Advice Urgently Needed!

[meeko 5]

Hi! My hubby and I are in the process of buying a 5 room HDB resale flat. We applied for and obtained an inprinciple approval for a bank loan before we even started house hunting. When we finally decided on a unit, I double checked with the loan officer if the bank has approved our loan. The answer was a firm yes. With this assurance, we then bought the option to purchase and then waited for the letter of offer from the same bank. Within a week, the letter of offer was signed and we thus exercised the option to buy the flat. Our application has also been submitted to HDB, inclusive of the acceptance of the bank's letter of offer. However, since then the loan officer has called me a few times asking me to submit additional documents to prove my husband's income and employment. Shouldn't these due diligence and credit checks be done by the bank BEFORE they issue a letter of offer for a hdb home loan? Where do we stand legally? Any real advice or shared experiences would be greatly appreciated.

[tatlee 0]

Hi! My hubby and I are in the process of buying a 5 room HDB resale flat. We applied for and obtained an inprinciple approval for a bank loan before we even started house hunting. When we finally decided on a unit, I double checked with the loan officer if the bank has approved our loan. The answer was a firm yes. With this assurance, we then bought the option to purchase and then waited for the letter of offer from the same bank. Within a week, the letter of offer was signed and we thus exercised the option to buy the flat. Our application has also been submitted to HDB, inclusive of the acceptance of the bank's letter of offer. However, since then the loan officer has called me a few times asking me to submit additional documents to prove my husband's income and employment. Shouldn't these due diligence and credit checks be done by the bank BEFORE they issue a letter of offer for a hdb home loan? Where do we stand legally? Any real advice or shared experiences would be greatly appreciated.

the income documents should be submitted together with the intial application form. If you get the letter of offer, that means credit check has been done and approved. Unless there is non-disclosure of important info in the intital application, there should not be any problems.

[meeko 5]

That's what my husband and I thought too! As far as i'm aware, no information has been omitted in our application for the loan. In fact, we were the first to volunteer the info that our car loan was under my husband's name, and our loan officer was quick to assure us that the bank would not take into consideration other financial commitments in the assessment of HDB loans. I'm just a little confused as to why the bank is doing their checks on employment status only now, after we've already accepted and submitted their letter of offer. what's more, the loan officer can't seem to provide any useful information whenever I ask and keeps telling me that she'd check with her credit department.

Anyway, thanks for the reassurance tatlee. I'm just a little stressed out as we have alot riding on this (our lease is ending in Feb and we need a place to stay without having to deal with rent hikes!) What's worse is that the seller has also purchased a private property in view of the money coming in from the sale of their flat to us!

[zirhk3355 1]

Read the letter of offer carefully; is it an irrevocable offer? If so and they suddenly reject your loan application at last min, you might have a legal case. But I am afraid the bank is smarter than that; the letter of offer would always be subjected to hundreds of clauses to be changed at the leisure of the bank.

But fret not, if you and your husband's credit status is ok, then there is no reason why the bank would refuse you a loan; they also want to earn interest mah. Just keep your fingers crossed for now...

[tatlee 0]

That's what my husband and I thought too! As far as i'm aware, no information has been omitted in our application for the loan. In fact, we were the first to volunteer the info that our car loan was under my husband's name, and our loan officer was quick to assure us that the bank would not take into consideration other financial commitments in the assessment of HDB loans. I'm just a little confused as to why the bank is doing their checks on employment status only now, after we've already accepted and submitted their letter of offer. what's more, the loan officer can't seem to provide any useful information whenever I ask and keeps telling me that she'd check with her credit department.

Anyway, thanks for the reassurance tatlee. I'm just a little stressed out as we have alot riding on this (our lease is ending in Feb and we need a place to stay without having to deal with rent hikes!) What's worse is that the seller has also purchased a private property in view of the money coming in from the sale of their flat to us!

the banks know the financial committments (car loans, cc, od, mortgage) from the credit bureau. cannot hide.

no stress. if there is any problems, bank would have asked for docs BEFORE letter of offer is out.

just wait for the news from credit dept and take action from there, if needed.

worse come worse, just get another bank loan and delay HDB and Private completion date. Just ask seller's seller to delay completion date. quite common practice. HDB also can delay completion date. I guess your seller would have a bridging loan, so the deal wont fail because of the delay.

[meeko 5]

the banks know the financial committments (car loans, cc, od, mortgage) from the credit bureau. cannot hide.

no stress. if there is any problems, bank would have asked for docs BEFORE letter of offer is out.

just wait for the news from credit dept and take action from there, if needed.

worse come worse, just get another bank loan and delay HDB and Private completion date. Just ask seller's seller to delay completion date. quite common practice. HDB also can delay completion date. I guess your seller would have a bridging loan, so the deal wont fail because of the delay.

Thanks again for the encouragement and advice, tatlee. Just spoke to the loan officer. She says the bank needs to do an employment verification with my husband's employer. The thing is, they've called the company twice already and was given an affirmative answer. In fact, the staff at the main office are alittle ticked off by the number of times the bank has called to check. Is this normal? For banks to doubt employment status . It's really annoying as I feel that all these "checks" should have been done BEFORE they approved the loan and not after.

[tatlee 0]

Thanks again for the encouragement and advice, tatlee. Just spoke to the loan officer. She says the bank needs to do an employment verification with my husband's employer. The thing is, they've called the company twice already and was given an affirmative answer. In fact, the staff at the main office are alittle ticked off by the number of times the bank has called to check. Is this normal? For banks to doubt employment status . It's really annoying as I feel that all these "checks" should have been done BEFORE they approved the loan and not after.

so banks dont even bother to check employee. If CPF and IRAS docs OK, mean OK already. Dont even look at originals.

Tell us which bank you deal with? Is it Maybank?

never encounter failed loan disbursement after letter of offer is out. usually failed loan disbursements after LO is for self-employed borrowers. Their income usually volatile and 'dodgy'. Employed with regular CPF contribution history better credit with banks.

[waileong 0]

1. Shouldn't these due diligence and credit checks be done by the bank BEFORE they issue a letter of offer for a hdb home loan?

Yes, but some officer probably kiasu or going through an audit and realised he forgot to check before the offer.

2. Where do we stand legally?

That depends on the terms and conditions of the letter. Eg, whether the bank has a right to demand additional information at any time, whether they have the right to cancel the offer by giving you N days' notice, etc.

Can't answer unless you print out all the T&C's.

[meeko 5]

Hi guys,

Actually, my husband (who's the main applicant for the loan) has 2 sources of income. One is as an employee/ performer of a local F&B company and the other is as a partner of a limited liability partnership that we both set up a year ago. For his first source of income, he has declared 2 years' worth of income tax. Since our company is only about a year old, we can only declare income tax next year.

I think that all banks should do their complete checks BEFORE approving loans and issuing the letter of offer. Even for self employed persons. They shouldn't discriminate against entrepreneurs such as hawkers.

Just my opinion anyway.

[Phantom 1]

Hi guys,

Actually, my husband (who's the main applicant for the loan) has 2 sources of income. One is as an employee/ performer of a local F&B company and the other is as a partner of a limited liability partnership that we both set up a year ago. For his first source of income, he has declared 2 years' worth of income tax. Since our company is only about a year old, we can only declare income tax next year.

I think that all banks should do their complete checks BEFORE approving loans and issuing the letter of offer. Even for self employed persons. They shouldn't discriminate against entrepreneurs such as hawkers.

Just my opinion anyway.

Its the staff. Most banks operate in a similar manner when it comes to processes for mortgage loan applications. You guys got an EXTREMELY inexperienced staff.

On the other hand, I've never heard of a bank calling up clients to do a reference check. Its not necessary in most cases.

CPF statements and NOA should always suffice.

If both your income suffice, no need to declare the other income.

[Chunky Monkey 2]

I agree with Phantom. You have got yourselves a very inexperienced credit officer or loan operations staff. Too duh. I would ask to speak with the credit department manager to clarify why the inefficiencies and repeat verifications at your husband's workplace. Or maybe they misplaced your income documentation?!

These days, the staff at many of the banks (no offence to some of the bankers on this forum) go through the motion of doing things without comprehending the rationale of that tasks at hand.

In a recent home loan application at HSBC, I submitted THREE years of Income Tax Assessments showing stability of income. And you know what the stupid credit officer asked for? My husband's payslip. I gave the RM a piece of my mind and challenged him to get his boss or the credit boss to call me personally, if they have the audacity to STILL ask for payslip when I provided the tax assessments.

I really pity the guys not in financial services. So many inexperienced bank personnel these days, and 'bully' the layman. Gets on my nerves. Like what my ex banking boss would say, "look pretty but brain empty"

Hi guys,

Actually, my husband (who's the main applicant for the loan) has 2 sources of income. One is as an employee/ performer of a local F&B company and the other is as a partner of a limited liability partnership that we both set up a year ago. For his first source of income, he has declared 2 years' worth of income tax. Since our company is only about a year old, we can only declare income tax next year.

I think that all banks should do their complete checks BEFORE approving loans and issuing the letter of offer. Even for self employed persons. They shouldn't discriminate against entrepreneurs such as hawkers.

Just my opinion anyway.

Banks' definition of hawkers is "self employed". By general policy, that means 2 years of tax assessment, and the bank will take the average monthly salary to compute the borrowers' ability to service the loan amount.

Your case is very straight forward. The credit officer can and should only take your husband's TAs from his 1st source of income, and completely disregard the source of income from your new partnership. A company letter citing one's partnership fees holds no water until it's substantiated by a TA, which in your case, is not available.

Edited November 29, 2007 by Chunky Monkey

[Phantom 1]

Or maybe they misplaced your income documentation?!

These days, the staff at many of the banks (no offence to some of the bankers on this forum) go through the motion of doing things without comprehending the rationale of that tasks at hand.

In a recent home loan application at HSBC, I submitted THREE years of Income Tax Assessments showing stability of income. And you know what the stupid credit officer asked for? My husband's payslip. I gave the RM a piece of my mind and challenged him to get his boss or the credit boss to call me personally, if they have the audacity to STILL ask for payslip when I provided the tax assessments.

I really pity the guys not in financial services. So many inexperienced bank personnel these days, and 'bully' the layman. Gets on my nerves. Like what my ex banking boss would say, "look pretty but brain empty"

I agree with CM on this. someone i know in my ex bank i worked in.. lost a clients IC.. so told him that the one he faxed in was not clear. Re-Fax again. Hence its possible they misplaced your income docs.

No offence taken and i do agree with you the ppl employed in banks today are just not qualified. I remember when i started my first banking job.. it was so difficult to get a job..sheesh.. now any mary harry or jane can graduate from with a fancy degree and come in. I was laughing when I know one swiss bank offered a fresh grad a six figure salary. for a private banking job... i won't be putting my money with them for sure. imagine the kind of private banker you get....

I told a close friend of mine, having been in the industry.. i really pity the every day folks who get think they are getting professional advise when most bank officers are more concerned abt their commissions.

[Chunky Monkey 2]

I agree with CM on this. someone i know in my ex bank i worked in.. lost a clients IC.. so told him that the one he faxed in was not clear. Re-Fax again. Hence its possible they misplaced your income docs.

No offence taken and i do agree with you the ppl employed in banks today are just not qualified. I remember when i started my first banking job.. it was so difficult to get a job..sheesh.. now any mary harry or jane can graduate from with a fancy degree and come in. I was laughing when I know one swiss bank offered a fresh grad a six figure salary. for a private banking job... i won't be putting my money with them for sure. imagine the kind of private banker you get....

I told a close friend of mine, having been in the industry.. i really pity the every day folks who get think they are getting professional advise when most bank officers are more concerned abt their commissions.

Sigh. Phamton, you have spoken my mind. I get so irritated with the RMs' sales spiels, and I now have a standing instruction. DO NOT SELL ME ANY BANKING PRODUCTS. DH blew his top one time, when our RM called him at work and tried to sell twin ccy / premium deposits and told him "oh, you can get double digit interest yada yada". The stupid RM did not even check my DH's qualifications. He's a ACA and CFA for goodness' sake. And my DH suffers no fools.

[Phantom 1]

Sigh. Phamton, you have spoken my mind. I get so irritated with the RMs' sales spiels, and I now have a standing instruction. DO NOT SELL ME ANY BANKING PRODUCTS. DH blew his top one time, when our RM called him at work and tried to sell twin ccy / premium deposits and told him "oh, you can get double digit interest yada yada". The stupid RM did not even check my DH's qualifications. He's a ACA and CFA for goodness' sake. And my DH suffers no fools.

lol... double digit interest?

Yah. When you strike spot.

Most of them don't even know 2 + 2 in currencies...

[meeko 5]

Hi People!

Here's an update on my situation: To cut a long story short, we have been verbally informed by the mobile banking officer that our loan has been rejected by the bank. Here's a letter that i've drafted to the bank manager. If anyone has any similar experiences or advice to give, please do come forward. By the way the bank isn't Maybank. It's first initial starts with an O (any guesses?)

My letter to the bank ( for obvious reasons, I've deleted all names, contact nos and addresses)

Dear Sir,

HDB HOME LOAN FOR RESALE FLAT AT XXX

I refer to our application for a HDB home loan from your bank for the above listed property.

In early November this year, my husband and I approached your bank counter staff at the XXXX branch with the intention of inquiring about your home loan packages for the purchase of a brand new or resale HDB 5 room flat. As there were no mobile bankers available at that particular branch, we were asked to leave our contact details and were told that a home loan specialist would attend to us via telephone.

On the same day, I received a call from one of your mobile bankers who introduced herself as Mobile banker X from the XXX Mobile Centre. Upon clarifying our requirements for a HDB Loan, I was asked to answer several questions regarding our financial and income status. I clearly stated to her that I was currently self-employed and that my income could not be assessed as yet due to the fact that my company, XYZ of which I am one of the partners, has only been in business for slightly over a year and have not had the opportunity to declare income with IRAS. As such, I told mobile banker x to submit a loan application based on my husband’s income alone. I also clarified, over the phone, that my husband had 2 main sources of income. The first one being from his job as a resident band performer at a local company , and the second being his other income being derived from his position as partner and Artistic Director of our company. Furthermore, to substantiate the former source of income, I was told by mobile banker x to submit to her the most recent Notice of Assessment, together with other documents, so that she could proceed to help us apply for the loan.

Following this conversation, my husband’s NOA, both our copies of NRIC, and CPF statements were faxed to her. We received a call from mobile banker x shortly afterwards to confirm that we had obtained an in-principle approval for a loan amount of $******.

A few weeks later, after house hunting, my husband and myself finally decided on the unit at XXXX. As the asking price of the seller was $******, which was above the loan amount that we were approved for, I quickly called Melissa again to check if we could increase the loan amount to the purchase price. She confirmed with me that no additional income or other documents were required for submission on our part. She was happy to submit a request for us and after several days, reverted back with the answer that the bank has approved the higher loan amount.

On the 19th of November, my husband and I went to the same flat for a second viewing and decided to make an offer to the seller. Prior to issuing a cheque of $1000 to purchase the option from the seller, I once again called mobile banker x to confirm the in principle approval of our loan. She gave an affirmative answer and requested that we faxed to her a copy of the option to purchase together with the Valuation Report for the property so that she could apply for the Bank’s Letter of Offer for the loan.

On the 23rd of November, we received the good news via telephone from mobile banker x that the Letter of Offer was out and that she would deliver it to us so that we could sign our acceptance. We arranged to meet the following day at 1230pm.

On the 24th of November, as you can probably verify by looking at your bank’s copy of the letter of offer, my husband and I signed on the dotted line and accepted that bank’s offer of the loan. With the assurance that we could get a bank loan, we then exercised the option to purchase and paid the sellers a balance amount of $4,000.

With this, my housing agent submitted all relevant documents together with the bank’s letter of offer to HDB in order to obtain a 1st appointment date.

It was only this week that I received a phone call from mobile banker x asking for the previous year’s NOA for my husband’s income. When questioned why the bank required additional documents, she told me that her manager had done a search on our names and “discovered” that we were partners in a Limited Liability Partnership company. I was perplexed as I thought that I had already declared this to her from the onset. Nevertheless, I complied and faxed her requested document. A day later, mobile banker x then called again saying the credit department needed to verify my husband’s job.

It is only today, after much chasing and calling, that I am able to get a verbal confirmation from mobile banker x regarding the status of our bank loan. It has apparently been rejected, though reasons have not been made clear to me by her. It seems that she herself is not sure on why the loan was questioned and offer retracted.

I have since called her at 300pm this afternoon to confirm that the bank has rejected our loan application. She has confirmed this. After my previous bad experience with her “assurances”, I am sure that you can understand why I have requested that she put this cancellation or withdrawal of offer of loan from your bank, in writing. She had initially promised that she would have the letter clearly stating the bank’s rejection ready by today and would fax it to me by the end of the working day, the original to be posted to me by Monday. However, I have since been informed by mobile banker x that she would not be able to get any letter drafted until Monday as her superior was not available. As I did not want to make a bad situation even more unpleasant, I politely asked her if she could just draft me an email by today confirming that she would be issuing a letter stating the rejection of our loan by Monday. The response I got was, to me, very unprofessional and inexcusable. Just to highlight several glaring deficiencies in your bank’s procedures and service level, I am very concerned as a local consumer with the fact that you are employing bank officers who are obviously not familiar with what the bank’s requirements are in terms of loan approvals. Also, I think that it is also fair to say that due diligence checks on the borrowers should be done PRIOR to the issue of a Letter of Offer from the bank and not a few days AFTER that same offer has been accepted by the borrowers.

In any case, I am writing this letter not to argue our case for the loan, but to request for some action on your part to correct this situation. I have also confirmed with your customer service staff that the system states that our bank loan application is still being processed and has not been approved. Your system should not reflect that status as we have already signed and accepted your letter of offer. This leads me to believe that the bank’s copy of our letter of offer has not been duly submitted to the next relevant department in line and is currently being held by your branch for some unknown reason, in which case I will take it as my acceptance has not even been properly processed. As such, there cannot be any binding contract between us and your bank.

Please send me a reply via fax to ####### or via email at mmmmmm@mmmm by the end of this working day with regard to the letter of rejection from your bank. If I do not hear conclusively from you or the bank’s representatives by 700pm today, I shall then reserve my rights to consider a bank loan from another bank and shall not be liable for any cancellation or any other fees imposed by your bank, notwithstanding the terms and conditions in the bank’s letter of offer.

Thank you.

Sincerely,

This is the letter that i've faxed to the bank. I hope someone can sort out this whole mess. Thought that buying a house should be a happy occasion. I now have nightmares! !!