Part six: House of mirrors or house of cards?A continuation of the How's the house coming? saga...
Initially I was full of confidence in our ability to finance a new house. I thought we were fairly well insured, and we qualified for both a Road Home grant and an SBA Disaster Assistance loan at a favorable interest rate. But now all the last-minute shenanigans and regulatory intrusions were threatening to bring the whole deal down like a house of cards.
With further prodding, I discovered that there might be other ways to increase our loan amount. Only part of the SBA loan eligibility was based on the value of my flood-damaged house. I discovered that we had not maxed-out the allowable loan for personal property, another component of the SBA loan.
When my Darling Wife and I had first compiled a list of personal property lost in the flood, we had only made a list that would get us to the maximum coverage on the personal property portion our flood insurance. SBA was willing to loan us money for the uninsured loss in personal property up to their limit, which they said only required that we send them an itemized list. We did this and finally were successful in increasing the loan amount to a figure that would make the purchase deal work.
Net result: increase in our SBA Disaster Assistance loan of about 25%.
And since we still had not been able to get to a successful closing with Road Home, they had still not sent us any of the grant we are supposed to receive. Not to worry, SBA had told me many months ago, because SBA will simply loan us what we need until Road Home comes through. We were still barred from receiving anything that might trespass into "duplication of benefits," so when Road Home finally sent a check we would simply turn it over to SBA and pay down the loan. That would certainly be helpful.
Somewhere along the way, perhaps as a result of their multiple failed attempts to close on our grant, Road Home reported to SBA that they had in fact given us money. SBA responded by dutifully deducting that same amount from our Disaster Assistance loan as they are required to do to avoid the "duplication of benefits" problem. Need I say that calls to Road Home to correct this error were a colossal waste of time?
Net result: No money from Road Home and a decrease in SBA Disaster Assistance loan left us thousands of dollars short of completing the purchase of the new house.
That's when I came up with a brilliant plan--if I do say so myself. I decided to borrow the money from a local bank until Road Home finally got their act together. Yes, it would cost us money, but it would free us from the quagmire of the state grant program. It would allow us to proceed with the purchase now and deal with the bureaucracy later.
I applied online at Whitney Bank, answered some additional questions on the phone and soon we were approved. I called this our "gap loan" and advised SBA that there would be a second lien on the new house. We would pay it off as soon as we received the grant money so it was only a short-term burden.
Once again, SBA initially told me, "Not a problem." But of course it turned out to be a problem--more than one. One day our case worker called my Darling Wife to inquire on some minor detail and she remarked that we were looking forward to receiving the Road Home grant. The case worker immediately told her that we were required to turn over to SBA any money we get from Road Home. She protested and explained that we were going to use the Road Home money to pay off the gap loan, but the case worker was not deterred; he advised her to read the contract we had signed.
My Darling Wife was on the verge of tears when she called me at work that day. After getting ahold of my case worker at SBA, I explained once again, in excruciating detail, what we were doing and why we were doing it. We were not going to turn over any Road Home money to SBA unless it exceeded the amount reported to SBA already, the amount already subtracted from our loan eligibility. I think he finally got it, but I knew for certain this problem would keep cropping up as we moved forward in the process.
And then of course, since the bank will also be putting a lien on the new house, my case worker informed me that our file would have to be sent back to the Loan Approval Officer to okay the presence and position of the second mortgage. "This usually takes no more than 10 days," he tried to say with encouragement. After speaking again with my wife, the case worker agreed to hand-carry the revisions to the Loan Approval Officer and to ask for an expedited review. I'm not sure, but I think she cried during that phone call which might account for the sudden show of concern and urgency.
Earlier I described the situation as a house of cards, but when you consider the many and incessant rules controlling the process, it really begins to resemble a house of mirrors. We were just trying to find the way out, but every time we thought we were close, we found that we had been fooled.
Exacerbating the problem was that every few weeks we were assigned a new case worker who I then had to "train" all over again. My list of SBA case workers from July 2007 to present includes: Gerry, Cindy, Willie, Roxanne, Linda, Toni, Amy, Gerald and Tamara.
And here is another fun wrinkle in our quest to buy a house.
In November, the upstairs tenant of the house we were tying to purchase moved out. Good news because we were planning on taking the upstairs anyway and thus avoided having to throw them out. Bad news because the sellers said they would rent it again unless we completed the sale swiftly or paid them to keep the apartment empty. So starting in mid-November, we began paying for an empty apartment--with money coming right out of our pockets due to the insufferably slow movement of paperwork at SBA and Road Home.
As 2007 came to a close, we must have been closer to finally getting into a house. But as we celebrated our second Christmas in a FEMA Travel Trailer on an empty lot in a flood-ravaged neighborhood in New Orleans, the dream of having a place to call our own felt as far away as the moon.
Part seven: The city on the edge of forever