January 11, 2001

Steven Hoskins
Construction Loan Manager
Grand West Financial Limited
Fax: 719-632-7506

Re: Closing

Dear Steven,

Let me bring you up to speed on a number of points you mentioned in your fax dated 1-10-2000.

In order:
When we signed the 4th Draw, NorthStar faxed a copy of it to Kevin. While still in the offices of NorthStar, my wife talked to him and he replied, "I have it right here in front of me". When I talked to Kevin on December 27th concerning the 4th Draw, he told "there's nothing to go through", that I had "merely approved numbers". Kevin has a copy of the 4th Draw and intimate knowledge of same. It was represented to us as a routine draw. It was on the same forms as we had been given for the 3rd Draw.

No one has said the Grand West "is responsible for cost over-runs". The paperwork that we signed with Grand West states very clearly that Grand West will assign an inspector to confirm that all work has been done before sending draws to the lender for payment. In the same section, it states that we must sign the paperwork so that Grand West can perform this function. It does not say that our signature is an acceptance of the amounts nor does it say that our signature constitutes verification of work done. Since the first two draws were made while we were still in Virginia, there is no reasonable manner in which we would have been able to confirm the work done. The paperwork signed with Grand West and Rocky Mountain indicates that the work would be confirmed by both before payment. Additionally, when we arrived on November 18th, we wanted to go into the house. NorthStar denied us a key and access, stating insurance concerns as the reason. When we were presented the 3rd Draw on November 22nd, there was no way we could have confirmed anything on that list. We subsequently gained access around December 7th when a sub-contractor left the rear door open.

We never said a final CO was necessary, just, according to Kevin, a final inspection that has passed Park County. We already have a TCO. Kevin indicated all he required was a passed final inspection. The final inspection has failed 3 times. Park County says the house is not acceptable. Are you saying that your policy allows you to close on a home that has failed inspection?

On December 29th, we were prepared to close on the house. We had the certified check for $12,000 and were ready to appear at the pre-arranged time of 1 PM. At 11:45 AM, NorthStar's electrician appeared. Barbara Robbins was already on site. Thirty minutes later, the electrician left to get a breaker for the breaker box. Before Barbara Robbins left, she called Pikes Peak Title and informed them that closing would be delayed because of the work being done on the house. Ms Robbins told them that closing would be delayed until 4 or 4:30 PM. Karen immediately called Grand West to inform them of the delay. Karen remained on site to provide the electrician access to the breaker box. Ms. Robbins indicated that she did not like to be the one to do that once there were personal possessions in the house. The electrician returned at 2:30 PM with the parts and was finished at 3:10 PM. Shortly thereafter, Karen left for Woodland Park. We were both there with paperwork in hand, ready to close, near 4:30PM. We were told closing was postponed because the other parties involved had to leave. We did not postpone the closing. NorthStar and Grand West made that decision, not us. Everyone else walked away from the closing table except us.

On December 30, we discovered that NorthStar had failed to provide the house with water. Again, NorthStar, or one of their contractors, had failed to perform as promised. Considering that NorthStar had had 8 days to correct the problem before the original closing date of December 29, we felt that going to closing without water was not an option. We did not feel we could trust NorthStar to resolve the problem once they had received their final payment. As it is, it was January 5th before the water was running and January 9th before we had hot water in the house. We did not realize that the house had failed the December 29th inspection until January 9th.

In December, when we indicated our willingness to close, we inquired whether it would be permissible for us to begin moving our belongings into the house. We indicated that we were paying for storage bins that would soon have to be renewed. Kevin granted us permission provided we did not live in the house. As we told him, we had no intention of moving into the house until we closed and had water. We simply wanted to be able to begin the emptying of the storage bins. He told us to go ahead. Later, we talked to Monica Wasden of Rocky Mountain. She stated a concern that we had moved into the house. We repeated what we had told Kevin: we would not live in the house until it had closed. She said that it was all right with her as well as long as we were not living in the house. We have permission from both Grand West and Rocky Mountain to have our belongings in the house. We are living in the TraveLodge in Colorado Springs (719-632-4600) and will continue to do so until the house is ours.

We are not in breech of any contract. If anything, Grand West has failed to meet it's fiduciary responsibilities in this case. At every turn, Kevin has loudly and vigorously defended NorthStar, even to the point of yelling at us on the telephone to "back off". As for resolving these issues with the builder, we have been attempting to get answers to over-runs since November 22nd and we still have not been given any. Our questions have been brushed aside with the response, "we'll get back with you." When I questioned Kevin concerning some of the monies on the 4th Draw, he replied, "there's nothing to go through" and that we had "merely approved numbers".

Since our verbal communications seem to have failed, we are now putting everything in writing. We want to get these issues resolved and obtain title to our house so we can move in. We have been in a motel room since November 18th and are eager to do this. We have requested cooperation from NorthStar, Grand West, and Rocky Mountain. NorthStar ignores our requests while Rocky Mountain and Grand West say it's not their responsibility.

  Michael Meadors
Karen Dudnikov
Fax: 617-687-7748
Phone: 719-539-8032