A transaction that was cruising along just so well, almost too good to be true, and then right at the last minute while waiting for the clear to close, an underwriter decided to do some muscle flexing.
Ideal clients, with the house going under contract on Mar 21 and we closed on April 14. A 2300 sq ft Colonial sold for $296,000.
The buyers have their home under contract and were well enough positioned to be able to close on their new house before their current home got sold. The Inspection showed some minor problems, but not at all unexpected for a foreclosure, especially when the the previous owners were forced into foreclosure because of a spouse dying.
There are so many peculiar things happening in the market with banks being cautious about their loans and being sensitive to excessive government scrutiny, that it would be understandable that caution would be present.
The loan officer did an admirable job keeping the transaction moving, and the buyers were likewise prompt with their requirements. Even the agents kept things moving, and it's known that we seldom do anything once the banks take over. In this transaction, at the last minute the underwriter decided that the plumbing issues identified in the inspection would need to be addressed by a licensed plumber before the clear to close would be granted.
The culprits were two cracked unions on plastic waste pipes. These were items that the inspector identified as items that should be addressed by a licensed plumber. I am not a licensed plumber, nor would you need one to replace a $1.25 plastic union. But this underwriter needed to see the receipt from the plumber and went so far as to check the license number against state records.
With a 60 page inspection report in their hands it's truly amazing that they didn't get further into the report or maybe they would have seen these minor issues also.
How about the cracked chimney that actually moved, or the carbon monoxide escaping from the chimney flue because it wasn't sealed?
Or how about the support bolts missing from the 26 ft deck that's 15 feet above grade level.
I did have some words with the loan officer, and he had to defend his co-workers. He talked about federal regulators reading the paperwork and their bank's exposure if the issues in the report had not been addressed properly causing them to take the heat, seemed to be a little tongue in check when considered against the structural problems that were also found in the report.
My people got a great deal, about $65,000 less than market value so a couple of thousand out of pocket to fix these items is not a great hardship. My concern is the people that come along with less resources getting pushed around by an underwriter that wants to do some weight lifting.
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