Buyers closing on my house in the next 2 weeks

[imported_Infidel]

So, after having a signed contract for 3 months now, and going on mortgage lender #3, and a 2 week delay due to Hurricane Ike, my closing is scheduled for October 10th, or sooner.

What are the chances the mortgage company will decide to not lend any money due to the national financial crisis?

Lender is GDR Financial / gdrbanc.com

Borrower is Mexican citizen with lots of money but all in foreign currency/records.

 

[jpeyton]

It probably won't affect signed contracts, only future ones.

 

[mshan]

I think it is going to depend upon:

- What is real value of the house?
- How good a credit risk is the buyer?

If mortgage amount is say only 80% of intrinsic value (and you're not in a market that is projected to have significant downside risk even from current prices), and borrower has good credit / conservative total debt to total income ratios, you are probably fine. And if they didn't lock in their rate, they are probably getting a pleasantly surprising nice mortgage rate to boot.

If they overpaid, and don't have much of a downpayment, who knows...

 

[JS80]

How much in escrow?

 

[chess9]

Does your buyer have a written commitment from the lender which includes all the loan's major terms, such as amount loaned, interest rate, points, etc? If so, the chances are good that the loan will close. If not, I'd say you could be screwed. Most sales are contingent on financing, so you won't get their deposit if they bail out.

Oh, and did the house appraise for more than the contract sales price, or at least equal to it? If not, that's a very bad sign. If home values are dropping in your area, you could be screwed for that reason as well. You might have to agree to a price reduction to make the sale.

-Robert

 

[imported_Infidel]

They came to the table w/20% cash down, and still had a lot of trouble because they're "non-traditional" due to the Mexican records. The buyer has spent 1000's on translations, incorporating his business to write himself paychecks to have a "paystub" for documentation. It has been a huge runaround. The house easily appraised for asking price ($180K).

I don't know their status with the mortgage lender, other than he is told that they have everything they need and everything is fine. We were burned pretty good by lenders though early on, so I trust nothing.

Because of all the extensions they've had to get, each time requiring additional earnest money, they have around $5K sitting in escrow that will be mine if they can't close. The way contracts are written these days, you only have 15 days from the date of the contract to save your earnest money due to lack of financing. Many people think that if the financing falls through you get your earnest money back, not true. I lost over $2K and the house my wife and I really wanted because the lender never informed me that my current home had to sell first. I was driving to the closing on the new house when the lender called and asked if I had the closing docs for my house, talk about pissed off.

So, cash in hand for down payment, good income, good appraisal etc. really hasn't meant much to the last 2 lenders they've tried. If banks freak out and stop lending money...

Fortunately the buyers signed a 12 month lease on the house (allowed me to get a mortgage independent of my house selling first) so either way I'm not responsible for 2 notes.

This is also in the Houston area, so a pretty strong market overall, no depreciation etc.

 

[mshan]

I would talk with your realtor and ask the mortgage lender they typically work with to honestly assess the buyer and decide whether, if push comes to shove, to modify purchase agreement and give them an additional month or two to find an appropriate lending source, if current one falls through, or to take the non-refundable earnest money deposit and look for another buyer.

 

[Thump553]

You'd get a whole lot more informed answer talking to your attorney than soliciting anonymous opinions on the internet.

Good luck. I still remember going to a closing during the S&L crashes and a lady was sitting in the waiting room sobbing. She was moving in from out of state, all her family's stuff was in the moving van in front of the house and her mortgage company had just gone broke.

 

[StageLeft]

Originally posted by: Thump553
You'd get a whole lot more informed answer talking to your attorney than soliciting anonymous opinions on the internet.

Good luck. I still remember going to a closing during the S&L crashes and a lady was sitting in the waiting room sobbing. She was moving in from out of state, all her family's stuff was in the moving van in front of the house and her mortgage company had just gone broke.

BS! The collective brai/\/5 of the int3rw3bs pwns all!

 

[imported_Infidel]

Originally posted by: mshan
I would talk with your realtor and ask the mortgage lender they typically work with to honestly assess the buyer and decide whether, if push comes to shove, to modify purchase agreement and give them an additional month or two to find an appropriate lending source, if current one falls through, or to take the non-refundable earnest money deposit and look for another buyer.

When the buyer was first presented, our realtor contacted his lender (hometrust mortgage) who assured him that the buyer was approved/great/no problems etc. Turns out hometrust had turned it over to a 3rd party investment bank that was no where near approving him.

So, I learned that mortgage companies will lie, and realtors will believe it to get the sale.

Purchase contract has been extended 3 times (4 now due to hurricane) to find better lending source. We are doing everything we can to allow the buyer what they need to buy the house.

Taking the earnest money and finding another buyer is fine, except that the buyers have a 1 year lease on the house, so it would have to sell with a tenant in it. Also, the house will not show nearly as well with virtually no furniture in it and some "cultural" oddities in the living space.

Easiest path at this point is to keep giving them the time they need, rather than try to start over.

 

[imported_Infidel]

Originally posted by: Thump553
You'd get a whole lot more informed answer talking to your attorney than soliciting anonymous opinions on the internet.

Good luck. I still remember going to a closing during the S&L crashes and a lady was sitting in the waiting room sobbing. She was moving in from out of state, all her family's stuff was in the moving van in front of the house and her mortgage company had just gone broke.

Yes, I have a real estate attorney in my back pocket. Unfortunately all of their advice regarding the contracts and lease ammendments have been deemed too cumbersome for the buyers by my realtor, and he has nixed most of the language we wanted to add to protect our interests. Realtors are real big on using generic agreements and contracts produced by the realtor's association, and they absolutely hate getting attorneys involved at all.

The attorney is currently dealing with her own issues related to the hurricane and I couldn't in good conscience bother them with my issues at the moment (personal friend).

My realtor indicates that every single sale he has working (5-6) are experiencing the same thing. Nothing is closing on time, crazy hoops to jump through for lenders etc, regardless of your cash position/income/credit.

 

[halik]

Originally posted by: Infidel
They came to the table w/20% cash down, and still had a lot of trouble because they're "non-traditional" due to the Mexican records. The buyer has spent 1000's on translations, incorporating his business to write himself paychecks to have a "paystub" for documentation. It has been a huge runaround. The house easily appraised for asking price ($180K).

I don't know their status with the mortgage lender, other than he is told that they have everything they need and everything is fine. We were burned pretty good by lenders though early on, so I trust nothing.

Because of all the extensions they've had to get, each time requiring additional earnest money, they have around $5K sitting in escrow that will be mine if they can't close. The way contracts are written these days, you only have 15 days from the date of the contract to save your earnest money due to lack of financing. Many people think that if the financing falls through you get your earnest money back, not true. I lost over $2K and the house my wife and I really wanted because the lender never informed me that my current home had to sell first. I was driving to the closing on the new house when the lender called and asked if I had the closing docs for my house, talk about pissed off.

So, cash in hand for down payment, good income, good appraisal etc. really hasn't meant much to the last 2 lenders they've tried. If banks freak out and stop lending money...

Fortunately the buyers signed a 12 month lease on the house (allowed me to get a mortgage independent of my house selling first) so either way I'm not responsible for 2 notes.

This is also in the Houston area, so a pretty strong market overall, no depreciation etc.

Wow if you're having that sort of issue in texas? Austin and Houston are way bellow national average for foreclosures.

I can only venture a guess and say that financing in Cali and Florida is virtually impossible...

 

[imported_Infidel]

It's really a function of his nationality and finances. He and his family are very distrusting of the American system, they are hesitant to give a mortgage company access to their banking info lest the info be given to the Mexican gov't.

He and his family own an import business with retail in both Mexico and US, so there isn't a real good document trail like there would be with a US business. Same with his credit record, it's done differently in Mexico.

So far he's put $32K down, another $5K in earnest money, probably $4K in translation/CPA costs, $2k to incorporate his business, $7200 over the past 3 months in lease payments to me. So, almost $50K out of pocket so far to buy this $180K house, and still hasn't gotten the financing. And last time I was at the house he had a new Porsche Cayenne parked in the driveway.

After the first lender mess, he indicated that he would have no problem with a Mexican bank, but he agreed to continue on with the US system.

 

[Thump553]

Originally posted by: Infidel

Originally posted by: Thump553
You'd get a whole lot more informed answer talking to your attorney than soliciting anonymous opinions on the internet.

Good luck. I still remember going to a closing during the S&L crashes and a lady was sitting in the waiting room sobbing. She was moving in from out of state, all her family's stuff was in the moving van in front of the house and her mortgage company had just gone broke.

Yes, I have a real estate attorney in my back pocket. Unfortunately all of their advice regarding the contracts and lease ammendments have been deemed too cumbersome for the buyers by my realtor, and he has nixed most of the language we wanted to add to protect our interests. Realtors are real big on using generic agreements and contracts produced by the realtor's association, and they absolutely hate getting attorneys involved at all.

The attorney is currently dealing with her own issues related to the hurricane and I couldn't in good conscience bother them with my issues at the moment (personal friend).

My realtor indicates that every single sale he has working (5-6) are experiencing the same thing. Nothing is closing on time, crazy hoops to jump through for lenders etc, regardless of your cash position/income/credit.

You're following the advice of a salesperson over your attorney on the contract language? Without even presenting them to the other side?

Your attorney won't mind a five minute telephone call. Any attorney can point to dozens of situations gone bad because of reluctance to call them and get timely advice. And yes, the times are certain bizarre in the lending field these days but odds are your attorney can cut through the BS a whole lot better than you can.

 

[GTKeeper]

Is your escrow already setup?

If it and the loan was approved, you are fine.

 

[chess9]

Originally posted by: Infidel
They came to the table w/20% cash down, and still had a lot of trouble because they're "non-traditional" due to the Mexican records. The buyer has spent 1000's on translations, incorporating his business to write himself paychecks to have a "paystub" for documentation. It has been a huge runaround. The house easily appraised for asking price ($180K).

I don't know their status with the mortgage lender, other than he is told that they have everything they need and everything is fine. We were burned pretty good by lenders though early on, so I trust nothing.

Because of all the extensions they've had to get, each time requiring additional earnest money, they have around $5K sitting in escrow that will be mine if they can't close. The way contracts are written these days, you only have 15 days from the date of the contract to save your earnest money due to lack of financing. Many people think that if the financing falls through you get your earnest money back, not true. I lost over $2K and the house my wife and I really wanted because the lender never informed me that my current home had to sell first. I was driving to the closing on the new house when the lender called and asked if I had the closing docs for my house, talk about pissed off.

So, cash in hand for down payment, good income, good appraisal etc. really hasn't meant much to the last 2 lenders they've tried. If banks freak out and stop lending money...

Fortunately the buyers signed a 12 month lease on the house (allowed me to get a mortgage independent of my house selling first) so either way I'm not responsible for 2 notes.

This is also in the Houston area, so a pretty strong market overall, no depreciation etc.

I've seen contracts not contingent on financing approval, but why would a buyer in his right mind sign such a contract in this market? He's pretty stupid to have done so, in my estimation. He was badly served by his realtor as well.

I've had 40 years of experience doing real estate work, but not in Texas, so I'll defer to a Texas lawyer, but this sounds pretty bad for the buyer.

-Robert

 

[chess9]

Originally posted by: Thump553

Originally posted by: Infidel

Originally posted by: Thump553
You'd get a whole lot more informed answer talking to your attorney than soliciting anonymous opinions on the internet.

Good luck. I still remember going to a closing during the S&L crashes and a lady was sitting in the waiting room sobbing. She was moving in from out of state, all her family's stuff was in the moving van in front of the house and her mortgage company had just gone broke.

Yes, I have a real estate attorney in my back pocket. Unfortunately all of their advice regarding the contracts and lease ammendments have been deemed too cumbersome for the buyers by my realtor, and he has nixed most of the language we wanted to add to protect our interests. Realtors are real big on using generic agreements and contracts produced by the realtor's association, and they absolutely hate getting attorneys involved at all.

The attorney is currently dealing with her own issues related to the hurricane and I couldn't in good conscience bother them with my issues at the moment (personal friend).

My realtor indicates that every single sale he has working (5-6) are experiencing the same thing. Nothing is closing on time, crazy hoops to jump through for lenders etc, regardless of your cash position/income/credit.

You're following the advice of a salesperson over your attorney on the contract language? Without even presenting them to the other side?

Your attorney won't mind a five minute telephone call. Any attorney can point to dozens of situations gone bad because of reluctance to call them and get timely advice. And yes, the times are certain bizarre in the lending field these days but odds are your attorney can cut through the BS a whole lot better than you can.

Good advice.

Is the OP absolutely certain the buyer loses all his escrow money if a bank or other lender won't lend the money? I'm having a lot of trouble wrapping my head around that. I've been out of settlements for a few years, but if this is happening in this market, I'm amazed.

-Robert

 

[dardin211]

Originally posted by: Infidel
My realtor indicates that every single sale he has working (5-6) are experiencing the same thing. Nothing is closing on time, crazy hoops to jump through for lenders etc, regardless of your cash position/income/credit.

This is happening everywhere, regardless of the situtation. My mom runs a reality and they have had a hell of a time getting anything closed for the last few months. Basically everything gets to the closing and appears to be good, then the lender turns around and asks for more pretty much everything.

So i'd really say its a flip of the coin if this gets done.

 

[imported_Infidel]

Originally posted by:chess9

Good advice.

Is the OP absolutely certain the buyer loses all his escrow money if a bank or other lender won't lend the money? I'm having a lot of trouble wrapping my head around that. I've been out of settlements for a few years, but if this is happening in this market, I'm amazed.

-Robert

Yep, I've been part to 3 contracts in the last few months, each one was boilerplate with the exact same verbiage. If notice isn't given in X days that financing can't be obtained, buyer forfeits earnest money. It cost me $2100 the hard way to find out, but, if I had entered a contract that indicated financing was contingent on my house selling (contingency contract) most sellers wouldn't have accepted it. This was really how I should have done it, but I had no idea at the time that my financing was contingent on my house selling, since my 2 previous home purchases weren't.

Regarding the attorney, they had a few changes that, obviously, the realtor did not have the ability to include/implement in the contract. The realtor was afraid of scaring off the buyer with excessive language, afraid of his liability if he didn't use the standard realty assoc. form, time was of the essence etc. Changes to the lease agreement were poo-pooed because the buyers were doing this as a "favor" to us so we could get financing. Yet, the buyer, his wife and 3 young children had been living in a hotel room for 3 weeks and were desperate to get into the house, so it wasn't really a "favor" to anyone.

In both my buying and selling this time around, I've learned that the buyer/seller is almost always more reasonable and flexible than the realtor lets on. A lot of headaches and difficulties could have been avoided if information didn't have to go through 3 people. Now I speak directly with the buyer, because we're the only ones with the same goals.

Sort of a silver lining, after the first house fell through, I had to liquidate my 401K to meet cash requirements. I was starting work with a new company, so my 401K was available, and it was almost entirely composed of profit sharing dividends (not my own contributions) and I was fully vested. So, 2 months ago I pulled out the money, intending to put it back in within the 60 day limit, which didn't happen. Considering the markets, I think it may have been fortuitous that I got it all out, in spite of the taxes and fees.

 

[chess9]

Originally posted by: Infidel

Originally posted by:chess9

Good advice.

Is the OP absolutely certain the buyer loses all his escrow money if a bank or other lender won't lend the money? I'm having a lot of trouble wrapping my head around that. I've been out of settlements for a few years, but if this is happening in this market, I'm amazed.

-Robert

Yep, I've been part to 3 contracts in the last few months, each one was boilerplate with the exact same verbiage. If notice isn't given in X days that financing can't be obtained, buyer forfeits earnest money. It cost me $2100 the hard way to find out, but, if I had entered a contract that indicated financing was contingent on my house selling (contingency contract) most sellers wouldn't have accepted it. This was really how I should have done it, but I had no idea at the time that my financing was contingent on my house selling, since my 2 previous home purchases weren't.

Regarding the attorney, they had a few changes that, obviously, the realtor did not have the ability to include/implement in the contract. The realtor was afraid of scaring off the buyer with excessive language, afraid of his liability if he didn't use the standard realty assoc. form, time was of the essence etc. Changes to the lease agreement were poo-pooed because the buyers were doing this as a "favor" to us so we could get financing. Yet, the buyer, his wife and 3 young children had been living in a hotel room for 3 weeks and were desperate to get into the house, so it wasn't really a "favor" to anyone.

In both my buying and selling this time around, I've learned that the buyer/seller is almost always more reasonable and flexible than the realtor lets on. A lot of headaches and difficulties could have been avoided if information didn't have to go through 3 people. Now I speak directly with the buyer, because we're the only ones with the same goals.

Sort of a silver lining, after the first house fell through, I had to liquidate my 401K to meet cash requirements. I was starting work with a new company, so my 401K was available, and it was almost entirely composed of profit sharing dividends (not my own contributions) and I was fully vested. So, 2 months ago I pulled out the money, intending to put it back in within the 60 day limit, which didn't happen. Considering the markets, I think it may have been fortuitous that I got it all out, in spite of the taxes and fees.

Ok, but I always put in the contract that it was wholly contingent upon financing satisfactory to the buyer. This is a good example of how the buyer is losing a lot of money because he didn't spend $100 on a lawyer. Very sad.

Never sign a standard NAR contract. No way....I hope you've learned a lot from all of this, and it doesn't cost you much more to get your honorary degree.

-Robert

 

[imported_Infidel]

Just an update. The buyer has backed out due to the economic situation and craziness with the peso. He still wants to buy the house, and may do so in 2 weeks, or 2 months, just doesn't know. So.... he wants me to just go ahead and sign another 2 month extension for him. The lender is ready to give him the money, so it isn't due to lack of funding.

Currently waiting to hear what my realtor and my attorneys have to say.

Yay me!!!

 

[heyheybooboo]

Originally posted by: Infidel
Just an update. The buyer has backed out due to the economic situation and craziness with the peso. He still wants to buy the house, and may do so in 2 weeks, or 2 months, just doesn't know. So.... he wants me to just go ahead and sign another 2 month extension for him. The lender is ready to give him the money, so it isn't due to lack of funding.

Currently waiting to hear what my realtor and my attorneys have to say.

Yay me!!!

How much is an option worth to you? Or better yet - the prospective purchaser.

The peso is down against the dollar the last few weeks.