Back in April I wrote a blog about a loan that I was doing for a young man that was purchasing a Bank Foreclosure. Well I am happy to say that the loan finally Closed this morning. It took a 110 days, and a lot of frustration, but it finally Closed.
When I was Pre-Approving this young man for this loan I tried to prepare him for the frustrations that I new he was going to encounter along the way, and the Realtor also did the same. But what this Borrower has gone through in the last 110 days was beyond what either of us could have prepared him for.
As I wrote back in the blog in April this transaction was a difficult one from day one. Before the bank even agreed to accept the offer, the Realtor representing the bank contacted my Borrower's Realtor and proceeded to inform her that the bank would not accept his offer because it was a VA (this was a backed loan (this was a CHFA/VA Loan), and that VA would not allow for the transfer of title within six months of the bank foreclosing on the property (flip rules). This Realtor went on to tell her that he had to go FHA or Conventional in order for them to accept the offer. My Borrower's Realtor contacted me right away to inform me of this. and to ask me to Pre-Qualify him for a FHA or Conventional Loan. I told her that I would be happy to do that, but that this bank and Realtor were wrong about that being a VA condition. The Borrower' Realtor asked me to call the other Realtor and make him aware of this.
After three days of going back and forth, and getting him a statement from a VA Underwriter, the offer was finally submitted. We were told that we would know if the bank would accept the offer withing two days, well it was three weeks before the bank accepted the offer verbally, and another two weeks before we got a signed Sales Contract.
Once we had the signed Sales Contract the Realtor contacted a Home Inspector right away, but this also became a problem because the house had be winterized. The bank was contacted and the Realtor was told that they would have the house de-winterized right away, but apparently right away means almost three weeks. Once the house was de-winterized the Realtor got the Home Inspector in the house within a couple of days. but this still left the little matter of an appraisal. Anyone familiar with VA Loans knows that the Lender does not assign the Appraiser, the VA does, which means that the Appraiser does not respond with the same sense of urgency as the Appraisers on our list. However, we got lucky here, the VA Appraiser that the VA assigned was someone that was on my approved list of Appraisers, and the appraisal was done within a few days.
This should have been the end of the delays, but unfortunately it would not be. Once my Underwriter had received the appraisal from the Appraiser, she quickly finished Underwriting the loan, and the loan packet was sent to the Closing Attorney. The Attorney had already been made aware of what had been going on, and did the Title Search right away. This was when the next problem came to light. It seems that no one could find the Deed to this property to begin with, but that was not the total problem with the Deed. When they finally found the Deed, the bank was not on record as owning the property, so now that Deed had to be corrected on top of producing another one. This little last set of events took a month to correct.
How this Borrower ever put up with all the frustration that he went through on this transaction I will never know, but he did. I attended the Closing at 9:00 AM today, and the look of relief on his face was beyond words. Had this loan been any other type of loan besides one through CHFA we would of had even more problems, because the standard Rate Lock Period is 60 days on all loans except CHFA which is 120 days. If this had been a 60 day Rate Lock, we would of have an interest rate issue, because the interest rate went up during this time period. Now that would not have been a pleasant issue to deal with.
I was happy for this young man today, and glad that this nightmare was finally over, but I would caution others that this is not all that uncommon. Well maybe all of these issues at once was a little uncommon, but a combination of these issues are very likely on Foreclousers and Short Sales. As was evident with this loan, we can never prepare our Buyers/Borrowers enough.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
