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Hi folks. I don't normally post two days in a row but I need to get this one out of my head. I don't like ranting so let's see if I can turn this ridiculous situation into a learning experience. OK here goes.

About ten days ago, I placed one of my listings pending. It wasn't an easy deal to negotiate and in fact took about 10 days to finally come to an agreement and get the contract signed and accepted. The reason it took so long is we were waiting on a pre-approval letter from the Mortgage Broker. There was an issue with how much the Lender would allow the Seller to contribute towards closing costs and I wanted to make sure we had exact figures, and confirmation that it could be done, prior to my Seller accepting and taking the house off the market.

Anyway, I had several conversations with the Mortgage Broker and the REALTOR® trying to get all of this sorted out to our satisfaction. Well, I finally did, the property went pending and we started moving forward. The appraisal was done last week and the file was submitted to underwriting on Friday for final approval.

Click on the picture for a great video!!

Now folks, I'm pretty diligent when it comes to doing my research on the Buyer prior to my Sellers accepting a deal. That's why they are paying me. We work as a team and we want to make sure when we go pending that there is a closing in the near future. I take this pretty serious and really pick the brains of the other side of the transaction. Unfortunately, being on the listing side, I have to get my information second hand. I have to rely on folks being honest with me. And frankly, I don't like being in that position.

Anyway, today, when I went down to my office, the first fax waiting for me was a denial letter. Not only was the loan denied but the reason for denial.....OK are you ready for this.....let's have a drum roll please......the Buyer has had.....not one, not two but three foreclosures in the last ten years!!!!! Yep that's right, this Buyer has been foreclosed on three times in ten years!!

Now, Jiminy cricket( I always wanted to use that phrase in a post) how in the world did this slip by the Mortgage Broker? Or did it? Well, I picked up the phone to find out. Supposedly, these three recent foreclosures DID NOT show up on the Buyer's credit report and he did not feel inclined to mention them on the loan application. Do you believe that? I don't think I do. According to the Mortgage Broker and the REALTOR® the foreclosures did not show up until the Undertaker, Oops!!! I meant Underwriter, did a public records search. That's their story and they're sticking to it.

Oh man, I am just befuddled. So I did what any good little Broker would do and I called the REALTOR®'s Broker to give him a heads up that my Seller will be claiming the escrow deposit. I told him he needs to make sure the Buyer understands that if he DID NOT disclose these foreclosures on the loan application he has committed a Federal offense and if he disputes the deposit release, my Seller will seek legal advice. So, we'll have to wait and see how this plays out.

OK, I feel better now. I have to say I am so tired of hearing this same old story again and again and again. I have personally had nine transactions kick in the last 60 days!!!! I know it's tuff out there and Buyer's are hard to come by but please, please, please, quit wasting mine and my Seller's time with this foolishness.

Now, let's see what I can come up with for a learning experience...hmmm.... OK, I've got one......Bite me you *&%#$ and %^&*!# Mortgage Brokers!!! Oops, sorry, that just slipped out.

Oh what the heck, that's MY story and I'm sticking to it!

All content copyright © 2007 - Broker Bryant Real Estate Ramblings

***OK so I edited my language, at the last minute, before posting. I realise that things happen and I try very hard to give folks the benefit of the doubt BUT it sure is getting difficult.

*****THERE IS ANOTHER POST RELATED TO THIS TOPIC HERE, WRITTEN BY BOB MITCHELL.

 

101 Comments on Another one bites the dust!!!

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Blog Boy...

 

 

 

 

That's 'my' comment and I'm sticking to it. LOL.

TLW...ROAR!

05/08/2007 04:48 PM by "The Lovely Wife"...Broker Bryant's Wife... (Co-Owner Tutas Towne Realty, Inc.)

Geez. I would have had a hissy fit. What is wrong with these people? Interesting though. I didn't know it was a federal offense if they didn't disclose the foreclosures. I'd be interested in anything you'd like to post, about these types of laws.

05/08/2007 04:55 PM by Lisa Hill (Daytona Beach Real Estate) (Adams Cameron and Company)

You say it all soooo well! How frustrating to do everything in your power right and then..BOOM it blows up! You are reminding me of a recent experience where the buyer was also the agent..that will be another blog after the attorneys are finished.

Great post! Great graphics and great use of links. I especially like the way you linked back to your listings. "And..another one bites the dust!"  So when is your book going to be ready? Put me down for a signed copy, please!

05/08/2007 05:02 PM by Margaret Rome- Baltimore, Md.-HomeRome.com (TREC-Sell Your Home With Margaret Rome)

I feel your frustration!  Honeslty I don't see how 3 forclosures didn't show up on the credit report.  Or more likely the loan officer didn't know how to read the report.  However if they did show up on the report I don't know how the 3rd underwriter didn't catch it.  If indeed it wasn't on the credit report and the LO did his job and actually asked if the borrower if there was any forclosures it's not the LOs fault.  It's the borrower's fault and if he's loosing his deposit then he's now paid his price.  Yes it's frustrating to you but hey your seller just made some more money.  Obviously they just wanted to sell their house sometimes that's the way it goes I guess. 

I just think it's pretty piss poor that the LO seems to be the one takeing the brunt of it all the time.  Granted there are bad LOs out there just as there are bad real estate agents but if the LO is given bad info it's not his fault.  The LO seems to be the messenger that gets shot most of the time.  The LO can get everything submitted and do everything just as they are supposed to but his job is only as good as the info given to him.  So if the borrower isn't up front or if something comes up with the title or escrow company or if the Lender just denies the loan for what ever reason it's not necessarily the LOs fault but he's the one that always gets blamed.  I've bought a house and a condo now and my real estate agent when purchasing my house was very piss poor.  He know we were fist time home buyers and tried to just get the deal done to make his comission.  In purchasing my condo my agent was excellent however the sellers agent seemed to be lacking in some areas for sure.  So it's not always the LO and it's sometimes the agent.

05/08/2007 05:06 PM by Geoff Thomas (Patton Financial)

That's just stupid!  Sorry, no other word for it.  I would be SO P****D!  Good luck, I hope it works out!

05/08/2007 05:07 PM by Stephanie Edwards-Musa, Realtor ® The Woodlands, TX Real Estate (Prudential Gary Greene, Realtors ®)

BB,

AHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH

WHY DO I EVEN GO TO ANSWER THIS TYPE OF POST?

You know how sensitive I am to this and I am afraid to say anything that I have vented and mentioned before and I am sure if you and I "do the BB/NB mind meld you will be able to know exactly what I am thinking..just make sure you hid the sharp objects. I am just so tired of this crap. On a lighter note....how was your day? :)

05/08/2007 05:09 PM by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)

Go after that earnest money.  One of the problems we have in our industry is that agents and brokers don't often enough FOLLOW THE CONTRACT.  That buyer gave false information and should forfeit the earnest money

Lots of agents in my area do NOT use Financial Statements.  The lenders letter is deemed sufficient.  Not for me.  I want that Financial Statement so I can make sure the buyer is qualified if interest rates go up.  More important, the Financial Statement that I use had an Affirmation that the statements are true.  If they didn't disclose past bankruptcy or foreclosure, they lose their earnest money.  Simple as that. 

Buyer won't sign a release (Required in MD and VA)????  Fine, that earnest money will sit until it molds out of existance.  That buyer will NOT get that money back.

Buyers and listing agents are too quick to want a ratified contract and need to examine these documents very carefully.  Folks think I'm insane because of the questions I ask.  But, I just want to know the facts.

Don't they understand that it's all going to unravel anyway?????

Geez.  You gave me a rant.  Thanks.

Flagged.  Like you need me to flag this.

05/08/2007 05:11 PM by Lenn Harley, Homefinders.com, MD & VA Real Estate

Bryant,

I am not defending the mortgage broker because most of the time they use whatever excuse they can. However it is true sometimes that foreclosures do not show up on credit report immediately. What bothers me is that the Mortgage Broker should have asked this question in the first place. You see on the Uniform Residential Application (form 1003) on Section VIII (under declarations). Question C ask this question:

c. Have you had property foreclosed upon or given title  or deed in lieu thereof in the last 7 years?

This declaration page of Section VIII is very important. However, most Loan Officers do not even ask thier clients the questions under this section anymore. Most of the time they assume and they answer the questions themselves not the borrower.  They assume the borrower is a US Citizen only to find out that he is a Residient Alien. Although it may not seem important, inconsistencies may lead to loan denial. I used to manage 47 loan officers when I was doing REsidential Mortgages and it ticks me off that most of the time I get 1003s without the declaration page filled out.

Another thing is ordering the title in a timely manner. If the foreclosure does not show up on the credit report it will definitely show up on the title. Unfortunately some Mortgage Brokers do not know how to read title or simply do not practice reveiwing the title work before submitting to the bank. Sometimes they submit the file to the bank without title only to get denied once they submitted the title a few days afterwards. I have a feeling that they submitted the file without title work initally that is why you got an initial commitment. The commitment is contigent on getting a clear title, and so on and so forth....

Anyway, I understand your pain. It sucks to waste time. NOw my question is, since we are talking to about law here. Did the Loan Officer broke the law by not asking the declaration questions? Is this a violation of RESPA law? Did he ask the borrower in the first place?

There are a lot of good loan officers out there, I hope all your future deals fall into the hands of good LOs. Good luck!

 

05/08/2007 05:24 PM by JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP)

BB,

All I have to say is glad this wasn't a deal on my house....not sure how Mr. Caligal would have handled the disappointment.

Hope you day gets better....or should I say evening now! 

Don't leave the door open on the way out of your office!!! (hehehe)

 

 

 

05/08/2007 05:28 PM by Caligal

By they way I just read Geoff Thomas comments....lol...I agree with him.... I have met some of these self proclaimed "LO Superstars" only to find out they do not know how to read credit report...lol!

05/08/2007 05:35 PM by JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP)

Neal, I figured you would like this one. No need to vent. I know:)

Stephanie, I've been in this business a long time so know these things happen. I'm over it already. Unfortunately it's the third time in a row for this particular seller.

Geoff, Trust me I know how it works and I know LOs get burned a lot. BUT I had several discussions with this particular MB prior to my Seller accepting the transaction. Her words, not mine, "These buyers have excellent credit and there will be no problem getting it closed" How am I supposed to take that? How do you go from having excellent credit to 3 foreclosures in 10 years? Do you think maybe she was exaggerating a little? I agree there are many hardworking and honest LOs and MBs but this is not one of them. I spoke to her a few minutes ago after posting this and she KNEW about the foreclosures but since they didn't show up on the credit report she THOUGHT it wouldn't be an issue. Wouldn't this be a major red flag and at a minimum cause you to do a public records search prior to telling me they have excellent credit? The Buyers have proven 3 times that they are dead beats. No honest LO or MB would even think of doing a loan for these folks. When I spoke to her she asked if she could change the denial letter to reflect a credit issue instead of prior foreclosures. What's up with that? I'll tell you what's up with that, she's a liar and a cheat. And unfortunately it seems to be the norm in my market. But I do agree it's not always the LO faults. And I deal with just as many crappy REALTORS(R). Something needs to change.

Hello Margaret, Just another day in the life of a listing Broker. This one was just a little beyond my normal crap:) Glad you like the links.

Lisa. A loan application states right on the bottom that any false statements is a violation of Federal laws. So yes omitting this information is a federal offense and they can be prosecuted. That's why it is so important for buyers to be 100% truthful about their financial situation. The problem is the FEDS are way to busy to pursue something this minor.

TLW, I've been hanging out with you too long:)

05/08/2007 05:36 PM by Bryant Tutas-Tutas Towne Realty, Inc

Rant On, BB!!!  It'll make you feel better, and it'll make us feel better.  (After all, it wasn't us!)  Caligal, I'm glad it wasn't you, either.  ;o)

05/08/2007 05:38 PM by Sarah Cooper (Real Estate Shows)

Jerome, Read my comment above to Geoff. You mention the Title would show a foreclosure. True but only for the seller NOT the buyer. The buyer has nothing to do with the title. It seems like the declaration part of the 1003 would be very very important and should be taken seriously by the LOs. I can't imagine not asking the Buyer to complete that and sign off on it. Those questions are there to raise red flags if not answered properly.

Lenn, you can be sure we will be requesting the escrow. It's with a Title Co. so will definitely sit there for years if they don't agree. Do you have a copy of the financial statement that you use?

CaliGal, Yep we don't want one of these. It's been happening way to often right now. Business is very difficult right now, as you know, and REALTORS(R) and LOs are throwing things up against the wall in the hopes that they stick. It's very frustrating. 

05/08/2007 05:45 PM by Bryant Tutas-Tutas Towne Realty, Inc

Sarah, I let go of my frustration within minutes. If there's one thing I do well it's moving forward at the speed of light:) I just feel really bad for the seller.

05/08/2007 05:55 PM by Bryant Tutas-Tutas Towne Realty, Inc

About your comment: 

"When I spoke to her she asked if she could change the denial letter to reflect a credit issue instead of prior foreclosures"

OKay...This is definetely a red flag...she is really a cheat. Yeah what up with that! LOL! Holy %$#@*! It seems like she is trying to cover her tracks! She probably gave false promises to the borrower as well.

 

05/08/2007 05:59 PM by JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP)

Yeah. Those dirty rotten, no good, mortgage brokers. Right Martin?

05/08/2007 06:29 PM by John Evarts (Classic Property Management of Santa Clarita)

Broker Bryant

I feel your pain.  As a Mortgage broker myself, I understand the importance of honest and forthright discussions with the realtors.  I don't know how something like this can slip through the cracks, but clearly somebody was withholding info. 

I mean really did they think no one would notice?

I've had clients tell me they have perfect credit only to run a credit report (at my expense) and find BK's, late payments and sub 500 scores.  To top it off, they had 5 recent inquiries and then they claim they didn't know their credit was bad..

All I can say is.. dishonest people -- They SUCK..

Martin

05/08/2007 06:42 PM by Martin Rodriguez (SCV Loan Solutions)

Hey Jim, Who's Martin?

Jerome, I always try to give folks the benefit of the doubt. I really do. But I tell you when she called me this afternoon and suggested changing the denial letter I was just truly dumbfounded. She was definitely back tracking.

05/08/2007 06:44 PM by Bryant Tutas-Tutas Towne Realty, Inc

Oh hey Martin, I guess Jim was flagging you in. It is very disappointing when these things happen. Dishonest dealings really give our industry a bad name. I think we will be seeing more of it too. This market is very difficult and folks will do anything to try and make a buck. I just hate to see it happen. I've made it one of my goals this year to be really firm with these types of people and start calling their superiors and reporting them if necessary. It has to stop.  

05/08/2007 06:50 PM by Bryant Tutas-Tutas Towne Realty, Inc

Here in PA, the escrow would also sit there until both parties sign the release, or a court order is issued. 

Too often, buyers walk away for whatever reason, and refuse to sign the release.  The sellers often lack funds to pursue it in court (spend $2000 in attorney's fees to get $1500 in earnest money?  No ROI there!)  The money then sits idle in the brokers escrow account.  Until the end of time.  The broker has to maintain the account by law.

There is legislation pending in Harrisburg that will create additional guidelines for Brokers to enable them to release escrow funds under certain circumstances.  We hope it will pass.  The original escrow laws were intended to protect the consumer.  In these situations, the laws protect no-one, and create an additional burden on the broker holding the escrow.

Bryant, I think you handled the situation in a way that many of us should model.  The only piece I can think of to put in place in the future to avoid similar problems is to require Buyer's Financial Statements with every offer.  When protecting the interests of the seller, it only makes sense, and seems to be what some might call "Due Diligence."  (I am not implying that you are not dilligent -- don't get me wrong.  Few people I have talked to actually require that degree of disclosure from the buyer before considering an offer)  Erring on the side of caution might have saved you and your seller some headache.

05/08/2007 07:32 PM by Rich Schiffer, REALTOR, e-PRO (Weichert, Realtors)

Rich, I agree I need to implement the financial statement. I'm still making market adjustments and that's one I need to put into place right away. In Florida they have given the Brokers the authority to use their judgement on releasing deposits in some cases. If there are conflicting demands we have to request a Escrow Disbursement Order from the Division of RE. Most brokers choose to not have escrow accounts. We place escrow with title companies so it's their problem not ours. I do not hold escrow. 

05/08/2007 07:51 PM by Bryant Tutas-Tutas Towne Realty, Inc

Ok, censor me if you want, but I say...f(&&*%(* bull##it lenders and dumba$$ agents are pissing me off too.

When can we let it out here?  Can I throw in a real Sh$$ sometime?

05/08/2007 07:57 PM by Rich Kruse (Gryphon USA, Ltd.)

BB,

Just another case of lackadaisical practice of business. They really need to enforce stricter guidelines to be able to work in that business. It seems it is becoming a world wide epidemic.

05/08/2007 08:10 PM by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)

Bryant, not trying to make excuses for this Loan Officer, because he did not follow all the steps that he should have taken, but foreclosures are very easy to miss on a Credit Report, especially if you do not have a reason to look for one, I will explain.

I can't speak for all Credit Reports, but on mine the word "Foreclosure" would not show up, what does show up is a code in small letters, on mine it is "08".  Also a borrower does not have to of had a foreclosure in order to have this code, because if a house goes into foreclosure, but the foreclosure is avoided, the Lender might still use this code on the Credit Report.  So when you are on the fourth page of the 1003 "Declaration Page", and you ask have you had a foreclosure and they say "No", they maybe telling the truth.

However, here is where the Loan Officer did not do everything that he should have done, because if he had he would have known to go back and look for this code on the Credit Report.  Once a full application is taken it should be run through "Automated Underwriting (DU)", if he had done that DU would have picked up on the code and warned him about a foreclosure showing up on the Credit Report, at which point he should have gotten clarification from the Borrower.

Like I said I am not making excuses for this Loan Officer, because it is obvious that he either did not run this through DU or was lying, but foreclosures are easy to miss initially.

Sorry for the long explanation, but hope this helps.

05/08/2007 08:18 PM by George Souto (McCue Mortgage Co.)

George, It does help and I appreciate you taking the time to explain it. But 3 in 10 years? Wouldn't their credit report still be a little less than "excellent"? I really want to be fair.

Rich, Join the club. With business being as difficult as it is right now we are ALL definitely a little testy. But it sure would help if we were on the same page.

Neal,  I agree. Make it a little tougher to get a RE license too or at least to be a REALTOR(R).

 

05/08/2007 08:27 PM by Bryant Tutas-Tutas Towne Realty, Inc

Code of Ethics for ALL!  Licenses, fees, continuuing ed for ALL

05/08/2007 08:48 PM by Celeste "SALLY" Cheeseman (RA), e-PRO HAWAII Real Estate & HAWAII Relocation (Century 21 Liberty Homes -Mililani, Hawaii)

Yes, three in ten years is a little much.  But I just had one this week that had gone into foreclosure 18 months ago, but was able to avoid foreclosure.  However, had a car repossessed  at the same time, as well as a bunch of lates.  All this 18 months ago, and the Credit Scores ranged from the mid 600's to the high 600's, hard to explain.

In your case I think it would be hard for someone to claim that each of the three times that they went into foreclosure that they were able to avoid it.  That would be just a little too much to believe.

I think you are being fair in this case, but I did want to explain that in normal cases this would not be something that a Loan Officer would quickly spot.  But there is nothing normal about three foreclosures in ten years.

05/08/2007 08:54 PM by George Souto (McCue Mortgage Co.)

let's have a drum roll please......Here ya go....drum drum drum for the dumb dumb dumb pre qual...not even a pre approval, this is really uncalled for, not to mention unprofessional....man I feel so much better now.  Sorry for the mess, hope you get ten more good ones because of this one.  God does reward you know.

05/08/2007 09:34 PM by Bob Sloop, Consultant, Indianapolis, IN (RS Mortgage Consulting)

A contract was accepted on one of my listings, great deposit, "A" Paper for the Pre-Approval....everything looked good. Day of settlement. I get notice from the agent "We can't settle". The lender required this years tax return and my buyer did not show his second income like he stated on his loan application. Guess who got the deposit.

The Buyer even had his mail forwarded to the house before settlement.....BUSTED! - LESSON?? - Don't LIE on your mortgage application!!!

05/08/2007 09:42 PM by Robert B. McArtor, REALTOR, AUCTIONEER, BALTIMORE, HARFORD, CECIL MARYLAND (Long and Foster Real Estate, Inc.)

Bryant,

It's nice when you find a lender or two who do a great job.  I have found someone who gives the same quality of customer service that I extend.  I pretty much know when she's on it that what she says is reliable and that if we don't close it will be because of some other issue.  I work mostly with buyers and I work diligently to make sure I'm not wasting a seller's time.  As a listing agent only, you definitley are at the mercy of the buyers agent when it comes to getting info about the buyer.

Fran 

05/09/2007 12:18 AM by Fran Gatti - Crescent City CA Real Estate (RE/MAX Coastal Redwoods)

BB... do you kiss your grandchildren with that mouth? :) This is another of those stories that leaves me shaking my head.

05/09/2007 03:19 AM by Jeff Turner (Real Estate Shows)

UCBB: Sounds sorta like a real-life "Ira Piranha," let me say this about that:

Jay’s tank aiming @ Mortgage broker © 2007 Codger™ Images

 

 

 

 

 active rain|active codgers, your active fans ©2007 Codger™ Images

 

 

 

 Jay

05/09/2007 05:10 AM by Jay Merton & Medford Ambrose, the Codgers (Retired Handymen)

Just when you think you have heard most things...

05/09/2007 07:51 AM by Theresa Cavanaugh (Global Realty Marketing)

Jay, Love the tank!! Hey you can dive that thing through AR and blow up unprofessionalism.

Jeff, Don't forget my grand kids live on a Marine base. They've heard a lot worse I'm sure:)

Fran, I'm definitely at a disadvantage. The MB I use is Ron Withers on AR. It's just I rarely get a chance to use him. But when I do at least I know I can rely on what he says.

Robert, Not sure why folks think these little "lies" won't be found out. You can't hide from 'the man":)

Great drum roll Bob, Thanks!!

Thanks George.

05/09/2007 07:52 AM by Bryant Tutas-Tutas Towne Realty, Inc

I love reading your posts.  They are informative while being entertaining.  I do hope you do NOT have any more buyers like this one come your way.

05/09/2007 08:30 AM by Judi Barrett (Integrity Real Estate Services)

How terrible.

Somewhere I saw a URL where you could check on anyones name for that type of problem. Just can't find it.

05/09/2007 09:02 AM by Gary Smith, Realtor® (RE/MAX Platinum)

Hey Bryant... I feel your pain.  A suggestion that works many times... add to your contract..."This contract is contingent upon buyer being prequalified by my trusted mortage broker (insert your straight shooter's name) within 5 days of effective date"... no obligation, but it is the seller's right to know who they are doing business with before they take the house off the market for 30  to 45 days only to get burned.  Better yet, ask for it to be done before accepting the offer.

05/09/2007 09:03 AM by Beth Butler - EWM Realtors

Jumpin Jiminny ( I always wanted to use that in a comment ) What were they thinking. I have had pretty good luck with mortgage Brokers, but there is a temptation on occasion from mortgage brokers to just throw things up against the wall to see what sticks. Sorry for you Loss of 9 . Frustrating and time consuming.

05/09/2007 09:03 AM by Downtown Portland Real Estate Broker~Herb Hamilton (RE/MAX Preferred Inc. Realtors)

How awful!  And then your Sellers may question how you could have done things differently.  It makes everyone look bad.

Jerome is correct about the 1003 but the Buyers signed the application stating the information was accurate.  I would consider that fraud.  Even if they weren't "foreclosed" on, they could have signed a deed in lieu or even had a short sale (I have been told that it hits your credit similar to a foreclosure).

Good luck and remember - Everything happens for a reason  :-)

05/09/2007 09:06 AM by Nicole Sleeva, ABR (Coldwell Banker Preferred)

4B's your posts are always educational and the comments that follow too.  I'm sorry this crap happened, even with your due diligence.  Go for that escrow dep!

Glad to see your Caligal is still reading and Jay's tank is a hoot.  When he's done here I'd like to have him run through my town too.

05/09/2007 09:09 AM by Palmetto Bay | Redland Real Estate | Maggie Dokic (EWM Realtors)

Supposedly, these three recent foreclosures DID NOT show up on the Buyer's credit report and he did not feel inclined to mention them on the loan application. Do you believe that? I don't think I do.

That is actually conceivable.  Three foreclosures not reporting would seem unlikely but it's plausible.  The title report would catch them in a public records search.

I told him he needs to make sure the Buyer understands that if he DID NOT disclose these foreclosures on the loan application he has committed a Federal offense

That is true.

There is nothing more frustrating to all of the players than when a buyer misrepresents material facts on a loan application. That buyer wasted the time of two Realtors an an originator.  He also wasted the time of the loan processor, clogged up the pipeline of a wholesale lender, and caused a seller to lose market exposure because the home was placed in a pending status.  His lie most likely translated to some a loss of time of 80-100 man-hours.  There will most likely be no action against him so he'll just do it again.

05/09/2007 09:27 AM by America's #1 Mortgage Broker

I agree with Brian. A final Title search would also show the buyer's info, at least in Oregon. Can't say for sure about Florida.

What it sounds like is they used a gredit guru who go everything off the credit report, but not the public records.

Can you request a copy of the 1003 (application) and see how the borrower answered the declarations questions regarding foreclosures in the last 7 years? If he lied, your sellers should at least get to keep the earnest money.

05/09/2007 09:33 AM by Larry Morris, CMPS, Newberg Oregon (NW Lending Solutions)

Should we all join you and beat up the buyer or the mortgage broker? I'm surprised you didn't drive up to their office and confront them (I would have). I love reading your posts, they are educational but entertaining.

05/09/2007 09:55 AM by Camarillo CA Real Estate Agent/ Mana Tulberg (Beach View Real Estate)

Oh my!!!  Rant on.  Everyone needs to vent so we don'tbottle it up.  Besides, ("Bite me you *&%#$ and %^&*!# Mortgage Brokers!!!") it sounds like you turned this into a learning experience. That is all any of us can do after the fact!

It does amaze me though, that anyone can "hide" one foreclosure, much less three!!  That broker didn't do his job. 

05/09/2007 09:56 AM by Virginia Halter Broker, ABR, CRS (RE/MAX Signature Properties)

Dude...move on....I've been there, not exactly, but when I've been in situations like that I make myself focus on another deal....We have no control......Move from the negative, back to the positive.

And remember, what comes around goes around!  I blame the Mortgage Rep....sorry, you can't tell me those "digs" were not on his credit report....

What we actually encourage our sellers in Jersey to do, if we are not familar with Mortgage company or rep to request, I repeat, request bujyer use one of three mortgage companies that we feel confident in 

Today is a new day and it's sunny and warm here in Jersey...Thank God! 

 

 

05/09/2007 09:59 AM by MEG COBBS (Prudential Fox & Roach REALTORS*)

One more...love the  "you tube!"

05/09/2007 10:01 AM by MEG COBBS (Prudential Fox & Roach REALTORS*)

Hey everyone, OK I was kind of hoping they wouldn't feature this one. I'm not a negative person and wrote this one in the heat of the moment. I was trying to make it funny:) I've been in  this business way to long to let things like this bother me for more than about 60 seconds. I just feel bad for the seller. This the 3rd one in a row for him. He still loves me though. We had a good laugh about it this morning. I talk to my Sellers constantly so they are all very well informed about the difficulties in the market right now. No surprises. We do what we always do...move forward.

***I've found that working with Sellers through difficult situations like this makes our bond better. Difficult situations and how we handle them separates the men from the boys. If handled properly it's actually good for business. So NEVER hesitate to make the difficult calls to your customer/clients. It gives them added confidence in your abilities and let's them know you are working hard on their behalf. Turning negatives into positives is what pros do. It's what we are getting paid to do.

05/09/2007 10:10 AM by Bryant Tutas-Tutas Towne Realty, Inc

Amazing story, Bryant...or maybe it's not in this market. The stories that keep emerging boggle the mind.

Great explanation, George. But I still find it hard to believe that this could have gotten to the point that it did with 3 foreclosures in the past. Adn clearly the buyer is NOT being hnest - duh!

Keep us posted, Bryant - will be interested to hear how things ends up with the deposit. I feel badly for your sellers! And I would be incredibly frustrated too.

Jeff

05/09/2007 10:21 AM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Wow, I feel like I just went to a credit problem foreclosure class 101.  Your post caught my eye Bryant and as I continued to read the comments from everyone else I continued to be amazed.  I do feel your seller's pain and gather from the sounds of the above your professionalism has enabled you to continue to represent him. Congrats to you for the way you have handled the situation, and thank you for sharing.  I have learned alot from this posting.  Thanks, and I hope the next escrow will be the one to close.

05/09/2007 10:45 AM by Linda Sanderson (Coldwell Banker Solano Pacific)

What in the world was the buyer thinking?? I think after 3 foreclosures, I would put off my home buying for awhile!

05/09/2007 10:54 AM by Christy Powers - Pooler, Savannah Real Estate Agent (Keller Williams Coastal Area Partners)

and lastly....disclosure issues are the termites in the basement...the sink holes in the flatlands, the slime in the bucket, and the stuff of nightmares...the  Buyer had been foreclosed on 3 X in 10  years???!!! no wonder you scratched out *&%#$ and %^&*!#

05/09/2007 11:02 AM by Asheville's GREEN Land & Homes ECO-Steward Realty

The buyer should have NO GRIPES about the loss of earnest monies.

I am sick and tired of people getting stuff removed from their credit reports and lieing on the application.

 

05/09/2007 11:04 AM by Tom Burris | FHA VA & Conv. Texas Mortgage Loans (DallasLoanGuy.com)

Broker Bryant,

I feel your pain.  I had a deal that I was reluctant to go pending on because of a gut feeling.  I questioned the agent and she said it would take longer to close due to him having an IT number.  I talked with the seller.  We changed it to pending.  Then come to find out after a couple of weeks he did not qualify for a loan.  My seller was quite peeved.  I was too.  Since I had questioned the agent and told her that my seller did not want to take the house off the market unless this would go through.  She understood but did not want her clients to get bumped if a better offer came in.  Well needless to say everytime that she shows one of my listings I make sure that a pre-approval letter comes with the offer and I call the mortgage person myself and talk with them.

Good Luck on selling the property.

05/09/2007 11:16 AM by Ronda Myers-Waters (Willems Realtors, Principal Broker)

Blog Boy...

Your "educational comment" inspires me to come back with...

"If you can't run with The Big Dogs stay on the porch" Woof Woof...ROAR :)

TLW...ROAR!

05/09/2007 11:17 AM by "The Lovely Wife"...Broker Bryant's Wife... (Co-Owner Tutas Towne Realty, Inc.)

Bryant... awesome ranting post!  That was just incredible...and lots of good comments too.  Keep up the good work.  Thanks,

Lee

05/09/2007 11:32 AM by Lee Krepps, e-Pro (RE/MAX Realty Solutions)

Bryant,

Sorry I did not get in on this earlier, and I don't have time to read every comment, but here is my take.

You are right.  The buyer committed mortgage fraud by not admitting to the foreclosures on the application.  The exact question is on page 4 of the loan app, section entitled Declarations and is questione e.  Blatant fraud if answered no.

Regarding the Mortgage Broker, not that I feel the need to defend this particular one, is that we generally go by what is provided on the application and credit reports, so we may not catch it.  I do not regularly run public searches to find things like this, that is the job of the underwriter.  How it did not show up on the credit report befuddles me as they are supposed to do public record searches as part of the report anyways.

It sucks when this crap happens, and there is blame possibly in many places, but it starts with the buyer committing fraud and he should be convicted for it, and the seller should get the escrow with no questions asked.

05/09/2007 11:33 AM by Robert D. Ashby, CMPS - Solid Rock Mortgage Corporation

Byant,

The mere fact that a home-buyer has had three (or even more) foreclosures in the last ten years (or even less) does not  prevent them from buying a home sometime in the future....as long as they are able to re-build their credit to a satisfactory level.

I once knew a couple (who shall remain nameless for obvious reasons) who knew the system so well that they actually PLANNED to buy a home, live in it for awhile, stop making payments on the loan, go into foreclosure, use the legal system to stall the process for almost two years, surrender the home (having lived there rent free for two years).. and then renting an apartment for awhile

They maintained good credit in all there other business transactions, completely rebuilt their credit in two years....... and did the same thing again..... two more years of rent-free living.....

Then, they did it again three years later....and with the help of the bankruptcy court--- stretched it out to almost three years....

Yes, it was a scam.... Yes, they knew what they were doing. And more importantly, yes they found another lender willing to give them a loan....

And, yes... they are going back into foreclosure sometime this year....or next...

It takes all kinds.... 

 

 

05/09/2007 11:37 AM by Paul David Hiebing, REALTOR @ Grampp Realty/GMAC Real Estate: Quad-Cities (Grampp Realty/GMAC Real Estate of the Quad-Cities)

How frustrating - for eveyone involved...

05/09/2007 12:10 PM by Tim Tanz, St Louis Real Estate (Keller Wiliams Realty)

Paul

To follow up on Beth Butler's suggestion, here is how I work:

The buyer's agent cannot "steer" the buyer to a particular lender.  However, as the listing agent I can require the buyer to be pre-qualified by my lender.  That's the first part. If the offer is accepted I require that the buyer double app with my lender (of course at no obligation or cost).

My experience has been very positve with this approach for a couple of reasons:

1.  In some cases my lender can actually save the buyer money with a better loan.

2.  In California, over 35% of escrows fail to close on time, and over 70% of the time the reason is the lender's lack of performance.  Once the offer is accepted, in the last counter I stipulate that the buyer needs to double app, I also refer to all the disclosures, and lastly charge $150 per day that the escrow fails to close on the agreed date.

3. I also try to line up back up offers, which help serve as leverage for the first offer.  I then shorten the contingency period and hold the buyer accountable to the timetable.  Many lenders are not very well-organized, so by double app'ing you'll know very quickly if the buyer is qualified.

Hope this helps.

05/09/2007 12:10 PM by Keith Sorem (Keller Williams Realty)

Wow Paul!! That is quite the story. Man I must be doing something wrong. I actually work for a living:)

Robert, I guess it is understandable how the MB could miss this. I'm learning a lot by reading these comments. That in itself made this post worthwhile. Thanks for adding value.

Lee, thanks for reading.

Rhonda, I had a gut feeling on this one too. That's why it took 10 days to negotiate. I should have paid more attention to my gut. I've done hundreds of deals and still get it wrong sometimes.

Tom, We'll see. I assume it will end up sitting at the title co. for a long time. It's not enough for the seller to sue over.

janeAnne, You got that right. If folks would just be upfront about everything our jobs would be so much easier.

Christy, I'm sure a rental would have been a much better idea.

Linda, I too have learned a lot from the comments. That's the main reason I write these type of posts.

Jeff, Thanks for stopping by. These deals seem to be the norm in my market right now. Times are tuff!!!

 

05/09/2007 12:27 PM by Bryant Tutas-Tutas Towne Realty, Inc

Keith, I think I am going to start implementing that strategy. This is hapening to often. Time to reevaluate how I am handling this aspect of my business. 9 kicked deals in 60 days is a horrible waste of time and money.

Tim, Thanks for stopping by. This comment thread is very eduactional.

05/09/2007 12:31 PM by Bryant Tutas-Tutas Towne Realty, Inc

I really hope your sellers get that deposit - and also hope it was considerable!  Our sellers are starting to turn down offers with $1,000 deposits - it's not enough to pull their property off the market with the difficulties we're encountering.  And may I add - no finding those foreclosures is absolutely ridiculous!

05/09/2007 12:37 PM by Rick & Ines - Miami Shores Real Estate (Majestic Properties)

WHOAAAAAA!!!!!!!!!!!!!!  Let me say this again...WHOAAAAAAAAAA!!!  Reign that paint brush in there big fella!

I don't doubt that the LENDER that you were dealing with screwed up, but are you even sure that he's a mortgage broker?  I've had similar things happen with banks and mortgage banking companies.  Mortgage Brokers do not have a monopoly on incompetence or lack of ethics.  And I'm tired of getting painted with that brush when it simply isn't true!  Especially when the brush is held by a real estate agent who we all know that the public holds in such high regard, right? (dripping sarcasm)  How does that feel getting painted with the same brush that paints all of the sleezy real estate agents out there?

Just like agents, mortgage brokers come in all stripes.  Some are good and other are bad.  The majority are probably somewhere in between.   It's irresponsible to say what you did about mortgage brokers when it simply isn't true!

 

Bob Mitchell

ValueList Real Estate Services, inc. 

05/09/2007 12:56 PM by ValueList Real Estate Services, Inc.

Sorry to hear BB.  so trying to learn something from this blog.. would it help if we check public records to see if they have judgements and things of that nature files in the local county court docs?.  you can see certain docs and i suppose it would only help if they had it files against them in this same county. just a thought. thanks for sharing, once again.  Hope you can still afford TLW!

05/09/2007 01:33 PM by Nick M -Realtor®-Appraiser in West Palm- South Florida Real Estate Appraiser (Certified Residential Appraiser- West Palm Beach Real Estate)