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Buyers Need Recourse for Delayed Closings

By
Real Estate Agent with The Boulevard Company SC 66445

Twice this month the VA caused major delays in closing for my clients. In one scenario I was the listing agent; in the other I represented the buyer. Thankfully each one helped me see and understand the side of the other, but I wasn't homeless and living in a hotel room with four kids for two weeks, nor was I trying to plan a cross-country move without a target move-in date.

Granted the closings for each of these houses was scheduled to happen at the end of November, which was the supposed end of the $8000 tax credit for first-time home buyers. Each of the buyers for these two purchases were first-time home buyers, so they both wanted to meet the November 30 deadline. Fortunately the tax credit purchase deadline was extended, because neither of these closings happened in November.

Both buyers were veterans using VA benefits to purchase their homes. Both closings were drastically delayed because the VA appraisers were so far behind in completing their work. Neither lender for these buyers was able to communicate with the appraisers since the law doesn't allow communication between the lender and the appraiser, so it was difficult (impossible) for me and the other agents involved to keep our clients informed and believing closing was really going to happen.

Each closing was 10-14 days delayed because the VA got so far behind with the appraisal process. The delay cost each buyer large amounts of money due to travel expenses, extended hotel stays, etc. What is the recourse for them? What can we do to help recoup the money they lost? How can we "punish" the VA for what happened? This is a program used by millions of people - shouldn't there be something in place to require them to work more efficiently for the sake of these families?

Posted by

Stephanie Davis REALTOR® ABR, GRI, SFR
© Carolina One Real Estate

843-870-0890

Serving Goose Creek and the Greater Charleston, SC area
www.agentinthecreek.com

Graziella Bruner
NCS Premier Real Estate - Detroit, MI
Associate Broker - Serving Wayne & Oakland County

My first experience with VA buyers was about 12 years ago and I don't believe the system has changed much.  I did my homework and found out about the whole process and the length of time it would take to get a VA closed. Then I informed my buyers of the process and what was required and all of the red tape and time it would take from start to finish to get into their home.  Our deal was going to take any where from 4 - 6 months from start to finish. So, I told them 6 months. 

I think punish is such a strong and harsh word, it's a great 100% financing program for Vets w/zero down and it works, just takes time, but it works.  I would suggest to get more involved with the lenders who do VA loans and become more informed of the process and the length of time it normally takes to get a deal done from the easiest to the hardest ones.

Dec 31, 2009 01:20 AM
Jerry Murphy, CRS, SRES
Long Realty West Valley - Anthem, AZ
Anthem, Phoenix, and Scottsdale AZ Real Estate

I feel your pain Stephanie.  We currently have a closing where we are representing the buyers who are utilizing the FHA loan program.  Due to some FHA case number gobbledy gook the closing got delayed for two weeks.  Our buyers signed yesterday only to find out the home won't close until next Tuesday because the seller, Freddie Mac, has to review the HUD and sign all of their docs.  That takes 4 days?!  Meanwhile our clients have been homeless (they moved out of their aparment on Dec. 21st) for the past week and a half.  I just don't understand the lack of compassion and urgency with people sometimes.  Don't they understand there's another person on the other end of these deals whose life is being held in limbo?  Great post, happy New Year, and best of luck to you.

Dec 31, 2009 01:20 AM
Bill Lauler
Chase Realty LLC - McLean, VA
Associate Broker,CIPS,CRB,SRES,GRI

Hi Stephanie , I just completed a settlement from hell.Have you heard of the new FHA guide lines . The property was meant to settle on the 11th of December,did in fact settle on the 28th of December.This was not a short sale or a foreclosure and it did cost my client the seller a lot more in condo fee's,taxes and frustration in general. As to the VA .,last month I had a closing with a VA loan with a disabled veteran.Not only did the lender lie to my client they made him pay the funding fee an they have as of yet to correct that problem.Their appraiser was from West Virginia.,this house is in Virginia and a new home,the lender further missed up the $8000 tax credit an this is still to be worked out...Just remember your client and mine are just another number to them!

Dec 31, 2009 01:26 AM
Paul Warkow
Paul Warkow-D.G. Weber Law Associates - Hauppauge, NY

Stephanie, I am confused.  The appraisal rules you are talking about, HVCC, does not apply to VA loans.  There should be no reason why you could not communicate with the appraiser.

Dec 31, 2009 01:27 AM
Norm Werner
Real Estate One - Milford, MI
Helping the first time and every time

The point that Paul made about HVCC rules not applying to VA loans actually points out one of the issues for us all - there are too many sets of rules to try to keep track of. Even seasoned mortgage reps have trouble with the rules that charcterize and differentiate VA, FHA, USDA or conventional mortgage. Thrown in the newer HVCC rules, the new FHA guidelines for good faith estimates and HUD-1 reviews and you have a confusing mess for everyone. I know that many of the new rules were put in place to try to prevent fraud or to supposedly simplify and clarify things for the buyers involved; however, things are more confused than ever going into 2010.

Dec 31, 2009 02:05 AM
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic

Hopefully it will get better in 2010. There are too many rules on top of rules. It needs to be streamlined. We will see.

Dec 31, 2009 07:32 AM
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

Closing delays seem to be on the increase.  We used to be concerned aboutonly the Buyer's mortgage process but now with so many Short Sale with which to deal, it is now common for the delays to be a result of lengthy reviews by the SELLER's mortage company(s).  Unfortunately, the agents are just left "flapping in the breeze" with absolutely no control over the process.

Jan 01, 2010 02:48 AM
Stephanie Davis
The Boulevard Company - Charleston, SC
Broker Associate and REALTOR®

Graziella - Yes the 100% financing provided by VA is a great program, but I feel it takes advantage of the buyer's vulnerabilities. It needs to be more streamlined and there should be a way to hold them accountable for the hardships caused by extreme delays.

Jerry - I've had folks endure the same situation where they were buying a foreclosure and closing was delayed because the lender/seller took several days to review and sign HUD docs. Lack of urgency and compassion - couldn't have said it better myself. Thanks for commiserating with me.

Annie Lauler Corporation - Just another number is right. In Realtor Magazine this month two different articles stated that it goes against the ethics policy for appraisers to travel more than 50 miles to do an appraisal. There is no governing agency to regulate this and they are not regulating themselves. That needs to be addressed.

Paul - I think there is a lot of confusion as to who can do what and when and where. I think you are right that HVCC does not apply to VA. Many lenders are using it across the board because they don't understand the rules.

Norm - It is a real mess, and buyers take it personally when the loan process drags out. I'm telling all my buyer clients these days not to be surprised if the lender delays closing, asks for duplicate documentation, extra documentation, or redundant documentation. I'm seeing it with every deal I do.

Robert - Let's hope so!

Tom - It's that lack of control that really bothers me, because it never feels like I'm doing enough for my clients. I've only been in the business 2.5 years but I can see a huge difference between the first couple deals I did and the ones I'm doing now. Those first ones were a breeze! I'm hoping we can get back to those days.

 

Jan 04, 2010 12:56 AM