tiesha on Aug 23rd to discuss options to gain access to funds outside of the milestones. Met in person the following day, explained my concerns and provided options how to move forward. Tiesha said she could not commit & would need to review with her VP*. There was no communication from SCU, a follow up email was sent Sep 12th, asking for an update & provided receipts of over $220k already spent with no payments from the bank. She responded on the 13th that she would need to discuss with SCU's ** and later that day sent an email stating the VP of Loan ************************ could offer no help and the payment milestones were cited as being the only avenue for release of payment. This is NOT "working with me" for a solution.

  Business response

  10/04/2023

  We feel this complaint was filed before upper management could investigate the matter. Attached is the call log and voicemail from when the VP was contacted and spoke with **************, as well as a brief recap of the phone conversation.

  In the phone conversation on 9/14/2023 ************** stated that he was comfortable with how SCU held their construction disbursement terms both during the application process and at closing. He understood that we laid out the 4 disbursement schedule breakdowns but were willing to move items within the schedule should things be completed in a different order. He felt that he had more than enough funds and did not have any issues with the disbursement schedule, or us holding his funds. He decided to build a shop (40x60) first, which was not part of the cost to construct, and the foundation was listed as an optional upgrade expense not included. The expenses of utility poles being needed was not included in the cost to construct as well, and the builder had stated that this charge would come from the utility company and is not included.  So, with these expenses the borrower was feeling tight on funds and wanted us to release the funds we had held for the house build. I explained to him that we release the funds after inspection to ensure that the funds are used on the home and not on other projects. If the contractor was looking for funds upfront, I would be happy to talk with him to explain the disbursement requirements, or if work had started on the home, we could send the inspector out to see what had been completed and release funds for the things done.  He then stated that only the footings had been poured on the foundation and the inspection would not give him enough funds released.

  He then stated that he had talked to a few other financial institutions after closing with us and found that they do not hold funds but do require that a % of work be done before the loan disbursement schedule kicks in. So, he asked if we could release his funds and require that the construction loan not be started until he had the first two disbursements done. I told him I would inquire into this with an attorney to see if it would cause issue to the closing documents he signed.
  
  An email to the Attorney was sent after the phone conversation on 9/14/202. The attorney responded by phone on 9/19/2023 and advised that we do not make changes to what had been signed at the closing, as the borrower should not have signed the closing documents if they did not agree to the terms. This was further discussed with upper management and then relayed to ************* on 9/20/2023. On the same day he responded that he wanted SCU to reimburse fees as he would now be going to another financial institution. On 9/21/2023, SCU agreed to reimburse inspection fees and pay the discharge. On this day SCU closed out the loan and account per ************** request, and sent the bank check to his address and discharged the lien on the property.
  
  Email communications between SCU and ************** are also included with this response. You will see that ************** was originally to close on June of 2023. At this point he stated he did not have enough liquid funds to close, so an extension was filed to coincide with the sale of their home. He closed his loan on 7/28/2023, we did offer an additional extension if he wanted it. There was no means pressuring to close. If he did not like SCUs terms on the construction disbursement, he was not forced to complete his loan closing with SCU.  I feel that in learning how other financial institutions do their construction loans, he no longer wanted to follow SCU terms, and has since tried to claim we misguided him. All documents he has signed including the disbursement schedule have not changed since the start of the application. We were more than willing to work with him, we just required an inspection before disbursing any funds, which he did not want to have done.
  
  If you need any further information, please let us know. 

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