It's a story of highs and lows, tears of joy and tears of sadness. This escrow was literally a test of the wills and endurance for my buyers. It all started in December of 2008 when I found this house in Anaheim, CA, that I thought my buyers would really like. I had been showing property off and on to this couple for two years already and finally we found this home. They loved it. It was the right price, the right neighborhood, and the right location in relation to their jobs. Everything was perfect, including the fact that it was a bank repo and not a short sale.
The first day the home went on the market we made an offer above asking price. The listing agent, on behalf of the bank servicing the loan (Wells Fargo), countered all the offers and asked everyone to submit their highest and best offer. We submitted our highest and best offer which was $20,000 over the asking price and won the bidding war.
Within a week we opened escrow with an anticipated closing date in mid January. The bank gave us until mid-February just in case it took longer to arrange financing. During this time the FHA guidelines for loans were constantly changing and mid January came and went. In fact, we were going to be cutting it close on the deadline for closing in February. Finally, after a lot of work on behalf of the loan officer and myself we got loan documents issued and the buyer signed them. Once those are signed, all that is necessary is to "fund" the loan and record the sale at the county recorder's office.
It's not so bad up until this point except that the loan took longer to get into place than anticipated. Then everything changed.
Wells Fargo had given us until February 16th to close the escrow. We were ready to close the escrow on Friday, February 13, 2009. On Thursday at 4 pm I got a call from our Title Officer at California Title. In a last minute check to make sure that there were no new issues with the title to the property he discovered a lawsuit that had been filed by the previous homeowner against the mortgage company, mortgage broker, and the bank who owned the loan (HSBC Bank) asking the court to halt the foreclosure proceedings.
The closing was off. My buyers were devastated.
Over the next few weeks all the parties involved went round and round on whether or not the property could be sold. There was evidence that the lawsuit was not served properly. The attorneys who filed the lawsuit said that they were going to drop the case from their firm or reassign it to a new attorney. My buyer's lender wouldn't fund the loan unless they had proof that the lawsuit was dropped. The title company was willing to write a policy even though the lawsuit was there. The buyers were willing to take on the risk, knowing that title would write the policy. Escrow didn't know what to do. My buyer's had already wired over $25,000 to the escrow company for closing. Wells Fargo attorneys couldn't give any answers to the potential outcomes of the lawsuit. It was a mess.
After about two weeks of riding a merry-go-round and getting nowhere, Wells Fargo unilaterally cancelled the contract and the escrow was over. However, escrow is never over until both parties sign cancellation instructions.
My clients received their cancellation instructions but were completely heart-broken. The instructions stated that the escrow had been cancelled by mutual consent and this was not the case. They clearly did not want to cancel escrow and were being forced to cancel. They did not sign the cancellation instructions. To our surprise, no one on the other side followed up with us so we simply did not respond. We just stayed quiet for about a week.
In the mean time, my buyer did some investigating at the court and found out that the lawsuit had been filed in November 2008, one month prior to Wells Fargo putting it on the market! Angry, my clients and I all wondered why the house would even be put on the market if the lawsuit was already filed.
At this point we decided to ask Wells Fargo to reimburse my buyer for their out of pocket expenses because they clearly should not have put the house on the market. Thankfully, the bank reimbursed my buyers for the Termite work, which they had agreed to pay for, the Home Inspection, and their Appraisal Fees. It took about six weeks to get these paid.
During these six weeks, I began to show other property to my buyers, we found a few and wrote a few offers but nothing was accepted. Writing each offer, however, was tough. Their hearts were not in it because they were grieving the loss of the first escrow.
At the end of March my clients had finally come to terms with the loss of this house and were ready to send in their cancellation paperwork so that they could get their $25,000 back from escrow that was still on deposit. Before we sent in paperwork, I decided to call escrow to see if they had received cancellation from the bank. They had not. "That's odd," I thought.
So I decided to call the listing agent. He confirmed that they had not signed cancellation because we had not and he called the contact at Wells Fargo to see what was going on. To all of our surprise the contact said that there were expecting some "favorable" news in regards to the lawsuit. Upon hearing this, we did not turn in our cancellation paperwork. Instead, we chose to wait.
My buyer headed back to the court and found out that neither the seller, nor their attorney's showed up at a court hearing at the end of March and Wells Fargo asked the court to dismiss the case. A new hearing was scheduled for the end of April. Again, they decided to wait.
Shortly after the April hearing date I went down to the court to find out the results. The case was closed and dismissed. This was great news!
With this news, I called the listing agent again and he called the bank. He found out that even though Wells Fargo did not cancel the escrow with the escrow company, they had fully closed it out of their system. In fact, the contact person at the bank that was managing the home sale had also changed. This new person had to be convinced that we still had an active escrow and that it would be wrong to sell the property to another person other than my buyers. Despite the obvious, they forced the listing agent to put it back on the Multiple Listing Service, and my buyer had to re-write the exact same contract as before and resubmit it to him. We did this in about 2 hours for fear that we would lose the house. The listing agent changed the status on the MLS to "pending" immediately and we starting working toward getting my buyers the house again.
Even after we got the contract in, Wells Fargo decided that they wanted to open escrow with a new escrow company and a new title company. Again, the listing agent had to argue with them to convince them that we already had an active escrow and title policy in place and that it was unnecessary. While they eventually agreed to our arguments verbally, they did not change the escrow company and title company in their computer systems. Now we had to argue with the "new" escrow and title companies to tell them that there were not going to be involved. Finally, our "old" escrow officer talked with the "new" escrow officer and told them that she already had the buyer's money and that seemed to work. We were going to use the old escrow.
Now title had to do the same convincing because the computer system said that another title company was not going to be used. We eventually won that battle too.
It took about four weeks just to get these things straightened out and now we are in May. Then we had to deal with changing FHA guidelines and changing underwriting guidelines for the loan again. New loan documents had to be drawn but more paperwork from my buyers was required. Updated information from the title and escrow companies were required. This process took far too long, and it nearly cost us the transaction again because we had one new deadline that needed to be met. In order to close the transaction, we had to do it prior to the expiration of the original appraisal.
In the end, we ended up closing escrow almost two weeks after loan documents were signed and only one day prior to the expiration of the appraisal. We were on pins and needles the whole way. The escrow was cancelled, dead for two months and it came back to life. It almost died again due to an appraisal expiration date and changing loan conditions. No one knew if it would actually happen, but it did.
In June I finally handed my buyers the keys to the house that they fell in love with in December. Their persistence, research, patience, and prayers made this possible. I count it a privilege to be able to work with such fine people in this business like this couple. The hard work and hundreds of phone calls and countless hours of follow up resulted in making their dream come true.
Oh, did I mention that they are first time homebuyers? What an experience and what a story. Congratulations Robert & Jessica on your new home purchase!
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