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Seventeen years ago I had an account with Hollywood Video, a movie rental chain (if anyone remembers those). When I signed up for the membership I was married, so I listed my wife as an authorized renter on my account. We had two adult roommates so I listed both of them as well, even though I was pretty sure they had their own accounts. One of the roommates had a little brother who came to live at our house for a while as well, but he was not listed on the account since he was only fourteen.One day the little brother got a hold of his sister’s card (the one attached to my account) and went to Hollywood Video and rented a PlayStation game and two movies. As part of the rental transaction he had to sign the receipt, and a copy was given to him inside the case of one of the movies. Standard stuff.I didn’t know that he had rented the movies until they were a week or so overdue, at which point I collected them and returned them to Hollywood Video. The late fees amounted to $17.00 and some change, which I paid with a check. This is where things get interesting.My wife at the time was big into - I don’t even know what it’s called. She had a bunch of plaster molds, she would pour clay into the molds and let it set, then she would take the castings and put them in her kiln and fire them, and then we would have a new set of coffee mugs, or a new ceramic figurine, or a wall hanging. She did a lot of this, and sold her pieces at craft fairs and such. We had an entire section of our basement dedicated to her kiln and all of her plaster molds, many of which she had made herself.Well, the day after I paid that late fee, she went to a local craft store to buy a few extra molds. The total cost came up to just under $500. She gave the clerk her check card, and the clerk ran it through the machine. It beeped that it didn’t go through, so they ran it again. And again. And again. On the fifth try it finally went through. Or at least, that’s what we thought.What had actually happened was that the machine had run the card all five times, pulling almost $2500 out of our bank account. We didn’t discover the error until two days later when our mortgage payment bounced, our car payment bounced, a check to our grocery store bounced…and the check to Hollywood Video bounced.We went back to the craft store, and they instantly refunded our money. The owner of the store also wrote a letter to each of the four business that had gotten their checks bounced because they emptied our account, explaining that the problem was on their end, that we were not at fault, and asking that the creditors either waive any bounced check fees or send those fees to the craft store instead.The bank that we paid our mortgage and car payment to accepted the letter and waived the fees. The grocery store accepted the letter and said they would send a request for the fee to the craft store. Then we went to Hollywood Video, where we were informed by the store manager that bounced checks were automatically turned over to their legal department to handle. They refused to accept payment for the check, and refused to even look at the letter. We were going to have to fight it in court.On the day we went to court, the lawyers from Hollywood Video met us outside the courtroom and offered us a deal. We could pay $250 and they would drop the suit. If we declined to pay that amount, we were “guaranteed to pay up to as much as $1200” because of the court costs and associated fines that we agreed to when we signed up for service. I guess this was a tactic that they used to scare people into paying ten times the amount of the original check, and it might have worked on me in different circumstances. I had an ace up my sleeve that they weren’t prepared for, however.Our turn came, and they got to go first. They kept it simple - we had signed a contract when we created the account, we knew what the penalties were for bouncing a check, and we shouldn’t have kept the movies as long as we did if we couldn’t afford to pay the late fees. Then it was my turn.I had three documents that I asked to be allowed to enter into evidence. The first was the letter from the craft store, indicating that the check bouncing was their fault and not ours. The second was the receipt from the original rental, showing that the rental form was signed by the little brother, and that the two movies were both R Rated movies. The third was a copy of the little brother’s state ID (he was too young for a learner’s permit or driver’s license) showing that the signatures were the same, and that he was 14 years old. Then I made my statement, where I basically said that the store had rented the videos to a person who was not listed as an authorized renter on my account, they had rented R Rated movies to a minor, and that when presented with the letter explaining that the check had bounced due to an error at the craft store they refused to accept it because they preferred to waste the court’s time rather than allowing us to fix the problem.The judge asked the lawyers if they had a copy of my original membership application, and they indicated that they did. I guess they were expecting me to say that I didn’t know about the penalties for bouncing a check and had brought it along to show that I had signed something saying that I had been advised. The judge looked at the page where it listed my authorized renters, looked at the copy of the little brother’s ID, then made his statement. He stated that the store had violated the contract by renting to someone whom I had not given them authorization to allow to use my account, thus rendering the contract null and void. Not only was the ruling in my favor, but he also found that they had no claim to charge me the original late fee. He also “urged” the lawyers to remind their clients that they should not be renting R Rated movies to minors.

Not all mortgage companies offer terrible service. Some actually do offer good service.My list of lenders is driven by the praises and complaints of my clients. Two bad experiences or drama-filled closings, and a mortgage originator is off my list.Now is probably the worst time ever to be a mortgage applicants. The banks will check and check on you, right up until closing. Some of that’s required by new federal laws.Just accept that you’re going to be asked for the same documents several times and live with that.Otherwise, use a well-recommended lender and you’ll be ok.

Great question and let me try to respond with the simplest of answers. “Delayed financing” should really read “delayed purchase financing” and if you interpret it that way, it helps to understand how it works.I’m going to use a classic example of a transaction we might see here in the San Francisco Bay Area. Hot competition for a home forces a buyer to purchase a home (listed at $1MM) with all cash. Let’s say the buyer uses $100K in gift funds, $300K from a margin loan and then $600K from savings.Within the acceptable window for the delayed purchase financing exception (I’m going to use one of our jumbo loan examples here, which would require the application within 90 days of the close), the buyer/borrower applies for an $800K mortgage.We will obtain an appraisal but will use the lesser of the purchase price or appraised value to determine the loan-to-value (LTV), we will adhere to the LTV guidelines for a purchase transaction and we will price the loan like a purchase transaction. Perhaps more importantly, we will source all of the assets used to buy the home to make sure they are the buyer’s own funds AND we are not permitted to “pay back” gifts.Assuming everything checks out, this borrower will be able to get an $800K mortgage originated within the 90-day window just as if he had acquired the home with a purchase money loan. After the 90 days? We would have to treat the transaction as a cash-out refinance with this same investor and that would make things far more difficult.Follow up if any questions any time!