FIREWORKS NOT INCLUDED!

As you can see, the demolition has begun. You would assume that this only began after great fanfare, excitement and a fireworks display that’s comparable with those seen during the bicentennial celebration. Yes, we had received the good news that the Construction Loan was approved but for some reason, that did not translate into “we can commence immediately with demolition”. God only knows why but once again this was the beginning of yet another long, drawn-out, series of non-events.

The main question/concern, Gina and I had throughout this entire process, is when can we begin demolition? That’s all we were looking for and all we really cared about!! Regardless of all the times and dates that have been bandied about from the financial institutions, we’ve learned that none of these dates have any value nor should be used to actually coordinate any sort of tangible forward progress in the construction process. We’ve have a General Contractor (GC) that’s been displaying near-saintly patience for more than two months now. Keep in mind, we don’t want to lose him...or lose him to another job! We’ve been keeping him updated as best we could, and have set numerous demolition dates based on information we’ve been given over the last few weeks....only to break them when not receiving the okays required. Do we dare tell him that we’ve been told that everything will be in place so he can begin his work on Wednesday?

From what I’ve learned, here’s the sequence of events after the loan is approved. For the GC to begin demolition, he needs to first get a final inspection from the city. He then removes the windows and doors from the structure. Only after that, can he bring the ‘dozer in to level the joint. One would assume that this “pre-demolition” could be done while all this financial minutia was wrapping up. Again, not so. The title company often sends an inspector to the house right before they fund, to make sure no construction has begun. They do this so that they are confident that no liens could be put on construction done prior to their official entry into the process. If they see so much as a temporary power pole or some brightly-colored porta-potty on the site, all bets are off!! If they so choose, they can make us jump through some additional bureaucratic hoops which at this stage, we wish to avoid at all costs. We could jeopordized the funding of the loan with any hint of demolition (or pre-demolition). The most ironic part of this entire process is no one was telling us when we could push the button and begin demolition. Are we really asking too much? Was there no “green-light” moment to be savored? And why did we suddenly feel our finances were being handled by a group genetically linked to the Three Stooges?

Allow me to digress for a second so I can share with you exactly how the events unfolded...

It all began on Wednesday, Jan. 23rd. After many passed deadlines and much waiting, we were verbally informed by John at IndyMac, that all our documents were in order and the Construction Loan was approved. Don’t get me wrong, I’m happier than a pig-in-shit that we finally reached this point, but I sensed that we were not quite ready to break out the wrecking ball. Upon asking additional questions, we discovered that this was only the first step in our quest for the holy grail of demolition. I learned that once “approved”, documents then had to be signed. After that, the loan would be “funded”, at which time, they would immediately payoff the mortgage on the existing house. Once the payoff was “recorded”, we could then begin demolition. My joyous, anti-climactic conversation with IndyMac John, ended with an agreement for us to talk (or should I say, for me to call him), again on Tuesday after 2 pm to confirm funding.

At that time, an appointment was also made for Thursday (if the documents were ready), for a “travelling” notary to come by the office for the traditional signing ritual. Documents were explained, signed and initialed until my Uni-Ball screamed from exhaustion. This took about 90 minutes or so. Though everything was now signed, we were told no demolition could be started until the loan was funded...but before any funding could occur, there was one more minor delay. In an effort to protect the consumer from dubious lenders and their oft mystery-shrouded paperwork, there’s a 3-business day right-to-cancel period that goes into effect. Regardless of how ready we were, we could do nothing until the three-day period passed at midnight on Monday.

While perusing the docs during the signing process, I became aware that I had some questions regarding some of the data on the documents being signed. On the advice Tony, a good friend of ours who owns a funding company and is the closest thing we have to a financial advisor, we were told to sign all the documents...regardless of any questions or errors on the docs. Not signing them would only hold up the process. I was told, any errors could be corrected after-the-fact. My major concerns with the documents were three-fold: 1) the interest was stated at at least three different rates throughout the batch of docs. 2) What I though was to be a fixed interest rate, was now stated as “variable” and 3) for some reason, the amount we applied for was now $100,000 less than we requested...and what we needed. Upon receiving additional counseling from Tony, he told me not to worry about the interest rate and the “variable loan” elements. Though not what we expected, because of the current nationwide economic upheavals, this will all work to our advantage and will save us money. But with regards to the disappearing $100,000, he had no answer. He was concerned and asked me to call John at IndyMac for some answers as to how this happen and why it came to be that we were not informed of this earlier.

Come Friday morning, I attempted to call John at IndyMac to clarify this less-than-anticipated loan amount. Though I had a pleasant conversation with his answering machine, speaking directly with John on this day, was not to be. Come Monday morning, I received a call from John’s manager Cameron. He call to introduce himself and asked how he could help. I asked him about the missing $100,000 and he told me that the loan-to-value ratio on the loan has been changed from 75 to 70%. When asked why we had not been informed of this, he responded in a nonchalant fashion, “Someone should have called you on this.” His concern that no one called us and that we now had $100,000 less to use towards the project, was non-existent. He did though give us a green light to commence with the demolition. Though still lacking in the “fireworks” I had anticipated, this is all we needed. Chris (Mr. GC), was called immediately after hanging up the phone from Cameron, and told he could begin with his demolition process. After yet another conversation with Tony shortly after, I was told that Cameron is not the person who can give me the demolition green-light, this could only come from Sean at the title company. For the novice home-builder who has never done something like this before, I was completely baffled. Not only am I waiting for the word to begin demolition, but now I have to question where this final approval (that no one seems to want to give), needs to come from. Deciding not to frustrate Chris even further at this time, we felt the word of the IndyMac manager is good enough for us...and Chris was not informed of the new development.

My 2 pm conversa-tion on Tuesday with John turned into an e-mail saying “We received your signed loan docs late this afternoon and our funder did not have enough time to review and fund before our 2 pm cut off time. I will check with her, but it seems that everything is in and will be ready to fund tomorrow morning.” The pictures you see where taken at just about the same time. Thanks to IndyMac being ever-alert and on top of their game, we had begun the demolition process before the house had been paid off and recorded...and to make matters worse, it seemed as though now the earliest this could happen would be sometime on Wednesday.

Maybe our desire to have an definite, concrete moment where we could open the champagne and celebrate, was asking too much. I’m not certain at this stage that there even is a point where we can declare some sort of momentary victory. We’re looking for nor do we expect any sort of fireworks at this stage of the game but just some sort of sparkle of life from some of these people would have been encouraging. Regardless, we are on our way!


P.S. Because writing this has taken so long, I have a last minute addendum. After calling IndyMac earlier today (Wednesday), I was told that the loan was still not funded and that it might happen later today. I could contain myself no longer and had a very heated conversation with John where I’m certain I impress him with my vocabulary. Surprisingly, I received an e-mail from John informing us “I am happy to tell you we funded your loan this afternoon and wire was send out to the closing agent.” Though the funding will not be recorded until tomorrow, the bulldozer is at the house literally taking out the garage as I write this. I’ll have pictures for you tomorrow, if I head doesn’t explode first!!

HURRY UP...AND WAIT!!

Following the last posting, I honestly felt that in a few days we would be able to announce that last step in the pre-construction fiasco was complete and demolition was eminent. Wrong again!! It was so close that we felt that “the following day”, we would have everything secure and be able to break the big news and show you pictures of a demolished house. Here it is almost three weeks later and the house is still standing. What's up with that? So in lieu of having some sort of big news to announce, you’re stuck again with my ramblings, rantings and ravings. Very frustrating for all!!

While working on all the prerequisite pre-construction stuff, we were also finalizing all that was needed for our Construction Loan. This was never the route we wanted to go. Original plans were for Gina and I to orchestrate the entire construction ourselves, acting as the general contractor. We both have organizational skills, we both have been involved in working with contractors (and artists) and we both know we can play well with others. Knowing that a General Contractor takes 10-15% of the costs as his fee, this was also an opportunity to save some money and to actually be able to afford all this.

To say this project quickly got out-of-control, is an understatement. We went into this thinking this would be just a remodel that would give us the space we wanted. We felt that if we juggled our limited resources a little, we could afford all this without too much bleeding. Wrong once again!! Our good intentions for a variety of reasons, quickly snowballed into a major construction project that required a complete teardown of the existing building and costs that challenge the national debt. I’ll try to quickly summarize the evolution of this power-shift.

The existing house is about 1100 sq. feet and was built in 1951. Unlike most homes now built in California built on a concrete slabs, it has an elevated floor with a crawl-space (not basement!!), under the house. A cute, yet small house (and single-car garage), that had old plumbing and electrical wiring. We have a great location, and though a couple blocks from the ocean and considering well never be able to afford beachfront property, we have a pretty good view of the water. The goal was to build a second floor, rewire and replumb the entire house and create at least, a two car garage. At some point during the process with the architect, it became clear that for structural and construction code reason, much of what we wanted was not achievable using our existing foundation and wall structures. Things quickly escalated and somehow, a complete teardown was the most logical option to pursue. Though “logical”, the construction of a brand new home was nowhere close to what we had to spend. Time to find that magical money tree in the backyard...I think it’s the one the unicorn is lifting his leg on?

To make a long story short, Pandora’s Box was now open.

#1 You cannot tear down your existing house without really pissing-off your existing mortgage company. If they find out, they can demand immediate payoff on the loan. Trying to get a new loan from the bank on property that’s been demolished is pretty tough and more expensive that need be.

#2 The only way to properly take care of this is by acquiring a Construction Loan. This temporary loan not only funds the new construction, it also pays off the existing mortgage. Of course, the interest rate on this is higher than a traditional mortgage and there’s bank fees involved. I’m now seeing the tip of the iceberg. This is the first of many hands that will be reaching into my wallet.

#3 To acquire a Construction Loan, a licensed contractor needs to be “set-up” to make the banks comfortable. Though with great perseverance and filling out even more documents, we could have possibly positioned ourselves as some sort of “owner/builder” thing, there are some battles that just are not worth fighting.

#4 For some silly reason, the banks will only loan you money if you a) can show them that you have the ability to pay them back and b) have enough money and assets to pay them if you default on the loan for any reason. We now somehow had to show them that we were worthy of receiving a loan from them.

The entire Construction Loan process has taken months. That would be more than understandable if we had shitty credit or a God-awful FICO score, but we don't...and to make matter worse, we got trapped in some sort of sub-prime limbo. I guess when the Pope recently declared that limbo, the place where the souls of unbaptized, innocent babies spent eternity, did not exist and was no longer part of the church's doctrine, it had to go somewhere!! Just our luck, it became a resting spot for us prior to our entry into “Construction Hell”!!

After investing considerable time in the process, weathering the holiday (which for some reason, people can’t operate in any professional capacity during), we were very close to getting everything locked-up. Did you hear this week about how IndyMac let go 24% of their work force this week? Guess who we were getting our construction loan through? You guessed it!! I called Tim (our IndyMac rep), up on Wednesday to confirm that he received the final documents he requested from us and to receive an ETA from him with regards to final approval. When his answering machine told me that he “no longer worked for the company”, I was floored. Not only did we get nailed by the current Sub-Prime over-reactions by the financial institutions, we now got hit again with staffing reductions. Unfriggenbelievable!!

Once the blood pressure settled, we hopped back into the fray to see how best to continue. At that point, we learned that our files had been handed over to Dana in Atlanta, GA. Maybe we were spoiled and got use to dealing with a rep in CA, but Atlanta? For some reason, John (Tim’s assistant here in CA), did not get canned and was trying his best to service our account. Though everyone at IndyMac was running around in some sort of post-apocalyptic state, John asserted himself and did his best to keep the process moving. We suddenly actually received some unexpected good news. John asked me if we would like to lock-in our interest rate on the loan. Not only was this good because it gave us hope of impending closure, but he also offered us a 6 1/2% rate...with no points!! All of these delays we experienced finally paid off for us. Because of the extremely crappy current state of our economy mixed-in with the impending elections, interest rates went down radically. The previously bandied rate of 8 1/4%, just dropped considerably which will save us thousands of dollars every month. Yahoo!!

That’s were we currently stand. We have been told that we should have approvals and documents to sign by the end of next week. We will keep you posted and will hopefully providing you with a very positive update shortly.



Not intending for this to run so long, I will conclude this week with two thing. The first is a glimpse of the elevation plans for the house. They may not be 100% accurate, but they are the last set of digital cad files we received. Everything else has been provided to us in the form of traditional blueprints. Take a look. We should have a great ocean view from the first floor, an even better view from the second floor deck and an incredible view from the third floor deck. If we can make this all work out financially, it should be perfect!!

...and because we can do whatever we feel like on this our blog, I'd like to close this entry with my thoughts and opinions on possible Super Bowl outcomes. Though it's likely that New England will win, in my opinion, it's far from a shoe-in. All four of the remaining teams have the talent to go all the way, but now we get to see who really wants it and who can best handle the intangibles of the sport. Here's my comments on all four teams:

NEW YORK GIANTS...I think they may be the surprise of the year. If they can survive the cold of Green Bay this week, I'd really consider putting some money on them. Screw the house, I'll take all the construction loan and "invest" it on the NY game!!

GREEN BAY PACKERS...I really do not believe they can pull this off. I think we should all make some sort of blood pact with Brett. We'll give him one last Super Bowl win only if he promises to retire immediately after.

SAN DIEGO CHARGERS...They have the potential but they just don't seem to be able to make it happen with any consistency. If Rivers is unable to play this weekend or the Super Bowl game, all bets are off!! They'd need a miracle to even have a chance to make it happen.

NEW ENGLAND PATRIOTS...They of course are the obvious favorites. Though the announcers are making their "perfect season" unbearable, they have the ability to win if they don't start believing too much of the hype themselves. They're good, but their shit still stinks. If they're not careful, their attitude may be their downfall. On a bright note, Gina will be very happy if the Pats win. If they lose, I really don't want to be around...it will get ugly!!

Enjoy the games and enjoy the weekend. Keep your fingers grossed that the next entry will be complete with photos of an empty lot!!