One of my colleagues was very happy to get a contract ratified for a beautiful condominium unit here in Washington.  Everything looked good.

  • The buyer was a compulsive early bill payer with pristine credit and a great job - the lender loved him.
  • The buyer was making a large down payment - a little over 20%
  • The home inspection was totally non-eventful.
  • The appraisal went through without a hitch.
  • The building was about 95% owner occupied, so it more than met the lender's investor unit guidelines.
  • The sellers had equity in the unit and were completely up to date on their mortgage and condo fees, so no problem there.

What, we wondered, could have gone wrong?

Well, there had been a couple of short sales in the building.  So this major lender decided they didn't want to finance units in that particular condo project.  They declined the loan at the last minute.

Huh?  The short sales were history, and whatever they sold for had to be reflected in the appraisal.  They had been included in the comparables, after all.  Yikes!

DC is not exactly Short Sale Central, and I have yet to list or sell a house or condo in this category.  But watching stuff like this unfold has created a new respect for those of you who have short sales and foreclosures as a major part of your business.

And I guess this is one more thing we have to look out for when we are helping our clients find a new home in a condo.

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66 Comments on Oh! No! Another Excuse For The Bank To Just Say "NO!"

20 Most Recent Comments Displayed Show All

MAY
22
2009
569,437 Points 1 Featured Post Localism Sponsor Outside Blog Attended Rain Camp

Lets give the banks more money to lend so they can find a reason not to lend to a good buyer.
4:21pm • #47
629,905 Points 18 Featured Posts Localism Sponsor Outside Blog Called Shot Master

What will they think of next to keep folks from buying a home.  
4:29pm • #48

How disheartening for everyone! Last minute nightmare. Thanks for sharing.
4:33pm • #49
1,913,864 Points 386 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Hi, Guys!  Just got home and found the little gold star and all of your comments.  As I mentioned, this is a colleague's transaction, and the first order of business was to switch lenders.  But it is important for those of us who do condo sales to realize that this is probably going to be one more hoop that many lenders will ask us to hop through.  And I, for one, am going to avoid the offending lender here like the Swine Flu!
4:38pm • #50
1,002,177 Points 43 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Patricia - Your life as a real estate agent will not be complete until you endure a short sale or two!  Seriously, I hope you continue to "miss out on all the fun" those transactions provide.  I'm trying to persuade a buyer to wait another month for a decision from the lender--and we've already waited a few...
4:44pm • #51
366,398 Points 17 Featured Posts Localism Sponsor Outside Blog Hit Router Called Shot Master

Pat - I agree with Jason, it seems like banks are finding excuses to say NO.  Really crappy is that it is at the last minute, not just our hard work, but the buyers and sellers are so disappointed.  And in the case of a short sale, if foreclosure is in the timeline, it may be too late to find a new lender.
4:58pm • #52
606,826 Points 71 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Pat - I have had 2 condo short sales close this year, but both were delayed closings because of lender requirements for info and their strict guidelines. One we had to switch lenders and that one only squeaked to the finish line.

... not an easy transaction at all ... good luck !!!!

Sheldon
5:11pm • #53
1,150,600 Points 53 Featured Posts Outside Blog

Pat,

I know of a deal here where the lender refused to lend because too many of the condos, in the particular building, were owned by one man. That was a risk.
5:20pm • #54
653,443 Points 9 Featured Posts Outside Blog Called Shot Master

I am surprised they would just turn it down like. Sort of a jerk move...I know its there money...but...
5:22pm • #55

Personally, I believe the banks are using their "bail-out" funds to honor their derivative obligations rather than revive the real estate industry.  
AJ Bataiff
5:32pm • #56
1,519,666 Points 112 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Pat:  That absolutely stinks!  Yet, somehow, it doesn't surprise me.  Short sales will be the end of us all.
7:28pm • #57
814,224 Points 164 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Pat, what a joke. This is all rather like shutting the barn door after the cow escapes.

Congrats on the gold star!!!! :D
7:48pm • #58
650,291 Points Localism Sponsor Outside Blog

Oh my - welcome to the world of short sales -- they do have a way of messing up a number of things that otherwise would not be messed up.
8:02pm • #59
1,419,798 Points 52 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

I'm hoping this will not become prevalent in the Las Vegas market. This is definitely something to keep in mind on all future short sale offers.
8:03pm • #60
645,174 Points 15 Featured Posts Localism Sponsor Outside Blog

Goodness.  This appears to be a violation of one's civil rights.  Turned down for a loan because of a building!  Unfair.
8:09pm • #61
1 Featured Post

Welcome to our world in Florida. Even established complexes that are strong with their reserves and no defaults in their association fees are being turned down. One of my agents has gone thru three lenders on one unit. They will make up any excuse right now NOT to lend on a condo! Good luck to your colleague on getting it financed.
8:48pm • #62
1,352,557 Points 42 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

If the short sales were figured into values, the only thing I could see would be concern that more short sales would cause further value decline?
11:41pm • #63
MAY
23
2009
Outside Blog

Pat - The only way I have sold any condos here is CASH.  Too many condos are vacant and in foreclosure. 
9:18am • #64
1,375,534 Points 151 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Condos have become pretty much unfinancable in our market.  They are scrutinizing:  HOA defaults and investor concentration and the numbers they put up to beat are pretty ridiculous.  SO ridiculous it would be hard to hit in a "normal" market.

SO I call condos "cash only" in Vegas.
12:00pm • #65

as the owner of an appraisal fee shop for the past 20 years that does sound bad for the lender. Was this a conventional loan or gov't loan product they were trying to use? M
Mike Young
7:47pm • #66

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Patricia Kennedy

Washington, DC

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Evers & Company Realtors

Address: 4400 Jenifer Street NW, Washington, DC , 20015

Office Phone: (202) 364-1700

Cell Phone: (202) 549-5167

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Pat Kennedy -- author of The Irreverent Guide to Real Estate -- gives you a look at life on the streets as a real estate broker in our nation's capital. And her blog is peppered with great advice combined with humor!


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