Do not pass go, do not collect $200, etc.
I mean, seriously. Enough is enough! We, as a collective citizenry (whoa-that goes against every grain of my Ayn Rand-loving nature), need to stand up and hold people accountable for their misbehavior.
Want to know why the easy mortgage money has dried up? Want to know why so many folks are whining and crying about ‘lost equity’ in their homes? Want to know why homeowners and investors alike are walking away from houses? It’s a lack of personal responsibility and we as a society have put up with it for too long.
This morning, I received a phone call from a buyer’s agent, on a transaction that is currently under contract here in Concord NC. He was calling to let me know that the contract is being terminated, due to the buyer’s inability to obtain loan approval. (In North Carolina real estate, we have standard language in our Offer to Purchase and Contract that states that the buyer must be able to obtain loan approval.)
Drat, darn…hate to make that call to the seller-we’re back to square one. But it’s part of the gig in real estate, some contracts close and many others fall by the wayside. Before I was going to make that call, I needed to ask a few more questions…since the contract was only a week old-and I had spoken with the buyer’s lender prior to the seller accepting the contract. Something didn’t quite feel right, that it was crashing so soon.
As it turns out, the buyer was unable to obtain loan approval because she LIED on the loan application. I mean, we’re not talking a little fluff-we’re talking whiteout on paystubs!! Seriously? This buyer thought that falsifying proof of income was acceptable? When the lender saw this mess, he immediately turned the loan away, refusing to get involved in what very clearly would turn out to be loan fraud. Kudos to them for their upright behavior.
So the contract is being terminated-and the buyer wants the earnest money back, since they were unable to obtain a loan. Which is true. BUT it didn’t go down in good faith-it went down because of deception and outright lying.
(In North Carolina, the earnest money deposit is held in a trust account, with one of the involved brokers or the closing attorney. And per the NC General Statutes, it can’t be released until all parties have agreed as to its disposition. If it’s still being disputed in 90 days, the money is escheated to the clerk of court and the buyer and seller can file on one another in small claims court.)
After speaking with the seller about the situation, the seller chose NOT to release the earnest money. He agrees with me that situations like THIS have been the primary cause for the sheer amount of loan fraud and crisis in the country-and that if this kind of behavior had not been acceptable (and even rewarded), we might not be in an environment where even good credit prospects may have trouble obtaining a loan. There need to be repercussions for lying. For knowingly running a buyer agent around town, lying to a lender, having a seller take a house off the market, etc. They should NOT get their earnest money back. As a matter of principle more than anything.
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