How do you spell stress? I spell it C-L-O-S-I-N-G

By
Real Estate Agent with Coldwell Banker Rox Realty

stress

What a week this has been with two closings that were on a very slippery, perilous slope to doom.   Let me begin with I'm a fairly new agent, six months into my new career.  HOWEVER or as a good friend says HOWEVAH - I'm not a total newb.  I've closed as many transactions in my six month career as seasoned agents in my market. Somehow, I've managed to have two deals in two weeks that other agents were saying "Wow, I've never heard of that happening before"  Great...I want to be unique in  the market but that isn't the way I envision!

CASE ONE - a short sale that took 5 months to get approval.  We finally make it to closing.  My buyer signed the loan docs...the seller signed their docs in another state.  The buyers lender wired funds to title.  This means we're about done - right?  RIGHT?  Wrong. 

Title has been trying to get final HUD approval from the short sale lender for SEVEN DAYS.  According to the short sale closing instructions, title is to send the HUD to the bank 48 to 72 hours prior to closing for authorization.  We did this.  And waited...and waited...and still we waited.  Email after email, phone call after phone call to the asset manager garner no response.  The listing agent, two title officers, the loan officer and two of her supervisors and I are emailing each other frantically.  What are we going to do?  We need approval to record!  The buyers lender is ready to recall the wire.  And to compound the problem - the loan lock is about to expire.  We'll have to start again.  What do we do??

I got the contact information for someone high up in the short sale bank's food chain from another agent that heard her speak at a seminar on short sales.  So we sent a "PLEASE HELP" email.  Guess what?  In two hours, we had approval!  YEAH!!!  We're done - right?  RIGHT?  Wrong.

The interest charges on the HUD are now incorrect, based on recording four days prior.  Title wants to send the revised HUD back to the short sale bank for reauthorization and charge the BUYER the interest. Ah no.  My buyer performed - you are not charging him.  At the same time - DON'T change the net to the SS bank or who knows when they'll get that approved.  You know where this is going don't you?  If you guessed the only lines we could adjust - the commissions...you get a cookie.  But it's closed, recorded and everyone is HAPPY!  We have no idea why the SS bank was not responding to title to approve the HUD.  I can only hope someone was deathly ill and not on vacation and forgot...

CASE TWO - a lender owned property.  My buyer found a lovely home, in a lovely neighborhood.  Thanks to her awesome REALTOR, she got a great deal - the house appraised at $120K on a $112K accepted offer.  This is great news - right?  RIGHT?  Wrong.

Her lender required a SECOND appraisal the week we were scheduled to close to substantiate the value!  This is extension number one.  Guess what value the appraisal review came up with?  $120K.  Yup.  The first appraisal was spot on.  OK, problem solved.  We can proceed to close - right?  RIGHT?  Wrong.

Underwriting came up with a second social security number for the buyer.  Instant red flag and deal killer. Bear in mind, my buyer is a FEDERAL law enforcement officer.  The background search on her is much more detailed than any banks underwriting review.  So now we need to order IRS copies of tax records.  A week later and a second extension they decide she is who she says she is.  OK, problem solved.  We can proceed to close - right?  RIGHT??  Wrong.

I have told both her lender and title she will be out of town on assignment beginning on Friday.  She must sign docs no later than Thursday - she leaves for 7 days on Friday and can not be accessed.  No docs...no docs...WHERE ARE THE DOCS - it's THURSDAY!!!  At almost 3pm, title finally gets the docs from the lender.  OK, print them and we'll get a mobile notary tonight and she can sign.  EXCEPT...(and you knew there would be one) - her lender bank requires a final review of the HUD.  OK, no problem - if something is wrong, she can re-sign that doc when she gets back and we're ready to close - right?  RIGHT?  Wrong.

The lender noticed an invoice for a home inspection to be paid out of escrow.  MY fault - I should have had my buyer pay outside of escrow.  I figured she already paid for two appraisals, put this on escrow.  I now know - NEVER DO THAT.  Now her lender wants to see the home inspection .  And not only see it - they want EVERY item the inspector noted on the summary repaired PRIOR TO CLOSING.

Ummmm HELLO.  This is a lender owned AS-IS sale.  Did you miss those addendum in the contract?  We are well beyond the inspection period and the BINSR was accepted as OK.  Besides that, nothing that affects the value or safety of the occupants was found in the inspection.   The inspector noted missing door stops, missing shower head, missing AC filters, a small air leak in an AC duct and two (yes only TWO) roof tiles that need to be renailed. Total cost of repairs, maybe $200???  The lender refuses to fund unless the repairs are done.  The seller will not make the repairs and the buyer can not LEGALLY make the repairs as she does not own the property.  The seller addendum strictly forbid any repairs prior to possession.

I send an imploring email to have this reviewed.  I stated that neither appraisal indicated repairs needed.   The value of the asset is more than the loan - imagine that, an equity position in todays market.   And a home inspection was never a condition of the loan.  If my buyer had paid the inspection fee outside of escrow - the lender would have funded and not asked any questions.  The house would have been in the very same condition with the very same issues if they were "ignorant" of the inspection.  Why condition the loan now with a condition we can not legally provide?  I closed the email with "Would you allow a buyer to make repairs to one of your banks assets prior to possession?"  I await the responses on Monday.

So how was your week?  Please share your closing nightmares so I don't feel so singled out.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Steve Davis 09/18/2010 04:19 PM
Topic:
Mortgage / Finance
Groups:
Active Rain Newbies
Arizona Real Estate
The Vent
Tags:
closing nightmares
real estate problems

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Rainmaker
856,798
Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

It is fun.  Everything is going along and two weeks before close all the missteps happen.

Sep 17, 2010 06:51 PM #1
Ambassador
4,308,994
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Bea, all is well that ends well. And I know how it feels when it falls apart...be it a short sale, foreclosure, bank-owned or regular transaction *see the order in which I put them ...lol

Sep 17, 2010 06:51 PM #2
Rainmaker
292,777
Steve Davis
Davis Coastal Properties - Carlsbad, CA
Carlsbad CA

Ok Bea. Who were the banks in Case One and Case Two. We all will want to know as we all are dealing with some pretty dumbass banks these days. Who are they?

Sep 17, 2010 06:53 PM #3
Rainer
53,785
Bea Lueck
Coldwell Banker Rox Realty - Casa Grande, AZ

Case one was Wells Fargo and case two was Chase.  Surprised?  LOL

Sep 17, 2010 06:57 PM #4
Rainer
63,378
Ally Wangsness - Seattle Real Estate Broker
RE/MAX Metro Realty, Inc. - Seattle, WA

Bea, we could also spell stress "b-a-n-k". I have big issues at this time with one of them.

Sep 17, 2010 07:01 PM #5
Rainer
438,618
Joan Valverde
HomeSmart - Colorado Springs, CO
GRI,CDPE,CNE,MRP,SRES Colo Sprgs, Blk Forest, Monu

Bea, Congrats on your two closings!!! This is were AR is so good for you to have "others" who know exactly what you are talking about.  I am waiting on a SS with Chase now. (getting no where fast ugh).  Thanks for the last minute heads up! :)

Sep 17, 2010 07:11 PM #6
Rainer
140,614
Maureen Fukumoto
Help-U-Sell Realty Pro - Mililani, HI
Maureen

Bea, Congratulations, this is a tough market to start a real estate career. By the time the market picks up speed you'll be seasoned and ready to rock.

Sep 17, 2010 11:04 PM #7
Rainer
53,785
Bea Lueck
Coldwell Banker Rox Realty - Casa Grande, AZ

Ally - GOOD LUCK!

Joan - Thank you

Maureen - that's what my broker is saying "You won't know what to do on a regular sale" I can't imagine...offer - acceptance - inspection - closing.  No drama in between!  I'll feel like I've forgotten to do something.

 

Sep 18, 2010 04:21 AM #8
Rainer
213,538
Jane Becker
Keller Williams Home Team AdvantEdge - Worcester, MA
CRS,ASP,ABR,CBR,CDPE,LMC,E-PRO,GRI

Boy, usually C-L-O-S-I-N-G spells relief :)

Sep 19, 2010 11:56 AM #9
Rainmaker
443,911
Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

Its very important for agents to keep in mind that anything listed in the sales contract or on the HUD may require lender review.  This includes, but is not limited to, a home inspection and a termite letter (except on VA loans).

From the repairs that you listed, they do sound cosmetic in nature and not necessarilyrequired by HUD to be repaired to meet minimum property standards for FHA loans.  A property being sold "As Is" is really irrelevant to the lender.  The new loan must still meet are current lending guidelines and minimum property standards.  The lender is the one taking on the risk if the new buyer eventually defaults.

A word of caution, don't put termite letter and home inspections requirements in the sales contract or pay for them on the HUD at closing.

Sep 27, 2010 01:44 PM #10
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Rainer
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Bea Lueck

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