Real estate scam using mortgage contingency clause

It may or may not be a scam. Mortgage commitments  today dont mean anything until the deal actually closes.  As far as advice for your seller...it depends on your sellers  situation,  financial and otherwise, as well as your local market. In my market, take the money and move.

 

 

Why have a contingency that goes that far out unless it's your state law? Give them 30 days at the most. Most unfortunate but moving without a closing seems a little risky.

Christine

I guess I would attempt to talk to the mortgage company's branch manager or district manager first, then find out if they would allow a recordable second mortgage between the seller and the buyer. If the buyer truly wanted the place and it appraised for the selling price giving a second with a 1 to 3 year balloon would keep the seller from having to discount at the last minute.

How long did it take to find this buyer? It would be best to stay put and find another buyer, as that is a lot of their equity gone to someone who can not buy or finance that house in that price range!

How long did it take to find this buyer? It would be best to stay put and find another buyer, as that is a lot of their equity gone to someone who can not buy the house!

How long did it take to find this buyer? It would be best to stay put and find another buyer, as that is a lot of their equity gone to someone who can not buy or finance that house in that price range!

How long did it take to find this buyer? It would be best to stay put and find another buyer, as that is a lot of their equity gone to someone who can not buy or finance that house in that price range!

How long did it take to find this buyer? It would be best to stay put and find another buyer, as that is a lot of their equity gone to someone who can not buy or finance that house in that price range!

Christine

I guess I would attempt to talk to the mortgage company's branch manager or district manager first, then find out if they would allow a recordable second mortgage between the seller and the buyer. If the buyer truly wanted the place and it appraised for the selling price giving a second with a 1 to 3 year balloon would keep the seller from having to discount at the last minute.

Christine, sorry about the multiple posts with same comment, AR does not seem to be loading comments again. I hit submit comment several times and ended up with 4.

I always make the loan committment deadline one week before close, then if the buyer backs out the seller gets to keep the earnest money. Which is still only small compensation compared to the hassle. That's how it works here in Colorado on our contracts, sounds like maybe not in PA.

Not all of these situations are a scam, sometimes $%&^* just happens. Best to work with the buyer you've got, but also in this market, mortgage approvals/commitments are going to be squirrely for a while, so just be the best agent you can for your seller, whatever it takes.

Right now it is my opinion that lenders are looking for any little thing they can NOT to fund mortgages.  I don't like the mortgage contingency going to the day of closing either as it really does create a hardship for the seller.  On the one hand they have to make their plans to move, often putting down a lot of money either toward a new home or a rental, they have to pack and be ready to move by closing day, and yet, the buyer can walk away at the last minute with a letter from the lender stating they aren't going to fund the loan for some reason.  They don't even have to give a reason.  I don't think this is right but I know for a fact that most of the major lenders don't even send the loan to final underwriting until about 96 hours before closing.  If they come up with additional conditions that the buyer can't meet, bye bye loan.  I have seen it happen several times in recent years.  It isn't right but not sure what we can do about it.  It is the lender's right and we don't have much control over it.  Hey mortgage people out there, any ideas????

All I know what lending guidelines have changed.  I have heard of this happening in other transactions.

SOunds like my summer of 2007...when I lost 8 deals in financing that were within a week of closing..i don't think Ihave recovered fully from the mental strain of this drama...I now don't work with mortgage brokers any more...I know much of it was just the time...and the timeing..but it nearly killed me to lose over 60k in commisions and months of work

Have the contract language revised to remove that provision.  Give the buyer 10 days for their financing contingency.  This puts the onus on them, not the seller.  Advise your sellers to lease the home back from the buyer for at least 7 to 10 days to make sure the closing occurs and the money is in your seller's account before the seller starts moving out.  This prevents this kind of nonsense.    

Due to all of the craziness going on lately, I am insisting on a minimum of 1% earnest money, and ALL contingencies to be removed within 14 days of contract date, on my listings. It seems an approval letter is not so much an approval letter these days. All Earnest $$$$ remains with the seller. I took it in the rear personally, from a "less than stellar" lender and learned the hard way. Elizabeth

Well, maybe there should be some regulation in place for when a lender gives a mortgage commitment. There should be something in place so if the lender changes the amount, or terms, after givng such committment, the lender would then be in default and owe damages. Now if the amount or terms change because the buyer lost a job or something else the buyer did to cause it, then this wouldn't hold the lender at fault. I know people don't like regulation, but I think we need some in the mortgage industry.