Buyer Can't Close! Banks Are Crazy!

LoveInTheHouseOctober 12, 2011

You guys who have been following my saga won't believe it. We're supposed to close on Friday. To refresh you, the bank wouldn't give the buyer a loan until he changed jobs to one closer to my home because they said the commute was too far. They didn't want a letter from him stating that he was really going to live in the house as a primary residence like some of you suggested. They wanted him to transfer closer to the house. So he changed jobs. It took about a month and was not easy. He started the new job last week. Now the bank is saying they want a letter from his old job stating they will rehire my buyer if necessary. What?! The buyer has been trying to get the letter for a week. Something about one department doesn't know what the other department is doing and the guy who handles this stuff is on vacation and now Mary in the office said it would be no problem, blah, blah, blah, blah. Maybe they're not going to give him one--I don't know. But in the meantime, it hasn't gone through underwriting and they can't close and who knows if they ever will close? WHAT MORE DO THESE BANKS WANT?! BLOOD?! MY FIRST BORN?! Now I am really messed up because I had to reserve a truck, start packing, hire the horse hauler, stop doing business, hundreds of things! AGAIN!

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On old school corporate Human Resource department forms there used to be box to check: Would rehire. It always got checked unless you were being fired or forced out. I wonder if they are looking for this kind of statement.

    Bookmark   October 12, 2011 at 11:55PM
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Oh, no, No, NO! I am so upset for you!

But I think it will work out as it isn't the buyer backing out, just that the rehire letter is not available (yet?) and the letter is needed before underwriting, right? I suppose that leaves the scary possibility the underwriters may balk for yet another reason. Is the problem partly that your buyer dragged his feet on getting the letter so the whole thing got delayed? Is he already commuting from his old house to the new job site? That'll get old, fast!

Still it sounds as though it will happen but perhaps be delayed a few days. If that happens it won't make any difference to your planning (except the NJ closing - is there wiggle room there?) You'd still be closing the business down, and needing to pack and move everything and schedule the horse hauler during your two-week over-stay. I'd just keep soldiering on for a few days more.

And your horses can eat a little more of your hay if you stay a bit longer. Your dilatory buyer owes you that, at least.

I hoping tomorrow everybody gets the lead out and does what needs to be done. Sheesh! You'd think this was the height of the real estate boom and people were still busy doing closings.

Keeping my fingers crossed so you get good news tomorrow.

Hang in there and keep your Mother's message to you in your mind.


    Bookmark   October 13, 2011 at 3:18AM
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Yikes! I've been following your saga, and can't believe that the bank wants this info. IF he hadn't transferred - had remained at the old job - he wouldn't have qualified, so WHY do they want confirmation that he could go back? Bizarre.

    Bookmark   October 13, 2011 at 7:51AM
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Sounds like qa buyer strtchd to the limit with little down paymet.

    Bookmark   October 13, 2011 at 9:44AM
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Sophie Wheeler

Exactly what brickeye said. Not enough skin in the game. Hobby use properties are high risk properties. The bank is averse to taking high risks anymore without a substantial guarantor. Hopefully, his ex HR department can satisfy them on that point.

    Bookmark   October 13, 2011 at 10:04AM
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I will be floored if his old company makes that type of commitment as they are opening themselves up to a bucket of litigation if he somehow loses his new position...which in this economy is perceived as being likely...last to be hired...first to go.

That letter could then be used to sue for misrepresentation if his old company does not hire hm back, as the letter would imply, as they may not have a position for him. If he then defaults on the loan, they risk having the bank on their case.

And, before anyone doubts that...have you ever heard of nonsense such as even requiring this for a mortgage?

Put nothing past the banks these days.

What bank is this? BofA? Citi? It sounds like one of their MO's.

    Bookmark   October 13, 2011 at 11:24AM
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Hang in there, LITH! We're all sending positive vibes your way.

Your scenario reminds me that what doesn't kill us makes us stronger, LOL! All this drama will make home sweet home in NJ all the sweeter. (I'm looking forward to the decorating blog once you're settled in the new place!) It'll happen.

    Bookmark   October 13, 2011 at 2:36PM
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Did he change jobs within the company or did he move to a different company?

    Bookmark   October 13, 2011 at 3:02PM
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Yes Jamie, that is exactly what it sounds like he needed!

Terriks, he moved to a different company affiliated with the old company. It's in the medical field. He was going to keep the old job originally and commute but the bank insisted he change jobs. Yes, so now he's commuting in the other direction.

Logic, it's not one of those banks. It's fairly local, which we thought was going to be a plus this time because they are experienced with this type of property in this location. I lost my first buyer two days before closing because her bank, out of state, didn't understand our zoning.

I know Liriodendron. I keep thinking of that message and believe it or not, even though I wrote this post with lots of exclamation points, I'm relatively calm.(Thanks Mom!)

Yes Stinky! I want to start writing about all the fixing and decorating we're going to do! I'm going to document it all; take a lot of pictures. If I ever get there...

    Bookmark   October 13, 2011 at 4:15PM
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OMG, Love....I can not believe what I am reading about this!

I have followed your house selling mess for a long time and I thought that this time was "for sure". My heart breaks for you and hold that Valentine close~~

This house selling is not for the faint of heart, is it?
Sometimes I think that God doesn't want me to move for some you ever feel that way too?

Good thoughts going your way.

    Bookmark   October 13, 2011 at 5:23PM
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The first question I would have would be about the appraisal. It doesn't sound as though it was high enough for them to feel comfortable with the amount of downpayment that the buyer has. I know you said it was "OK", but you need more info than that, especially the comps they used. You need to know what the specifics are. Because I agree that a former company is very unlikely to provide the type of letter than the bank is requesting, even if they are affiliated with his current company.

    Bookmark   October 13, 2011 at 6:35PM
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Live-wire, the appraisal was twenty thousand dollars more than what I sold it for. The loan officer told me the appraisal "was fine." I think they're just really being fanatics because of how they gave out so many loans willy nilly in the past and now they are over-correcting. Jamie is right about what this document is. According to my buyer, the bank has it now. But no new closing date. I have to reschedule the closing up north but I don't know what to tell them about when. Everyone is messed up.

Phoggie, yes, sometimes I do think, am I supposed to stay here? Is that why this keeps happening? What am I supposed to be learning from this? I've learned I'm a control freak and have no patience. Have I gotten any better at it? Nope.

    Bookmark   October 13, 2011 at 11:48PM
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If the Bank has the letter, why postpone the closing? There is no reason to postpone. Contact the closing attorney and ask them why they can not stay on track. All of the hard work is done. All they have to do is finish the HUD1 Settlement Statement. The longer you wait, the more time the underwriter has to find something else to ask for.

    Bookmark   October 14, 2011 at 7:46AM
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Probably 85% of my closings come down to the last day or two with the lender asking for docs. But, until the day and hour has passed, there is usually no reason to postpone the closing.

    Bookmark   October 14, 2011 at 7:50AM
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Probably 85% of my closings come down to the last day or two with the lender asking for docs. But, until the day and hour has passed, there is usually no reason to postpone the closing."

I understand that this is "how it is" but it really is unacceptable from a sellers point of view. You have everything you own either in storage or halfway onto a truck headed across the country and everything is left in limbo until the last moment?
How is one to schedule anything living in this sort of uncertainty?

My last closing was "is it gonna happen or is it not?" right up until the HOUR we were asked to appear. By that point my truck had pulled out and was two states down the road- that is a terrible risk to ask a person to take and that it has become standard is ridiculous.

I know consumers have next to no recourse, but this stress is horrible and so not necessary.
It is a symptom of this day and age where competence and the ability to get things done are the exception rather than the rule.

It just stinks.

    Bookmark   October 14, 2011 at 10:36AM
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Cearbhaill, exactly! They were the ones who picked the closing date! I have to be ready just in case they might do what they said they'd do! We're moving to another state too, like you, and there's moving trucks and my daughter's school plus we have a farm and the horse hauler was ready to come--all kinds of stuff. Oh yeah. I forgot about one of the most important things. Work! We've had to stop taking orders for flooring because we're supposed to be gone! So now we're basically unemployed, waiting for them, living on love! I don't know what they are thinking!

NC, I spoke to the lawyer/closing agent this morning. She said it's in underwriting and she was going to call them to try to find out when they'd be ready. It sounded like the lawyer was waiting for the bank. We are supposed to be closing right now so it's passed.

    Bookmark   October 14, 2011 at 12:50PM
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Does the buyer have an agent? If the lender has everything they have asked for, someone has to demand an explanation as to why the closing date was missed. I am telling you right now... you better be the squeaking wheel.
Good luck.
PS... even though this is the norm nowadays, if it has gotten this far, chnaces are really good that it will close.

    Bookmark   October 14, 2011 at 3:48PM
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Okay NC, I can squeak if need be. My feeling had been that I shouldn't bother them and get them mad at me, figuring that they were going to get done when they get done and I need to be patient. But on the other hand, the way you said it... they missed the closing date! I have a right to be mad!

    Bookmark   October 14, 2011 at 11:57PM
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Look at it this way: if you weren't FSBO you'd be completely justified in hounding your listing agent to light a fire under someone's butt (probably the buyers' agent's). One of the (many) things that FSBOs require is that both parties do the work that their respective agents would customarily be responsible for.

In this case w/o agents somebody is gonna have to get cranky. And since you seem to have the most to lose (2nd closing planned next week in NJ) it probably falls to you to stack the logs, lay in the kindling, crunch up the newspaper and start waving one of those 12 inch fireplace matches around.

Somebody needs to get to the bank first thing on Monday and get the process rolling. Do you know for sure that all the docs are in -including the re-employment foolishness? Properly it should be the desperate, groveling buyer since it's his earnest money and purchase that's on the line (though in a technical sense he probably has a mortgage contingency to allow him to escape scot-free). And he's the one with proposed on-going financial relationship with the lender. But if he can't, won't, or is otherwise too wussy to take his whacks at them, then it may fall to you. Either way I think you have a right to know by, say noon on Monday, what's going on.

Here's where you "earn" your (saved) commission.

Meanwhile keep thinking of your Mom's message: she knows it will turn out OK.

BTW, This absurd will-they/won't they/when closing mess is not an artifact of the post-crash world. I have had it happen before, as long ago as 40 years! But every time eventually (usually just a few days) everything happened as planned - no sales or purchases EVER completely fell through.


    Bookmark   October 15, 2011 at 1:57AM
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Most people think all we agents do is drive clients around and look at homes and then write up offers. That is the easy part. I spend most of my time doing contract to close process faciliatation. It is amazing how incompetant so many people are when it comes to their responsibilities. Processes, whether they are man made or natural, all take a lot of energy to keep them rolling. If there is no energy input all processes will come to a halt.
The lender will not get mad at you for asking for an update.
What is the buyer saying about all of this?

    Bookmark   October 15, 2011 at 7:49AM
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That is exactly why I always point out to proposed FSBO candidates that the 6% they "save" is not simply free money in their pocket.

Both buyers and sellers have important things that need to get done in order to get to closing in good order, on time and without crisis. If agents are involved these responsibilities fall largely on them. They've got commission-skin in the game after all, and they know what the steps are and the workarounds when things get sticky.

But in FSBOs (especially a totally no-agent FSBO) it can devolve into an all-around mess.

I find it amusing that in the case of FSBOs (which I usually do - prefer it actually - for both buying and selling) each party thinks that they ought to be the full financial beneficiary of the avoided commission. In fact each side has to do more work to get the deal closed, so perhaps the financial benefit ought to be equitably shared. And then you've got to ask yourself is all this extra, time-critical, financially risky, often completely unfamiliar work worth saving a half-commission share? Perhaps not.

But as long as both sides imagine that they are getting the benefit of the entire foregone commission it probably seems OK.

I'm not knocking FSBOs; as noted I prefer doing it that way myself. But I don't do them just to get more money out of the deal. I know I'll be earning that money in time, effort, risk, some additional cost and overall wear and tear on my peace of mind. And I also expect that the other party will be earning his share, as well. Although on that score, I find that almost always I earn their share, too, simply because I've done enough FSBOs that I know what the steps are and they don't and it's easier to do what I can myself rather than risk it not happening in a timely way.

OTOH, when I have to make a real estate purchase in a distant place where I am not familiar, I usually hire a fee-based buyers' agent to handle the search and closing details for me.

I'm putting as much long-distance mojo and good thoughts on LITH's sale as I can, so it gets itself back on track early Monday. She has already been through the wringer on this sale and I know she needs to move on.

Keep packing, girl (or award yourself a complete mental-health day off - you're entitled!) I'm up here in northern NY sending energy waves down to you to draw you north.

Hope to read good news about your deal on Monday!


    Bookmark   October 15, 2011 at 3:16PM
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NCrealestateguy, if I thought that's what all you guys did, I'd become an agent myself! I like real estate but I know you have a tough job, believe me!

The buyer is more laid back than I am about all of this. He's in a family rental, no children, and they're going to move here at their leisure. So closing delays are no big deal to them. Although now he has to commute, because if he's telling the truth, he started the new job closer to my house.

I was TOLD by the buyer and the lawyer that the bank has the document.

I can get cranky. I just want to make the right moves. I don't mind doing all the work. I expect that, being a FSBO. This is my 5th FSBO. My buyers never know what to do and so I do it all. Heck, this place I bought was also a FSBO and I still had to do all the work when I was on the other end! lol Yeah, it takes a lot of time but I work from home so I can do it. It also takes a gamble financially because you have to spend money advertising, etc. And if you fail, you're out that money. And that wouldn't happen if you had an agent.

I don't know what my buyers think about the financial benefit Liriodendron. I price the houses according to the market and hope I get what I'd like to get out of them but I know I can't depend on that. It would be this price whether I am selling it or an agent's selling it. I always try to price them to sell because once I decide to sell, I'm not one to fart around. So maybe the buyers are thinking they're getting a deal because there is no agent involved when they're really getting the best possible deal because I price them to sell no matter who is doing the selling.

I do FSBO's not only because I need the job but because, even though I don't know everything, I think I do the best job--I'm passionate, I'm dedicated, I'm careful, I'm strategic, I'm creative, and I have my best interests at heart. I've made some mistakes but if there's something I don't know, I look it up or ask someone. And I've learned that I'm a control freak! I'm not happy that when I made my offer on the new house up north, there was a mistake in how the agents communicated it and it caused a little trouble. Here's what happened: I said I'll give the seller X amount of dollars and if he'll take it, done deal, I won't do a home inspection or an appraisal and I'll pay with cash. We had to do this verbally because I am in Virginia and they are in New Jersey. We negotiated on the price a bit and then when they e-mailed me the contract, I noticed that they had added, "As-is," and "Buyer is responsible for Certificate of Occupancy." I never said that. What I meant, and what I told my agent was that I wasn't going to do a home inspection and then use it as a negotiating tool after we agree on a price. The guy wouldn't have to worry about me nit-picking stuff halfway through the deal. But I didn't mean I didn't want a Certificate of Occupancy, because I have to move right in because we are coming from another state and I need to know I can turn the lights on and flush the toilet and turn the heat on. So the agents got it wrong and I had to fight to have that taken out of there. They wouldn't take the "as-is" out though because now the seller was mad and felt like I was reneging on what I'd said. So I just like to do these things myself and then there's never a problem as far as both buyers and seller being happy. I am friends with all of my past buyers! Also, every time I ask for information about the house, the agent, who I love, sounds a little stressed. I know she is getting a hard time from the seller and his agent. So I just go and find the info myself. For example, I wanted a document showing exactly where the septic tank is because it's a new tank and I know it's close to the driveway and I don't want to inadvertantly run over it with the horse trailer. The listing agent told my agent, "There's a cement lid in the front yard." Big help. I called the county myself and the guy got the info for me and I was right, it's precariously close.

I'm not knocking agent-assisted sales either because I think that most people need an agent's help. I guess there's pros and cons to everything and you just have to weigh out what's right for you.

Okay, I'm going to put a little pressure on Monday and get the energy going. Thanks for your opinions guys. I enjoyed this conversation. And yes Lirio, I keep thinking of my mother's message and I'm really not freaking out!

    Bookmark   October 15, 2011 at 10:48PM
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I am so sorry! We are trying to buy, and are good, credit-worthy folks, but our lender is giving us so many hassles I'm not sure it will go through! They are CRAZY!!!

    Bookmark   October 19, 2011 at 12:22AM
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"We are trying to buy, and are good, credit-worthy folks, but our lender is giving us so many hassles I'm not sure it will go through! They are CRAZY!!!"

Put more money down.

Last autumn I closed on two REO properties as investments very quickly with little hassle.

Each had more than 30% down.

    Bookmark   October 19, 2011 at 9:41AM
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Legallin, you're not alone. The banks are over-correcting now, and good, credit-worthy folks like you are suffering. Me too. It's not right. We bailed them out and they thank us by refusing to lend money to qualified people and tacking on fees for everything. I call them the kings. They're foreclosing on people and refusing to lend. So they've got the houses and all the money.

    Bookmark   October 19, 2011 at 10:39PM
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I realize this process has been stressful for you in many ways. But do not let your closeness to the process cloud the bigger picture.
The banks are not refusing to lend money to qualified persons. I see it happen every day. All of your buyers have had issues of some kind that increased the financial risk to the lenders. This scrutiny of buyers is what we all needed to be done from the start. Now that they are scrutinizing all buyers, we can not complain because it shoots down a commission check for me, or it prolongs your move outta town. There is a much bigger picture here that is needed more importantly than my and your wants.
I tell my clients that good things happen to good people. Good things will happen to you too, just maybe not on your timeline.

    Bookmark   October 20, 2011 at 6:36AM
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Okay NC.

    Bookmark   October 20, 2011 at 11:27PM
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Sending good thoughts your way!

    Bookmark   October 21, 2011 at 11:11AM
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Some people on here are missing the point. The new lending standards are much more stringent than the old ones, and by that I mean the standards from the 1990's and before, NOT the overly loose ones of five or 10 years ago.

It's easy for brickeyee and others to say that the problem is with the buyers (and the refinancers who face similar issues) because they don't have 30% down. A conforming loan has always, and still does, require 20% down, not 30. Very many of the borrowers who would have qualified for a conforming conventional mortgage in, say, 1995 will not qualify now because the banks are running scared and lending standards are much tighter.

That, combined with the fact that appraisers -- who took some heat for giving out inflated appraisal values during the boom, have also tightened their standards to the point of erring in the other direction -- has had a chilling effect on an already depressed housing market.

    Bookmark   October 21, 2011 at 5:59PM
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Thanks Neesie.

Yes FeedingFrenzy, that's what I was trying to say. This is my 5th sale and I've never had trouble like this--three buyers rejected by three different banks for three different reasons. Four if you count the first one that fell through so fast I don't even think about that one. In the past, I never had these troubles closing on loans. I don't even remember any of them being delayed. Three of my sales were before the banks were giving out money willy nilly to everyone. Those three were when I think we all would agree "normal" lending practices were happening. The last one was during the party, so to speak, five years ago. Though that person put over 50% down. Anyway, none of them had trouble. Now the banks are overcorrecting and no matter how many buyers I find, the banks keep finding reasons for saying no. Maybe they have a legitimate reason with my latest buyer. I don't know. But it's just a funny coincidence that I can't get anyone to close. And I know I'm not alone. Both the lawyer and my buyer's agent told me that half the sales they get don't close. Actually, even the septic inspector told me that. He asked me to pay ahead of time and not at closing because he said closings aren't happening and then the people don't pay him. So it's not just me and what I am doing wrong! I read in the paper today about how the economy is supposedly improving but real estate is "flat." Well no wonder!

    Bookmark   October 21, 2011 at 8:36PM
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"A conforming loan has always, and still does, require 20% down, not 30. Very many of the borrowers who would have qualified for a conforming conventional mortgage in, say, 1995 will not qualify now because the banks are running scared and lending standards are much tighter. "

Al I have seen is a lot more due diligence on the lenders part to make sure that in a possibly declining market the are not overexposed, or have the frauds that occurred over the previous years get repeated.

Any buyer even close to eh limits is liable to be turned down now, since the fantasy the RE always goes up has been clearly demonstrated as false.

I had an employe who signed a contract to purchase a brand new town house assuming he could sell for mire than be payed the builder.
Wen the market turned down he lost over $20,000 when he could not close on the purchase.
He is lucky the builder did not pursue him for more damages.

    Bookmark   October 22, 2011 at 12:39PM
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I have to disagree. Due diligence was when my first buyer got turned down because there was something on her credit. Over-correcting was when my second buyer, who had excellent credit, excellent income, stable jobs, etc. was turned down because of the agricultural zoning in a place where that's all we have is agricultural zoning.

    Bookmark   October 23, 2011 at 11:12PM
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"turned down because of the agricultural zoning in a place where that's all we have is agricultural zoning."

If they tried for conventional financing there is a limit on how much land Fannie and Freddie will allow to be included in the mortgages they purchase.

For this reason the house and a plot of land are often separated from the majority of the agricultural land.

    Bookmark   October 24, 2011 at 9:22AM
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Brickeyee, someone else had told me that when my buyer was turned down for the agricultural zoning. So I called FHA myself and they told me that the amount of my land was not a problem. They said that if I had a piece that was larger than most of the other pieces in the area, then it would be a problem. But my land is actually one of the smaller pieces. The FHA lady told me "it's the way your buyer's bank is interpreting the rules but we don't have anything against it." She also told me my buyer could try to get a FHA loan through another bank. By that time, my buyer was extremely stressed, got cold feet, and I lost her.

    Bookmark   October 24, 2011 at 9:57PM
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"So I called FHA..."

FHA is not conventional financing.

Are you speaking of Farmers Home Administration or Federal Housing Administration?

They are not the same, and have different rules.

Federal Housing Administration has excess land rules.

It more often hits a larger lot (say 3 acres) among smaller lots (say 1/2 acre).

    Bookmark   October 25, 2011 at 11:30AM
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There are no longer acreage rules with Fannie, Freddie or FHA. It used to be that the property was considered with 5 acres and no value was given to the remaining acreage.

Now, as long as the comps have similar acreage, and the acreage does not have more value than the actual house, it's not an issue. And there can't be evidence that the acreage is used for agricultural/commercial purposes.

And again, there are all kinds of mortgage programs out there for all kinds of qualified borrowers - VA loans for 100% for veterans, USDA loans in qualified areas for 102% of the appraised value. Fannie Mae loans to 97% for qualified borrowers, FHA loans for 96.5% for qualified borrowers. CRA loans for 100% to qualified borrowers ...

The key, as many other posters already said ... qualified borrowers!

    Bookmark   October 25, 2011 at 12:59PM
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It was the Federal Housing Administration and Pam is right. Like I said, I talked to them myself and the amount of my land was not the problem. It was simply a matter of the underwriters didn't understand our zoning--they were in Wisconsin and we are in southern Virginia. I didn't find this out until later because the broker was in North Carolina, not far from here. And once they said no, that was it--no was no. The loan officer fought with them about it, we tried to explain to them what A1 zoning in this county is, other people have gotten FHA loans for properties just like mine in the neighborhood, blah, blah, blah, but they wouldn't reconsider.

    Bookmark   October 25, 2011 at 10:48PM
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"Now, as long as the comps have similar acreage"

That has always been the rule actually.

Now try finding comps that have the same acreage.

If you cannot some portion of the acreage IS not going to be included.

    Bookmark   October 26, 2011 at 10:17AM
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Oh goodness, it seems like you're always arguing with me Brickeyee. That was not the problem. The amount of acreage was not the problem.

    Bookmark   October 26, 2011 at 10:58AM
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It vewry wqell may be.

You are not privy to the buyers load application and how the bank is underwriting it.

If the bank has revealed ANY seller details to you they have a huge privacy violation problem and could easily face a lawsuit by the buyer..

The loan is none of the sellers business, beyond verifying it has been applied for if that is a contract condition.

You seem to have some large holes in your knowledge and understanding of privacy laws, and how much information a seller is entitled to about a buyers financing.

I would consider it meddling in private business if you even talked to my lender.

    Bookmark   October 26, 2011 at 2:14PM
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Hitting myself on the forehead here, lol. Brickeyee, that was one of my previous buyers. They gave me the declinal letter that they got from the bank explaining exactly why they were rejected. They also shared with me all the e-mails between them and the bank throughout the whole process. That buyer actually called the lender from my home at one point and HANDED ME THE PHONE. I'm not claiming to know anything about privacy laws. All I'm telling you is what happened.

    Bookmark   October 26, 2011 at 10:06PM
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Now that you found a lender willing to lend on A-1 property, can you contact these buyers and see if they are still looking to buy? (In case your current buyer can not close?)

    Bookmark   October 27, 2011 at 7:49AM
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I would doubt your involvement is helping the process very much, if at all.

Unless you want to finance the sale yourself step back and let the buyers get their own loan.

If the same bank has managed to screw up repeated deals it is time to find another lender, or even a broker who has access to multiple lenders.

    Bookmark   October 27, 2011 at 9:52AM
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No Brickeyee, it was all different banks.

NC, that is an excellent idea. The price of the house is lower too.

    Bookmark   October 27, 2011 at 10:01PM
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brickeyee wrote "Al I have seen is a lot more due diligence on the lenders part to make sure that in a possibly declining market the are not overexposed, or have the frauds that occurred over the previous years get repeated."

So you do agree with me that lending standards are even tighter than they were back in the pre-bubble days. Ironic, though, that you mention "the frauds that occurred over the previous years" as if the mortgage lenders, themselves, played no role in perpetuating them.

Now the banks are sitting on piles of money curtesy of taxpayer bailouts. Their reluctance, whether justified or not, to make loans to both business and consumer borrowers who would have been considered good risks in a "normal" economy is one of the prime reasons why economic growth is so slow. Businesses can't borrow money to expand so they can't hire more employees. Many houses remain on the market despite willing buyers because they either appraise too low or the borrowers can't get loans, thus keeping the housing market depressed. It's a vicious cycle.

As for your employee, he got caught at the end of the housing bubble just like a lot of other people who in retrospect should have known better. . . and especially the very same lenders who are now so tightfisted.

As they say, there's nothing worse than a reformed drunk.

    Bookmark   November 3, 2011 at 9:24PM
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Businesses do not borrow money in order to expand just so they can hire more employees. Bussinesses hire new employees when the demand increases for their product. Right now, consumers are not spending enough on these products to justify hiring nor expanding. BTW, the only banks that have not paid back the loan, with interest, is Fannie and Freddie... $140 billion. Why are you not concerned with them?
FYI... I deal with buyers all the time that are receiving loans... FHA at only 3.5% DP, VA loans, USDA loans at 102% loan to value, conventional loans, lot loans...

    Bookmark   November 3, 2011 at 10:10PM
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It IS a vicious cycle FeedingFrenzy. Every time the banks turn down one of my buyers, all different banks, all different reasons, I lower the price of my house to get it to happen and then I have to get the seller of the house I'm trying to buy to lower his price because I don't have as much money as I did. All this playing around the banks are doing, leading people on, pretending they will lend mortgage money, is costing a lot of money. Wasted money. Me, my buyers, and agents who have been trying to sell the houses I've been trying to buy, have spent money on advertising, lawyers, title work, inspections, even gas... cutting into our "profit", and in some cases, like the seller of the first house I was in contract on, putting people further into a hole. That lady was under financial difficulties and the bank rejecting my buyer two days before closing really hurt her. Which hurts the economy. And it's all a waste because they're rejecting people who are good buyers. Brickeyee, I'm not going to argue with you about the quality of the buyers. We've been through it. They're good.

By the way, the well/septic inspector wanted me to pay when he did the inspection and not at closing. He said too many of them don't close and he doesn't get paid.

The buyer I'm on now is missing the second closing date tomorrow because, for one thing, the bank wants to know how many hours per week he's working at his new job that THEY made him get. How many HOURS HE'S WORKING PER WEEK?! Do they want to know what time he takes his coffee break?!And so I'm probably going to lose the house I'm in contract on because this is the third time I can't close and so that guy will probably lower the price of that house when he puts it back on the market. And so on and so on and so on. But the bank CEOs are still giving themselves big bonuses.

    Bookmark   November 3, 2011 at 10:19PM
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Has your buyer proved to the bank that he has paid that tax bill yet, or is that still out there too?
Why did you give your seller up North a closing date of today? Ths bank told you that if the IRS did not have them an answer within a couple of days, then it would probably be more like 30 days.
The best way to keep your seller content, is to keep him updated at least once a week. Once he feels like the communication is lacking, the deal will more than likely be over.

    Bookmark   November 4, 2011 at 6:44AM
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LITH~~ I am so sorry you are having so many problems selling your house and moving "back home". Do you sometimes feel that you are NOT supposed to move? Every time we lose a buyer, I get more and more convienced that it isn't supposed to happen~~~ but good luck to you.

    Bookmark   November 4, 2011 at 12:19PM
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If he's paid by the hour, it's a very pertinent question as to how many hours of work he's getting. That directly impacts his ability to pay for the house. It's a little concerning that his bank would even need to ask this question. His pay stubs ought to be enough. Sounds like there was an income drop with the new job.

    Bookmark   November 4, 2011 at 5:23PM
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The best way to keep your seller content, is to keep him updated at least once a week. Once he feels like the communication is lacking, the deal will more than likely be over."

Maybe you could have him call your lender and talk with them.

    Bookmark   November 4, 2011 at 5:44PM
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Except he just switched jobs a month ago, so he might only have one pay stub so far (I've had several jobs where I didn't get my first check for three weeks), and if he started in the middle of the pay period, or the middle of the week, the hours from the only stub he would have so far could easily be off.

    Bookmark   November 4, 2011 at 5:47PM
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NC, I told the seller up north (his agent actually) the closing date because I do keep them informed. And they keep hammering at me for a new date--when are we closing? when are we closing? I can't blame them. All they want is a real date! I told them exactly what was going on--that the bank said we might know now and be able to close today or we might have to wait about 30 days. But I didn't know whether we'd have to wait the 30 days or not because the bank wouldn't tell anyone--not me, not the buyer, not the lawyer. So all of us kind of had to be ready just in case they said they could close.

Yeah, the buyer just switched jobs. Because the bank made him switch jobs. And he had to have verification about that before they went forward on the loan. I'm sure that included his salary. So why now the number of hours? Ah, it's just one thing after another. I called a cash buyer today who's been interested. It's less money of course but I don't know how much more I can take. If I at least KNEW that once the bank gets the stuff they need, they'll close. I could wait. I could wait months if I had to. But they're not promising that. I can just picture waiting all this time and then the buyer doesn't get the loan.

    Bookmark   November 4, 2011 at 11:22PM
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Fannie and Freddie are exempt from the Dodd - Frank law! Our government that tells us they are trying to protect us from the big bad banks, will not even admit at all, that Fannie and Freddie were, and are, the biggest culprits behind the housing meltdown.
And Oh, did I mention that they just asked for another bailout... their fourth one!
It is not the private sector screwing us all over here folks.

    Bookmark   November 5, 2011 at 6:52AM
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