(or any deal for that matter)
We recently had the buyer for a short sale. The property went under contract in late August and was scheduled to close in five weeks. The list agent had already made good progress with the short sale lenders and was feeling optimistic about closing on time.
Our buyer was thrilled. She loved everything about the property even though it needed a significant amount of work, she had the funds, motivation and know-how to make all the repairs. And the price was significantly discounted to account for the needed repairs. We insisted on and the buyer agreed to a thorough home inspection to bring all the issues to light, which included:
The back roof needed to be replaced.
The septic system needed some minor repairs.
The well water needed a UV filtration system.
The radon was high and the house needed a radon mitigation system.
The rear deck was incomplete.
Knowing short sales, we wrote the offer using a conventional mortgage with 20% down. The mortgage commitment came in 10 days prior to settlement with FHA financing with 3.5% down on it.
Unbeknownst to us, the mortgage broker talked our buyer into switching to an FHA loan telling the buyer how she could put less money down and have more cash to make the repairs. He basically changed the terms of the agreement of sale without consulting anyone or having all parties agree to it. When we told him the FHA mortgage would be unacceptable to the short sale lenders, he could not understand and kept insisting that would be ridiculous for the bank to turn it down. "The money is still green!" he kept insisting.
Within just a day or two of receiving the mortgage commitment, the FHA underwriting went into full swing. Suddenly, we were bombarded with the following requests:
A roof certification
A septic certification
A well certification
A radon certification
Hmmm, didn't we just cover those things were in need of repair?
We had to delay settlement in order for the loan to be re-written as conventional. We are still waiting for settlement as now the short lenders are getting fickle and uncooperative about the whole thing and won't provided the previously promised demand letter. We honestly don't know if this is a direct result of the delay in settlement, but it has created a whole lot of work which may or may not end up being for nothing. And who do you think is crying foul the loudest? The mortgage guy.
~Lisa
Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for help buying or selling a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.
How One Bad Mortgage Guy Can Derail a Short Sale Copyright © 2010, The Scott Loper Team, All rights reserved.
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The Scott Loper Team
Scott Loper - Associate Broker
Lisa Loper - Sales Associate
Gina Wherry - Sales Associate
RE/MAX Realty Group
439 Main Street
Harleysville, PA 19438
Ph: 215-256-1200 x-213
