In this brave new mortgage world, where at least half of all sellers are either lending institutions or agencies that represent these lending institutions, can I just say this? I MISS THE "REAL SELLERS".
You see sellers used to be real people who actually cared about closing on time. They had a real estate agent who was getting paid enough that she relentlessly contacted me for updates, making certain everything was moving along to the seller's satisfaction.
The title company was chosen by one of the agents (instead of dictated by the lender seller) and was actually competent. Contracts and addendums did not need to go through 3 lender committees for the smallest change.
And rarely did you come across penalties in a purchase contract for closing late. As an example: $150 a day for closing late, when the only reason for closing late is repeated delays by the lender seller.
My advice to buyers agents on this? DO NOT ALLOW A LENDER SELLER TO IMPOSE THESE PENALTIES.
During a recent transaction, the lender seller slipped a late closing fee of $150 a day into an addendum which extended the contract. Then they proceeded to delay the transaction even more than they already had, forcing the buyer into a late closing. Why did we need an extension IN THE FIRST PLACE? Because:
- Lender seller took the first 3 weeks to sign the purchase contract
- Title company could not find the buyers deposit money
- Preliminary title report arrived with a different buyer's name on it, and dated November 7, 2007
Naturally, my lender refused to draw docs without these critical items being in order.
The listing agent was someone who knew nothing, refused to talk with me, and referred me to a part time student who was his assistant and also knew nothing. His attitude was this "I'm not getting paid that much so don't call me....and anyway, most buyers that go into these contracts never get financing ANYWAY."
Title company attitude was "You are one of thousands of bank owned properties. We will get to you when we get to you and don't blame us for being confused".
All of this would NEVER be tolerated by a REAL SELLER. I have never had more respect in my life for the OFTEN OVERLOOKED role a listing agent plays in a transaction after the property sells.
Who would have thought that it would come to this? Buyers of lender owned properties should impose the penalties to the sellers for closing late, not the other way around. My advice when writing a contract on a lender owned property?
- Do not accept penalties for closing late
- Write a contract for at least 45 days
- Try to use your own title company, not theirs
- Make sure mortgage broker is a pitbull...or at least a VERY SQUEAKY WHEEL
Written by Janet Guilbault, Mortgage Lending Expert based out of the San Francisco Bay Area
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You nailed it. So much nonsense dealing with the short sale and the ridiculous process lenders take it and the money they are trying to "save" is not a savings at all BUT some loss mitigation department has their annual goal of recovery and regardless of the circumstance they will fight until the end.
The whole process is aggravating.
Great post. This topic not discussed enough.