Help! Call 911! Well, one of my closings for this week is dying a slow death. I just hate it when that happens. We were supposed to close last Friday, then extended until today, only to find out Wells Fargo has denied the loan due to the Buyer's debt ratio being to high by 1%. Only 1%! Seemingly, there is some additional income, from a part time job, that was disqualified, due to not being seasoned (less than 12 months). How can something so small kill a deal?
Anyway, the Loan Officer called me today, to give me this news, and to request a 3 week extension so they can submit the package to another Lender. A 3 week extension! I'm not quite sure how an extension and a new Lender is going to change the debt ratio. The facts are, these are first time home buyers, that were getting a pretty good rate and a 30 year fixed 100% first mortgage from Wells Fargo. If they switch to another Lender they are looking for an 80/20. Now I have been doing this for a while and may be looking at this wrong, but wouldn't an 80/20 make the ratio even worse than it already is?
My suggestion was to check with the underwriter, at Wells Fargo, to see what the loan amount would need to be to fit within an acceptable ratio. By my thinking, maybe, if we knew this figure, we could adjust the purchase price downward and do the deal, instead of granting an extension on a deal that may or may not work. Does this make sense? Is it a doable solution? Maybe reducing the price by $5,000 or so would work. We could then lower costs to the Seller to get as close to the original NET as possible.
I'm thinking out of the box here to try and get my Sellers out of their house. We have been trying to sell this place since June and they have in fact already placed a sizeable deposit down on a rental home. I don't want them to lose this rental deposit or this deal. I have grown to really like these folks and I want them to be able to move on. At this point I am not even concerned with getting paid. Heck, I made enough money this year. Sometimes you just have to do one for the "ole gipper."
I'm looking for 100% financing on a purchase price of $175,000 with the Seller contributing 5% towards Buyer's closing costs. The Buyer has a middle score of 620.
So, what do you think, ActiveRain mortgage guys and gals? Any hope showing? Any way my Sellers can still salvage Christmas? Are there any mortgage brokers wanting to ride a white horse this Christmas? All thoughts and suggestions are appreciated. Giddy up!!