Soviet dystopian physician loan nightmare with KeyBank, please help!

[catch22]

Hello everyone!
I'm an internal medicine hospitalist and graduated in 2017. My wife is a final year surgical fellow. We're relocating for her new job and having some difficulties with our mortgage lender KeyBank. It's causing a great deal of stress and anxiety for us and I was hoping to get your thoughts. Sorry for the wall of text.

Current and future financial situation:
- We own our current home outright which is under contract for $320K ($~300K net to us after realtor fees), we have $105K in the bank, and ~$350K in retirement savings. We have NO student loan debt. We are in our early 30s. I make $300K base right now plus bonuses, total combined income about $420K/year currently.
- Future job start date Sept 2022, my future salary $240K+bonuses, her salary $320K+bonuses which escalates to $350K in second year and $380K in third year
- Under contract for a $1.2M home
- Mortgage is a KeyBank physicians loan, 10% down, 3.75% / 30 year with rate locked in until the end of June. Closing date is mid June.
- $48K already paid in deposit towards the home, with $72K due at close + closing costs.
- The mortgage stipulates that we can close within 90 days of employment start date, which is why we specifically timed our house hunt and closing date this way.

We are in what can only be described as a farcical, Soviet-like bureaucratic nightmare. The bank has both of our employment contracts and letters from the onboarding person at our new hospital confirming our employment and start dates. The mortgage documentation guy told us we'd just need to provide another letter from the hospital ~30 days prior to close as a good-faith status report on credentialing. This all sounded extremely reasonable. Credentialing paperwork came in April 2022 so we've filled out everything, provided references, prior malpractice certificates, etc. We both have totally clean records.

Suddenly about a week after we did our credentialing paperwork, we received word from our realtor that the seller's agent had never received a mortgage commitment letter from the bank. I called around to investigate and it turns out the bank has not provided this letter because they were expecting updated employment status from the hospital but they didn't ask us for it. Apparently they wanted another letter from the hospital stating income, start date, and any outstanding contingencies (i.e. credentialing).

At this point I discovered that the initial documentation guy has become basically incommunicado. He's not reachable anymore. He doesn't respond to my emails or calls. Now we have a new person who is handling the account, whose title is mortgage transaction coordinator.

The hospital provided yet another letter to the bank stating our start date, salaries, etc. They wrote that we've provided all documentation to proceed with credentialing, that the onboarding process is proceeding as planned, and that all credentialing contingencies had not yet been met but that they fully expect us to keep our start dates. This is all the truth. Credentialing is a months-long process that involves faxing and emailing all sorts of prior institutions like our residency programs, all prior malpractice carriers, etc, not to mention references from multiple busy physicians with lives of their own.

I'm currently being told that the bank underwriter doesn't want to clear the loan because the hospital basically hasn't said we are ready to start work. I spoke to the bank contact person and confirmed that she is in fact specialized in physicians mortgages and she told me that she's familiar with credentialing time frames. She also reassured me that the underwriter understands the nuances of physicians employment. She said that in her experience physicians are fully credentialed by the time they reach 90 days prior to job start date. I explained that at least in my experience this is usually not the case, and the credentialing often takes place right up until shortly before starting. Furthermore, I explained that it's currently April and there's just no way to reasonably expect the hospital to emergency-credential two doctors who aren't starting work until September. In the time period between June and September I'll be working per diem, and we can comfortably pay the mortgage out of money from the sale of our current home plus my moonlighting income.

I'm now hearing that the seller's agent is getting nervous because they think the mortgage is going to fall through. The sellers of course need to sell their house so they can buy their new house; not to mention it's a historic seller's market that is starting to turn.

I'm getting progressively anxious and upset because I feel like the mortgage company doesn't understand how doctors' jobs work, and that their expectations for credentialing are unreasonable and unachievable. I've asked on several occasions for the mortgage transaction coordinator to communicate directly with the hospital onboarding specialist to figure out EXACTLY what the bank needs to confirm that we are in fact gainfully employed physicians. Somehow this has not happened. It seems that the mortgage company wants to see the magic words "all employment contingencies are fulfilled" but the hospital (very reasonably, I think) feels that they cannot actually say this since they haven't finished their credentialing process. But if KeyBank doesn't release the funds until the credentialing process is completed, we'll lose this house for sure. I'm actually afraid we'll lose our $48K deposit if that happens, plus appraisal and inspection fees, not to mention the immense amount of time spent on house shopping, preparing documentation, and everything else we've done.

When we bought our first home in 2019 we had absolutely NO issues like this. The bank took our future contract, confirmed employment without our input, and disbursed the funds. I'm not sure why the due diligence has reached a level now that is essentially impossible to meet their requirements.

Again, sorry for the wall of text! Have any of you dealt with this issue with physicians mortgage lenders? Or specifically with KeyBank? What do you suggest we do? I feel like I'm trapped in some kind of Catch-22-style bureaucracy with no way forward. The hospital person is going to talk with the mortgage person AGAIN tomorrow. I've also got a supervisor's contact info at the bank so I will escalate if this keeps going on. Our realtor says we're too deep into the process to switch lenders without the deal falling apart. I'm actually wondering if we need to lawyer up. What a freaking nightmare - if two doctors can't get a mortgage, who can? Would appreciate any suggestions you all could provide!!

[nastle]

I thought Byzantine is the adjective used to describe toxic bureaucracy.

[Craigslist]

I just went through physician loan process (I decided against buying the property ultimately), did keybank really ask you about malpractice history????? No my servicer took my <1 year of 1099 income and 1 year of w-2 income to qualify me as well.

I don’t get why people have to do some nonsense where you have to sell the house under you at the same time you buy a house somewhere else, like everyone is trying to make jobs and buying houses to new places happen at the exact same like everything is perfectly fungible (I’m probably not using this word right but whatever).

[Tangler]

Toxic bureaucratic incompetent annoyance was my experience in 2019.

Next time I will pay cash, and not deal with it.

My time is valuable and one advantage of being older is less need to finance.

If you are 30 and borrowing at 3% it makes sense to finance, and invest the money in VTSAX.

If you are 50 and borrowing at 5% it makes sense to pay cash rather than buy bonds.

Banks suck. Fed gov now requires banks get all kinds of info and much of it totally irrelevant.

I had 2M in stocks and 700k in cash, and zero debt. I was buying a 1.5M house with a down payment of 700k and financing the rest.

The bank needed my cancelled rent checks for the last two years. My W2 from last 3 years, and countless bank statements etc. etc.

I said: look, I could sell my stocks and buy this thing outright. I have the money, I just do now wish to pay the capital gains taxes while our household income is over 400k.

There is zero risk to the lender, what is the deal? Why do you need all this crap? No one could intelligently answer that question.

I would think I had provided everything and they would send an email.....hey we need ____.

I don't think anyone capable of abstract thought works for these banks / lenders.

Painful.

The borrower is slave to the lender.

[Larry Ragman]

Sorry you are going through all of this. Of course, you are also anxious about getting the deal done. But it is not that unusual for financing to be the last step in a closing. Regardless, I suspect getting a lawyer involved at this point would be counterproductive.

You appear to be doing the right things in terms of communication. Nervous or not, the sellers cannot back out just because the financing is slow. They signed a contract too.

If the deposit gives you anxiety I recommend reading the contract you signed. They are often contingent on arranging financing. If that is so in your case, your deposit is not really at risk.

Good luck.

[catch22]

Toxic bureaucratic incompetent annoyance was my experience in 2019.

Next time I will pay cash, and not deal with it.

My time is valuable and one advantage of being older is less need to finance.

If you are 30 and borrowing at 3% it makes sense to finance, and invest the money in VTSAX.

If you are 50 and borrowing at 5% it makes sense to pay cash rather than buy bonds.

Banks suck.

The borrower is slave to the lender.

Agreed, after this experience I have no intention of ever getting a mortgage again. If we buy another house it would be an inexpensive vacation home. Will do cash next time. The bank is truly infuriating. Our first home was extremely easy, very reasonable documentation requirements, low stress. I'm not sure why it's so bad this time. It's compounding the stress of an already bizarre housing market

[Tangler]

Sorry you are going through all of this. Of course, you are also anxious about getting the deal done. But it is not that unusual for financing to be the last step in a closing. Regardless, I suspect getting a lawyer involved at this point would be counterproductive.

You appear to be doing the right things in terms of communication. Nervous or not, the sellers cannot back out just because the financing is slow. They signed a contract too.

If the deposit gives you anxiety I recommend reading the contract you signed. They are often contingent on arranging financing. If that is so in your case, your deposit is not really at risk.

Good luck.

"Again, sorry for the wall of text! Have any of you dealt with this issue with physicians mortgage lenders? Or specifically with KeyBank? What do you suggest we do? I feel like I'm trapped in some kind of Catch-22-style bureaucracy with no way forward. The hospital person is going to talk with the mortgage person AGAIN tomorrow. I've also got a supervisor's contact info at the bank so I will escalate if this keeps going on. Our realtor says we're too deep into the process to switch lenders without the deal falling apart. I'm actually wondering if we need to lawyer up. What a freaking nightmare - if two doctors can't get a mortgage, who can? Would appreciate any suggestions you all could provide!!"

Yes. Just suck it up and go for a run / walk and think about what you like about the house.

I agree, don't get a lawyer or try to change lenders. They all pretty much suck (IMO). Much of what is required is because of the Dodd-Frank act (or so I am told) which means the feds attempted to stop people from lending to dogs and dead people and then selling the loans to people that then packaged the loans into terrible products which they then sold to other unfortunate humans.

This NINJA loan type crap is what assisted in creating the housing crisis. Now the red tape is almost insurmountable for normal people and banks often just immediately sell the loan and so they really must fill out all this crap so they can sell it without trouble.

I would contact the supervisor and be very nice and say: "hey, this is what is going on......we had to send the info about loan stuff multiple times and the first person went MIA, can you please help smooth this out"

Being nice (even when it sucks) never hurts.

It will get done. It will be over. When you are 60 pay cash.

[zlandar]

What outstanding items have you not submitted for your hospital credentialing? Hopefully the answer is none.

You don't want to WoT either the hospital or mortgage lender. Keep concise communications.

[Lordosis]

Any local banks that you can work with? Kind of late in the game but I have found them to be more flexible.

[East coast]

While frustrating no doubt, Stories like these make me very comfortable with increases in housing prices and suggest those may continue despite hikes in rates.

[pierre]

Nervous or not, the sellers cannot back out just because the financing is slow. They signed a contract too.
Good luck.

My contract (standardized by my state) had deadlines in it. I’m pretty sure if we didn’t close in time, the seller would have walked. I assumed that all mortgage contracts have deadlines in them, that would allow either party to walk away if they were not met.

OP, good luck. My experience with Key bank 6 months ago went very smooth. I wonder if you are just dealing with incompetent people or if things have changed over there.

[Hatton]

I guess this is another reason to wait until you have worked at a job for a period of time before buying a house. Selling and buying a house not to mention moving has a lot of moving parts that can go wrong.

[CordMcNally]

Sorry this has been a difficult situation. Unfortunately, the more moving parts that are involved the higher the likelihood that something will go wrong. I'm not sure what a lawyer will do besides cost you more money. I doubt they can speed up the credentialing process and I doubt they can force the bank to give you the mortgage. The best way to get things accomplished is to make sure that everyone's goals align but I'm not sure how that will be possible in this case. You'd better cross your fingers and hope the seller doesn't back out.

[Nash22]

Add me to the list of people who is comfortable renting for the time being then pouncing on depressed list prices in the $700k range with cash when mortgages go to 10%. I imagine that will buy much more house in a few years than it does right now.

Not many Americans are going to be able to afford $700k houses with 10% mortgages.
Right now we have an anomaly with middle class people living in 3/4 million dollar houses because they have the fluke of 3% 30 years. The handful of people who took ARMs are totally hosed.

[uksho]

Hello everyone!
I'm an internal medicine hospitalist and graduated in 2017. My wife is a final year surgical fellow. We're relocating for her new job and having some difficulties with our mortgage lender KeyBank. It's causing a great deal of stress and anxiety for us and I was hoping to get your thoughts. Sorry for the wall of text.

Current and future financial situation:
- We own our current home outright which is under contract for $320K ($~300K net to us after realtor fees), we have $105K in the bank, and ~$350K in retirement savings. We have NO student loan debt. We are in our early 30s. I make $300K base right now plus bonuses, total combined income about $420K/year currently.
- Future job start date Sept 2022, my future salary $240K+bonuses, her salary $320K+bonuses which escalates to $350K in second year and $380K in third year
- Under contract for a $1.2M home
- Mortgage is a KeyBank physicians loan, 10% down, 3.75% / 30 year with rate locked in until the end of June. Closing date is mid June.
- $48K already paid in deposit towards the home, with $72K due at close + closing costs.
- The mortgage stipulates that we can close within 90 days of employment start date, which is why we specifically timed our house hunt and closing date this way.

We are in what can only be described as a farcical, Soviet-like bureaucratic nightmare. The bank has both of our employment contracts and letters from the onboarding person at our new hospital confirming our employment and start dates. The mortgage documentation guy told us we'd just need to provide another letter from the hospital ~30 days prior to close as a good-faith status report on credentialing. This all sounded extremely reasonable. Credentialing paperwork came in April 2022 so we've filled out everything, provided references, prior malpractice certificates, etc. We both have totally clean records.

Suddenly about a week after we did our credentialing paperwork, we received word from our realtor that the seller's agent had never received a mortgage commitment letter from the bank. I called around to investigate and it turns out the bank has not provided this letter because they were expecting updated employment status from the hospital but they didn't ask us for it. Apparently they wanted another letter from the hospital stating income, start date, and any outstanding contingencies (i.e. credentialing).

At this point I discovered that the initial documentation guy has become basically incommunicado. He's not reachable anymore. He doesn't respond to my emails or calls. Now we have a new person who is handling the account, whose title is mortgage transaction coordinator.

The hospital provided yet another letter to the bank stating our start date, salaries, etc. They wrote that we've provided all documentation to proceed with credentialing, that the onboarding process is proceeding as planned, and that all credentialing contingencies had not yet been met but that they fully expect us to keep our start dates. This is all the truth. Credentialing is a months-long process that involves faxing and emailing all sorts of prior institutions like our residency programs, all prior malpractice carriers, etc, not to mention references from multiple busy physicians with lives of their own.

I'm currently being told that the bank underwriter doesn't want to clear the loan because the hospital basically hasn't said we are ready to start work. I spoke to the bank contact person and confirmed that she is in fact specialized in physicians mortgages and she told me that she's familiar with credentialing time frames. She also reassured me that the underwriter understands the nuances of physicians employment. She said that in her experience physicians are fully credentialed by the time they reach 90 days prior to job start date. I explained that at least in my experience this is usually not the case, and the credentialing often takes place right up until shortly before starting. Furthermore, I explained that it's currently April and there's just no way to reasonably expect the hospital to emergency-credential two doctors who aren't starting work until September. In the time period between June and September I'll be working per diem, and we can comfortably pay the mortgage out of money from the sale of our current home plus my moonlighting income.

I'm now hearing that the seller's agent is getting nervous because they think the mortgage is going to fall through. The sellers of course need to sell their house so they can buy their new house; not to mention it's a historic seller's market that is starting to turn.

I'm getting progressively anxious and upset because I feel like the mortgage company doesn't understand how doctors' jobs work, and that their expectations for credentialing are unreasonable and unachievable. I've asked on several occasions for the mortgage transaction coordinator to communicate directly with the hospital onboarding specialist to figure out EXACTLY what the bank needs to confirm that we are in fact gainfully employed physicians. Somehow this has not happened. It seems that the mortgage company wants to see the magic words "all employment contingencies are fulfilled" but the hospital (very reasonably, I think) feels that they cannot actually say this since they haven't finished their credentialing process. But if KeyBank doesn't release the funds until the credentialing process is completed, we'll lose this house for sure. I'm actually afraid we'll lose our $48K deposit if that happens, plus appraisal and inspection fees, not to mention the immense amount of time spent on house shopping, preparing documentation, and everything else we've done.

When we bought our first home in 2019 we had absolutely NO issues like this. The bank took our future contract, confirmed employment without our input, and disbursed the funds. I'm not sure why the due diligence has reached a level now that is essentially impossible to meet their requirements.

Again, sorry for the wall of text! Have any of you dealt with this issue with physicians mortgage lenders? Or specifically with KeyBank? What do you suggest we do? I feel like I'm trapped in some kind of Catch-22-style bureaucracy with no way forward. The hospital person is going to talk with the mortgage person AGAIN tomorrow. I've also got a supervisor's contact info at the bank so I will escalate if this keeps going on. Our realtor says we're too deep into the process to switch lenders without the deal falling apart. I'm actually wondering if we need to lawyer up. What a freaking nightmare - if two doctors can't get a mortgage, who can? Would appreciate any suggestions you all could provide!!

OP, sorry if missed this , but why can’t they give mortgage based on your current salaries ?