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A HARD BATTLE.

By
Real Estate Agent with Pacific Coast Real Estate Group

After submitting my Buyer to seven different lenders and fighting for my committed client for almost three months, I got a tentative approval, then a final approval and finally a funding and a successful closing.

The problem was that my Buyer is a self employed individual that wanted to do a "no income verification loan" and wanted to purchase two units with 15% down payment. He got rejected by one bank after another. Finally, the fifth lender offered to make the loan with a 20% down payment or $ 92,000. Not a small amount I must say, but my client wanted the property and agreed with the 20% down payment.

After a week of presenting different documentation, the lender finally told us they had discontinued the program and could not do the loan. Only because I am very stubborn and so is my client, we did not give up. We submitted the loan to two more lenders. Finally, the seventh lender agreed to do the loan but they would not take less than 25% down payment or $ 115,000, plus reserves for 3 months in the amount of $ 10,000.

There is a point in time that regular people have to run out of money. My client told me he could get the 25% down payment or $ 115,000 but there was no way he could get the reserves of $ 10,000. After so much effort we were stuck. I offered my client to lend him the difference and he could pay me back whenever he had the cash. My client is a proud individual and he did not accept the proposal. So what to do?

The property was a Bank owned property. Very little what you can do with an REO. Nevertheless, we took a chance and informed the Seller that my client had reached the end of the line and could not come up with his Lender's cash requirements because he had ran out of cash. We asked the Seller for some help towards the closing costs. After a week, the Seller agreed. We asked the mortgage broker for a slightly higher interest rate in exchange for lesser fees. The mortgage broker worked out the new PITI with a higher interest rate. My client felt comfortable with the new PITI, so eventually, the amount requested by the Lender matched my Clients Savings and Checking's Bank Account and he wired the funds three days ago. I was informed by the Seller that we had closed. I never got a call from the Escrow. That's courtesy. Anyway, Happy ending.  

I know that a lot of lenders at AR are thinking that they could have made the loan with the 15% down payment; MAYBE, but what I learned is that some of the many lenders NEW underwriting requirements are just plain insane.

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland
Yes, indeed, they are insane.  It's as though the financial industry has determined to recapture all of their past losses out of the hides of new borrowers. 
Mar 28, 2008 03:53 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

Amazing that you were able to get an REO seller to wait for 3 months while you found financing. (There surely could not have been multiple offers on this property.) At that point I'm not surprised they kicked in on closing. It's time to get that property off the books!

Mar 28, 2008 03:53 AM
Randy "Lazarus" McAtee
Lazarus Realty - Fresno, CA
Owner/Broker, Lazarus Realty, Fresno California

I love La Jolla!

We used to live in Lemon Grove and I would go to La Jolla and fish off the cliffs just south of the Scripts Institute underwater park.

Why did we leave San Diego??? 

Mar 28, 2008 04:01 AM
Isaac Bensussen
Pacific Coast Real Estate Group - La Jolla, CA

Vickie:

The fact is that when I presented the offer to the REO Seller, I submitted a pre-approval letter with the 15% down payment. This first pre-approval had been obtained by my mortgage broker through the "new" computer submission format" that showed that my client was approved. That triggered the REO Realtor to remove the units from "Active" and put them in "Pending". All the other surprises came along the way. The original first approval said Oh, we are sorry, we can not do the loan. I told the Realtor representing the REO Bank ( that by the way were wonderful to work with) of this problem and they decided to hang on without removing the units from "Pending". That's the reason I could finalize the deal without other offers coming through.

Isaac Bensussen www.besthomesinlajolla.com

Mar 28, 2008 04:07 AM
Isaac Bensussen
Pacific Coast Real Estate Group - La Jolla, CA

I really don't know Randy. I have not gone for a vacation break in many years because in La Jolla, everyday is vacation.

Isaac Bensussen www.besthomesinlajolla.com

Mar 28, 2008 04:10 AM