Memo to Big Banks: If you don't want to cook, get out of the kitchen!

By
Real Estate Broker/Owner with Dennis J. Zisa & Associates, Inc. License # 8836971
https://activerain.com/droplet/sJk

First-time homebuyerReally guys, I've been wearing long pants for quite some time now...I can take it! And, believe it or not, most of my buyers can, too! So if you can't see your way clear to qualifying them for a mortgage loan, just say so! But, on the outside chance that you do actually issue a pre-approval, please don't jerk us around for another five months, while you pull out more and more hoops to jump through!

 

I can remember when a bank or mortgage company would run a buyer's credit, verify their income and the source of the down payment, and then give them a conditional approval. Generally that approval would hold, barring any problem with the appraisal, or some other unforeseen development. Well, those days are gone...long gone! Now, fast frame to the present! The buyer's credit is approved, their employment is verified, and the down payment requirements are met. Great news...they're finally pre-First-time homebuyerapproved! Time for the champagne? Not by a long shot! Now's when things just start to get interesting....Now's when the goal posts start moving, and they don't stop moving until that wire finally hits the title company's account...that is, if it ever does hit! 

 

Our market is South Jersey, specifically Camden County. A significant chunk of our business revolves around rehabbing, listing, and selling single family rowhomes in Camden City...it's a niche business, we're committed to urban renewal, and we believe that home ownership is a necessary part of the processIt should come as no surprise that we very often find ourselves working with first-time home buyers. The challenges should be obvious, but even where these prospective homeowners have actually managed to maintain a decent credit score, and a steady, full-time job (not small accomplishments in our present day economy), it seems that there is always another obstacle to overcome. Then there's the property appraisal. This is where your real fun starts! It matters not that the appraiser is able to establish value, despite a "declining" market. It matters not that the homeCamden real estate meets, or is made to meet, FHA property condition standards. It matters not that the buyer is satisfied with their professional home inspection. No, what it will probably all come down to is some further ludicrous demand from your Underwriting department!

 

 Case in point....we are currently struggling to bring to the table a small FHA deal...we have been for over 4 months now! The buyers have (finally) been fully qualified, the property has appraised for value, and the seller has completed the mandated laundry list of FHA repairs, termite treatment, etc. (the file is two inches thick!). Think we might be good to go??? Well, not so fast! It seems there is just one more pesky little requirement left to clear your underwriting department. It appears that the appraisal stated that "the subject basement exhibits dampness, and a possible plumbing issue. A plumbing certification is required". So the seller pays a licensed plumber, who issued a "clear" plumbing certification. Requirement satisfied??? Well.....not exactly. Just for safe keeping, you now want a structual engineer to perform a "structural review" of the foundation.  By the way...did I mention that this is a $37,000 deal?

We may just have to order take-out!                    

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
Location:
New Jersey Camden County Camden
Tags:
fha
big banks
firsttime homebuyer
homeownership
camden city
camden county
south jersey homes
seller financing
installment sale

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Ambassador
1,730,106
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Dennis - isn't it amazing that when the property was $500K, there was no problem to get the loan, even 100%. Now that the sme property is only $170K, there is no way in hell to finance it. How come at $500K it was safe, and at $175 it is freakin' risky?

Jul 25, 2011 03:35 PM #1
Rainmaker
601,542
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Dennis - LOL  I can certainly understand your pain - been there before.  I too have had my head-banging moments with underwriters harrassing solid an qualified buyers.  Most of my problems are the result of my borrowers buying run-down, dilapidated, dumps.  Quite frankly, I don't blame some lenders not wanting to touch these money pits.  For me, my average sale is around 300k so it is a little different than a 37k property.

Jul 30, 2011 01:05 PM #2
Rainmaker
1,561,913
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

It's so frustrating isn't it . . . (and Donne's mention in her post sent me your way for a read). 

Jul 31, 2011 07:22 AM #3
Rainmaker
313,989
Glenn Roberts
Retired - Seattle, WA

Dennis, THe bank there and the banks here need to get out of the business. THey don't have a clue.

Jul 31, 2011 03:53 PM #4
Rainmaker
185,847
Irina Netchaev
Pasadena Views Real Estate Team, Inc. - Pasadena, CA
Pasadena CA Real Estate
Wow... How sad... Couldn't agree with you more. I think u/w get up in the am with the pure goal of torturing folks. Hope you can pull this one together after all.
Jul 31, 2011 08:32 PM #5
Rainmaker
324,145
Melissa Brown
Helen Adams Realty - Charlotte, NC
Realtor - South Charlotte NC Homes for Sale

OMG!!!!  That is SO frustrating!  It's like the pendulum has swung WAY too far to the other side.  Getting a deal closed now is like birthing a baby!

Aug 01, 2011 06:36 AM #6
Rainmaker
683,087
Sidney Kutchuk - Realty Works Temecula Kutchuk - Realty Works Temecula
Realty Works Temecula - Temecula, CA
Realty Works Temecula

Dennis:  Good luck on this one!!!  I re-blogged by the way!!!!

Aug 01, 2011 04:07 PM #7
Rainmaker
347,501
Dennis J. Zisa & Associates, Inc.
Dennis J. Zisa & Associates, Inc. - Camden, NJ
29 years in So. Jersey and the Greater Camden area

Jon  The bottom line is that they, all too often, have no interest in accomplishing their supposed "mission", which is (or should be) to make sensible loans to qualified borrowers, and be content to secure those loans against reasonably valued collateral. 

Carla: Thanks for the comment....It is frustrating, particularly when it's assessed against the real and detrimental effect it has on people's lives- for someone in the process of buying their first home, a last minute rejection is devastating.

Glenn, you've certainly got that right! Thanks for the comment. 

 Irina, it really does seem sometimes that their actions (or inaction) is calculated. Thanks.

Melissa: I couldn't agree with you more! I've used the "pendulum" analogy countless times in trying to explain their nonsense to my clients.

Jane: Thank you for that! If and when we get to the table, it will surely be the subject of a new blog.

Aug 03, 2011 07:36 AM #8
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Rainmaker
347,501

Dennis J. Zisa & Associates, Inc.

29 years in So. Jersey and the Greater Camden area
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