Please Refund My Money For The Appraisal Since My Loan Was Denied!

By
Mortgage and Lending with Fairway Independent Mortgage NMLS #196099

"Please Refund My Money for the Appraisal Since My Loan was Denied."

     Last month I had a loan denied by underwriting. After appraisal and home inspection services were already rendered, the Virginia first time buyer decided she was owed a refund for the appraisal ordered by the company. When I refused her request she decided to escalate the call to our company president, office manager, and anyone in the company that would listen.

NOT ALLOWED
     But here is the skinny, the loan was denied because the borrower could not verify a large deposit into her checking account which covered the  Earnest Money Check written on her contract. Even after explaining that the loan program does not allow gifts, reviewing the loan process for 100% financing with the Virginia First Time Buyers Program, and sending my Do's and Dont's checklist (via email), I was mythed when the buyer decided or better yet, had to take an unsecured signature loan from her credit union to cover the deposit check written with her contract. Otherwise, it would have bounced based on the fact that she had entered into another contract in Maryland with a different agent.  And although she claims to have signed a release from the other "ratified contract" in Maryland, the Broker still cashed the earnest money check submitted with the contract. So the borrower knew the check she wrote on the contract in Virginia would bounce, causing a red flag in underwriting...hence the large deposit(loan) into the bank account. (Borrower says hey Markita is wasn't a gift...)
Red Flag
So after trying to beat the system, deceiving the agents(the realtor in Maryland threatened to sue if the buyer closed in Virginia as she had a signed Buyer Broker Agreement), injuring the sellers, and ultimately losing both properties... the client decided she wanted a refund from our company for the appraisal we ordered, go figure...

At the end of the day, I guess the moral of the story is do not  enter into a  contract if you are already in a contract !

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Jody Keating 07/15/2010 07:59 AM
  2. Edward Cooper 07/15/2010 09:13 AM
  3. Jason Kardos 07/16/2010 05:14 AM
Location:
Virginia
Tags:
underwriting guidelines
vhda loans
1st time buyers in virginia

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Rainer
13,753
Eric Cavanagh
Keller Williams - Jacksonville, FL
Connecting buyers and sellers since 2005

I just had to fast forward to the end to say How can you expect someone to do a job (an appraisal, home inspection, etc) and not get paid?  Of course the buyer was shady.  COuld the agents involved explained things better?  Should the loan officer have told the buyer not to put an offer on two properties?  C'mon, now.  Why was the buyer in such a hurry that they couldn't wait for the binder to come back from the other contract?  DId they want thier money back for the other cancelled contract?

THe buyer is an idiot and should be prohibited by law from reproducing.  Sometimes we do our best and we still lose  because we are involved with others who have no ethics or sense of personal responsibility.  What a shame. Part of being an agent I guess.  Bottom line:  what is the lesson to be learned here?

Jul 16, 2010 04:41 AM #64
Rainer
42,807
Woody Willis
Century 21 American Properties West - Jacksonville, NC

Sorry that it worked out that way, but in NC (if not everywhere, we are required by law to explain "working with real estate agents" and explain agency. But still, many, many times when one of my agents goes thru it, they are told by the client that they have already signede about 10 of these around town and some other peice of paper, too (meaning the right to represent the buyer). We then have the job of explaining that they could be liable to a lawsuit and advise them to work it out with the other 10 agents they are "working" with. Woody

Jul 16, 2010 05:02 AM #65
Ambassador
1,703,510
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

I do agree with Lenn that there should have been better communication all the way around.

Jul 16, 2010 05:03 AM #66
Rainmaker
318,971
Tamara Inzunza
RE/MAX Executives - Alexandria, VA
Close-In Alexandria and Arlington Living

Definitely a tangled web indeed! Just goes to show how deceitful buyers can be when they are trying to go after something they really want.  Doesn't matter how much you 'communicate', if a person is intent on being deceitful, they will TRY to find a way to get what they want.

Jul 16, 2010 05:25 AM #67
Rainmaker
656,917
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

I guess the agents who are saying the agents involved in this deal didn't explain the homebuying process, have never had a client who was told to do or not to do something, then went and did the opposite. 

Jul 16, 2010 05:37 AM #68
Rainer
44,263
J. Stephen Gregory
Mom's House on the Cape - Yarmouth, MA

I agree with the general tenor of the comments I'm reading - what is the lesson to be learned here?  It sounds like buyers motivated by greed and fueled by stupidity.  What can you say?

 

Jul 16, 2010 05:38 AM #69
Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Part of the problem is the timing of everything.  The buyer was asked for her bank statements to prove the earnest money cleared, per guidelines.  Was she educated at that time that any large, non-payroll deposits would be questioned and would need to be documented.  If there were any that weren't explained, she would not be qualified for that loan.  If this was clearly told to the buyer UPFRONT and the buyer didn't step up with the facts to her story, then she's truly at fault. You stated you disclosed "gifts" weren't allowed - was she told non-secured funds weren't either?

If, however, this WASN'T CLEARLY spelled out to the buyer, then I believe she would ethically be due the refund of the appraisal cost.  It's EVERYONE'S responsibility to clarify all terms and disclose all information.  If the buyer wasn't given the information, she couldn't know that using unsecured funds would disqualify her for the loan.  Yes, she didn't disclose she was involved with another home, but did later "ratify" the contract, she may have thought she would get an IMMEDIATE refund of the initial earnest money and not realized it wasn't going to happen in 15 minutes.  So, to secure the purchase on the new home, she accessed funds with the intent of paying back the unsecured portion with the refund of the original transaction.  That IS ALLOWED as long as the buyer could produce the original check, the original contract, the negated contract, proof the earnest money was returned and proof the unsecured loan was paid in full.  A lot more paperwork, but ALLOWED.

Sounds to me like quite a few people here dropped the proverbial ball.

Jul 16, 2010 06:13 AM #70
Rainmaker
144,754
Markita Woods NMLS#196099
Fairway Independent Mortgage - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Thanks to everyone that commented onthis post. We did not refund the appraisal fee as services were already rendered and the borrower was aware that the fees were not refundable.

No matter how much we communicate people have to listen and be willing to disclose information. I can not speak for what was told to the client by the agents but I know what we discussed, sent in writing, and never was their mention about another contract until the poop hit the fan.

In an effort to keep the post short I did not include all the  behind the scenes actions to bail her out and still do the loan. But in the end it all fell through because the buyer was not being upfront and honest with her communciation with everyone involved.

 

Jul 16, 2010 08:02 AM #71
Rainer
31,350
George Wilson
Lincolnton, NC - Lincolnton, NC

Agent/Client communication is important as long as everybody is on the same page and is being transparent. I question whether the agents involved knew about each other, in other words did the buyer inform them who she is working with & disclosed contact numbers for them to talk? I always ask my buyers/sellers if they are working with another agent & to what degree (any agreements/contracts signed & with whom?); some will be honest and disclose & some will work both against the middle (better commission rate/kick backs = low ball wins). It seems that since she was working across state lines that common sense dictates using an agent that can sell in both states; unless she didn't want the agents to know her intentions by keeping them separate & "ignorant" about the deal she was working. Also was there another LO involved on the first contract?

All LOs I've worked with have always told the buyer what is to be paid, by whom & conditions that a refund, if any, is awarded along with time line. In those cases that an EM is refunded I tell the buyer: after the agent signs off, after the seller signs off; after my BIC signs off then a check is cut & figure for this to take 5-10 business days on average. IMO, I think she playing fast & loose and got caught.

Jul 16, 2010 08:29 AM #72
Anonymous
Denise Dimares

That's interesting Markita, but it sounds like the agents did not educate the client very well.  And...because she is a 1st time home buyer, I would be inclined to believe that she really did not know. When I meet with home buyers, I go through a well organized buyer's presentation and sometimes I have my lender present to answer any financial questions they may have.  It amazes me that some buyers really do not know simple things like who pays for the home inspection or appraisal. 

A while back, I met with a first time home buyer who had come to me asking for help in getting her earnest money deposit back.  To make a very long story short, she was trying to purchase a house from an agent who represented the seller.  She contacted the agent listed on the yard sign and assumed the agent represented her because the agent wrote the offer. The agent acted as a dual agent in favor of the seller.  Of course she received her earnest money deposit back, but this is one of those cases that the buyer really did not know.  It's imperative that agents educate their clients or the clients will assume they know what they are doing. 

Jul 16, 2010 01:09 PM #73
Rainmaker
1,538,011
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I have to wonder if the second agent even knew about the first agent and the first contract. Or if the first agent knew about the second. This sounds like the kind of buyer who would not be honest with anyone.

Jul 16, 2010 06:33 PM #74
Ambassador
2,008,677
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I think Lenn makes a lot of good points about agent communication with buyer. However, sometimes buyers don't provide enough information even with questions asked.

Jul 16, 2010 07:08 PM #75
Rainmaker
131,417
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Man bad agent and bad client.  If she would of been as forceful in getting the check back as she was in trying to get the appraisal money back she might not of had this problem.

Jul 16, 2010 07:57 PM #76
Rainmaker
1,420,796
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

I can't help but wonder if the buyer thought she was being clever by purchasing homes in two different states... that she would never be discovered and could have her cake and eat it, too... or if she was ill-informed by her agents. Either way, nobody enjoyed this situation. Sorry you had to go through this, Markita.

Jul 17, 2010 04:06 AM #77
Rainer
57,693
Tatyana Sturm
Exit Realty DTC - Aurora, CO
Denver Realtor, GRI, Denver/ Aurora CO Relocation

It should be explained to the buyer that there are some risks involved in buying a home and some of those risks are these.....I am firm believer in explaining risks and benefits to the client so they can make their own decisions.

Jul 17, 2010 04:08 AM #78
Rainmaker
226,596
Tom Waite
Thomas Waite Real Estate Broker - Cypress, CA
So Cal-Apartment Bldg Investments
Great thoughts and blog. Concise well delivered information and slant on the issues.
Jul 18, 2010 07:53 AM #79
Rainmaker
1,431,210
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Sounds to me like the buyer was playing games and got caught.  You owe them nothing.  People do not realize how hard it is to slide something by these days.

Jul 18, 2010 01:09 PM #80
Rainer
22,269
Nicole Fleming
FC Tucker Emge - Henderson, KY

I have buyers who have lost two deals due to issues that came up with appraisal findings and they lost the money on the appraisals both times.  Their situation is a little more complex as far as financing and I feel bad that this keeps happening, but losing an appraisal fee is better than finding out the house has issues later that cost you a lot more.  Same for inspection costs. 

I agree that there was a communication breakdown, whether it be the fault of the agent or the buyer I don't think we can tell completely.  But, buyers aren't always willing to disclose all of their "business" with you and it's hard to react or monitor what you don't know.

Tough one!

Jul 19, 2010 05:25 PM #81
Anonymous
Avalon Bryce

As a buyer, I thought that a buyer's agent with a signed contract should explain everything to their customer/client. It is small things like that (customer/client) that can make information confusing for buyers. When we started looking for our first home we read a few books and scoured the Internet for more information on the home buying process. Unfortunately, we found a Realtor that claimed to be well versed in real estate but we later found out (after we signed a contract with her) that she was not. We stuck it out and found a home eventually. Throughout the process with her we kept asking her for a copy of our signed contract. She kept making excuses each time. Luckily we made a copy of the contract with our signatures only (less hers) before we gave it to her. I say all of this to really say that I don't believe that buyers for the most part try to scam. For people not in your industry a lot of terms are confusing and a lot of negotiations can appear to be mind numbing. When you are in an industry and you start to blame the customer, it is time to reevaluate if you are really meant to be in that industry.

The Realtors on here like Lenn that sided with the customer is the type of Realtor we will look to work with if we able to close on our home to sell it in the future. Thinking the best of people is the best way to work. Buyers for the most part know you want your commission but it seems you should want to help buyers if you are truly a buyer's agent.

I fault you Markita. You did not ask enough probing questions before you started to work with this buyer. The breakdown in communication was on your end. Only you, the professional would know what to ask to know if this person was in a contract or not. Even if you did suspect she was working with another Realtor you could have given an example of a past experience of when you found out a buyer was working with two agents and how it ended up costing the customer money in the end. Examples like these tend to make a liar honest for fear of losing money.

It is like being in Tech Support for computers and you assume that a user has plugged in their computer so you start doing hours of trouble shooting to find out in the end they had not plugged it into the electrical outlet. Believe it or not, this does happen.

It sounds to me like the buyer had not been educated by her first agent and also by you.

This is a buyer's (your customers) perspective amongst agents.

Dec 24, 2010 07:35 PM #82
Rainer
135,632
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

This would be why I avoid 1st time homebuyers...as well as low price ranges.  Always too many headaches.

May 13, 2011 05:48 AM #83
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Rainmaker
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Markita Woods NMLS#196099

Queen of Mortgages - FHA, VA, Conventional, USDA
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