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Is it legal to refuse an offer due to type of loan?

By David Shamansky

Mortgage and Lending with US Mortgages - David Shamansky NMLS#392126

September 17, 2013 01:23 PM

I ran into an odd situation today...

A bank owned REO (one of the ones talked about constantly here in the rain) actually DENIED, not a full price offer, but a 1000 OVER list price offer and there are NO competing bids???

Impossible?

Yes I would have thought the same thing but to add insult to injury the comment from the Bank representative stated it was due to them wanting to do a VA loan!

WHAT? That's about all that I could muster at the proposity of this comment. I asked was there another offer? No was the response. I asked what on earth could be the reason and was told we wont take an FHA or a VA loan for this home its either conventional or cash.

So my question comes in on this... is it legal to deny an offer due to type of loan?

Then the next question comes into moral issues here. So we recruit to get young men and women into our service for this country to serve and protect and at times risk their lives or even give their lives but when they return we honor them by saying NO to a VA loan???

WOW, disgusting and reprehensible... that's about all I can say to you (one of the big 4) and to think this country and all of us here bailed you out and this is the thanks given back, to deny an honorably discharged veteran from paying you MORE than full price! You should be ashamed.

Please comment as I truly am not sure if this is a legal action for denial or not and I am very curious to hear what my AR friends have to say on this.

Thanks

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Tammy Lankford,

Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA

Broker GA Lake Sinclair/Eatonton/Milledgeville

of course it's legal. It has nothing to do with the person, it has to do with the property. For example in my area if a manufactured home has piers sitting on cap blocks instead of poured footers it's a no go for VA or FHA. It won't get the thumbs up from an appraiser. It's the actual property that sometimes won't qualify. And not all sellers CAN upgrade their property to qualify for those loans.

Sep 17, 2013 01:26 PM

MichelleCherie Carr Crowe .Just Call. 408-252-8900

Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA

Family Helping Families Buy & Sell Homes 40+ Years

I would ask one of the VA experts here for some advice. The property qualification issue is real - I understand property must have all Section I done prior to close for VA loan.

Sep 17, 2013 01:37 PM

Lisa Friedman

Great American Dream Realty - Essex, VT

35 Years of Real Estate Experience!

I see both sides to this. One, I think it is horrible because I would like to see our veterans get so much more - they deserve it! On the other hand, we know that certain types of mortgages represent more 'red tape' than others and may be more difficult to close. Working as a seller's agent, they may prefer to play the waiting game and think that they will have another good offer soon. I definitely think it is discrimination about the type of mortgage, however I don't think that I would say it is discrimination against the person per se. It is a delicate situation.

Also, many of those loans are no or low downpayment. I often offer extra earnest money to be returned at closing as security for the buyer not walking away from the property if they find something they like better. We all know how difficult it is to sue for performance and with little to no downpayment money at stake...

Sep 17, 2013 02:38 PM

Debbie Gartner

The Flooring Girl - White Plains, NY

The Flooring Girl & Blog Stylist -Dynamo Marketers

I'm not sure I understand why they would deny it based on type of loan. Does a VA loan have more issues during the closing process?

Sep 17, 2013 07:35 PM

David Shamansky

US Mortgages - David Shamansky - Highlands Ranch, CO

Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Tammy - Sorry maybe my post wasnt clear (YES I get the fac there can be issues for a property and to clarify this is a home built on its own foundation as a stick built SFR so NO issues that would disqualify for a VA or FHA loan) sorry I dont know everything but do know a lot (lol)

Sep 18, 2013 01:27 AM

Michelle - Yeah I know it may be easier to find if I sent directly to them.

Lisa - Totally get that but part of the equation here is the buyers wrote into the offer the added amount so if the appraisal came back with an issue the sellers (nasty ol Bank) had the money to cure from sellers overbid!

Deb - Yeah there are more stringent items for appraisal but other than that the loans dont have a whole lot of difference to them these days, since ALL loans have to fully qualify for income and credit its little nuances in the product that some are afraid of maybe???

Sep 18, 2013 01:32 AM

Charles Stallions

Charles Stallions Real Estate Services - Pensacola, FL

850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

I was told by someone that they consider Vetrans first so maybe that had something to do with it. Who knows foreclosures have been a mess for years. The banks are losing as the REO people are not selling to the highest bidders anyway if they can sell it to there own investors first

Sep 19, 2013 09:38 AM

Is it legal to refuse an offer due to type of loan?

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