YOUR BUSINESS AUTHORITY
Springfield, MO
YOUR BUSINESS AUTHORITY
Springfield, MO
Pathway Properties Joplin LLC and Michael C. Fusek, both of Springfield, allege that Destiny Capital Mortgage Inc., of Richardson, Texas, engaged in fraudulent misrepresentation, negligence and breach of contract regarding a rate-lock agreement reached prior to the plaintiffs’ purchase of property at 732 S. Range Line Road. The property itself – a retail center with a Quiznos, Aaron’s and Sprint store – is not part of the lawsuit.
The lender denies the plaintiffs’ claims and says that the agreement expired before the closing date.
Rate-lock agreement
According to court documents, Pathway Properties applied for a $1.6 million loan from DCM on April 24, 2006.
The application indicates that the rate would be determined by a rate-lock agreement.
Two days later, on April 26, Fusek signed an agreement to lock the interest rate at 4.99 percent plus 120 basis points with a rate-lock fee of half a point at close. The terms said the agreement was scheduled to expire in 45 days.
Pathway Properties claims DCM’s agreement guaranteed financing at the rate of 6.18 percent.
In its court pleadings, Pathway Properties says DCM promised financing at that rate even after the expiration of 45 days. Pathway Properties says it told DCM that the company would be in default to the seller of the property if the deal didn’t close on June 14.
Pathway Properties says that on June 14, DCM faxed closing documents reflecting the agreed-upon rate but later told the closing company to not let Pathway Properties sign the documents until it sent a new set of documents.
Pathway Properties says that DCM then faxed new documents with the interest rate of 7.8 percent. Pathway Properties refused to sign the documents with the higher rate.
Pathway Properties called DCM’s actions a “bait-and-switch” maneuver.
Fusek declined to discuss details of the issue when called by Joplin Tri-State Business. “My advice is don’t get involved with out-of-state lenders,” he said.
In its court response, DCM denies Pathway Properties’ claims and said the rate-lock agreement expired June 10.
According to the agreement, “If the loan does not close within the rate-lock period, the commitment will become null and void unless otherwise agreed to in writing by DCM. In this event, DCM will maintain your rate, points and terms to the best of Destiny Capital Mortgage Inc. ability given the current market conditions.”
DCM denied that it provided closing documents at 6.18 percent on June 14 and argues that it instructed the closing company to hold documents that included a rate of 7.8 percent.
“No extension to the rate-lock agreement was offered neither orally or in writing,” said Trey Dyer, a Dallas attorney representing DCM, in a telephone interview.
“Our contention is the rate-lock agreement expired on its own terms.”
Seeking a settlement
On Aug. 16, Pathway Properties’ attorney Brian K. Asberry of Springfield firm Neale & Newman LLP sent a letter seeking a $200,000 settlement to DCM CEO Baron Hopgood.
Asberry said that DCM’s delays cost Pathway Properties $32,000 in closing costs and other damages in excess of $250,000.
“The bottom line is your company’s conduct over a period of several weeks caused much damage to our client,” Asberry wrote to DCM. “We believe that your company’s ‘bait-and-switch’ tactics will not be endorsed in a court of law.”
Asberry said in the letter that Pathway Properties obtained financing for around 7.5 percent. A deed of trust dated June 22 and filed with the Jasper County Recorder of Deeds shows that Pathway Properties obtained a $1.64 million loan from Arvest Bank.
Asberry’s attempts to reach a settlement apparently failed. He filed a civil case against DCM in Greene County Circuit Court on Feb. 21 seeking unspecified actual and punitive damages and attorneys’ fees.
The case moved to federal court at the defendant’s request on March 26.
Asberry declined to discuss details of the case but said the issue underscored the importance of the relationship between a borrower and a lender.
“I think the idea of having a personal relationship with your banker – while not critical – sure makes everything easier,” Asberry said.
“There are a lot of issues that can come up and do come up in lending … and my experience has been … that the entire lending transaction goes more smoothly,” he added.
About Destiny Capital Mortgage
Destiny Capital Mortgage Inc. is a Richardson, Texas-based commercial mortgage lender specializing in commercial and church lending. Its Web site is www.destinycapitalmortgage.com.
About Pathway Properties Joplin
Pathway Properties Joplin LLC shares ownership with Pathway Properties LLC. Both entities are based in Springfield. According to its Web site, www.lookin
house.com, Pathway Properties LLC markets luxury homes, duplexes and apartments in Springfield.
Jeff Wells is editor of Joplin Tri-State Business, Springfield Business Journal’s sister publication.[[In-content Ad]]
Under construction beside the existing Republic branch of the Springfield-Greene County Library District – which remains in operation throughout the project – is a new building that will double the size of the original, according to library officials.