I can't tell you how disappointed and angry I am! We just received a call from our realtor that the buyer cancelled because of financing. The thing is she had almost 60 days to figure that all out. However, there was an appraisal done by an appraiser that is not familiar with this area 2 weeks ago and supposely it came in low and her lender told her that she could get a much better home for the price she's paying for this one. Her realtor showed her the comps and said this home was well worth the price she's was paying... we even lowered it $30,000 right before she put her bid in! Anyway, she finds a new lender and her realtor tells my agent last Friay that everything is fine and the apprasial DID come in at 270,000 and we should be able to close in time. Well..yesterday we seen her and her agent driving around in our neighborhood and then stopping and looking at our home. Then shortly after that my agent receives an email informing that the buyer has to cancel escrow because she couldn't meet with FHA guidelines. I believe this seller got cold feet and it really had nothing to do with financing.
Back on the market it goes. Thanks for reading...if you got this far.
Have your Realtor come over with the contract and go through all the dates...(deadlines).
Did she not qualify --why?
What exactly are they talking about??????????
Tell them to line up some documentation of what they are talking about. The lender needs a "V8 knock in the head"--what was he thinking?? He needs to be reported.
...if I were your Realtor - I would be livid -- being jacked around like that.
Remember the release of her deposit will require your signature. I would get some strong answers.
Sixty days is an exceptionally long period of time to elapse without having the buyer release the financing contingency. Did your realtor not require that the buyer stipulate to a timely deadline for this contingency to be released in the contract?
I'll try to keep this short. The situation goes like this... on Feb 23rd the buyer offers 270,000 all cash deal. Then a week later she finds out she can't use her insurance payoff money from her home that was lost to a fire to buy our home. So then she applies for a loan and at this point ask for a longer escrow period. Then we are told in the beginning of March there will be an appraisal anyday which turned out to be March 27th. The reason for the delay was because the lender wanted the appraisal 30 days or less from closing. We waited about 2 weeks after the appraisal and was then told by the buyers agent that the appraisal came in low and that her lender basically said she could get more house for her buck. So her agent showed her the comps and she decided to use a different lender. We are then told on Friday, April 11th that everything is going well and the appraisal actually did come in at 270,000 and we should close on time. Very confused at this point!!! Yesterday my husband noticed the buyers agent and buyer driving around our neighborhood and that they stopped in front of our home briefly before driving away. Shortly after that my agent receives an email from the buyers agent stating that the buyer has to cancel because she couldn't comply with FHA guidelines. WHAT!!!! The buyer has offered us $1,000 dollars because she feels bad. We have already signed the cancellation form this morning because we were told by our agent there is nothing we can do at this point because of the loan contigency was never signed off. I'm so confused and I feel like we were taken advantage of. Ever since the offer was accepted I have worked so hard to make this home perfect for her. I just got done staining the entire deck!!! Oh well, at least it will look awesome on Tour Day Thursday.
I know you don't have any more answers than the ones you have already provided but I do have a question, in a general sense, that you don't need to answer:
The prospective Buyer couldn't use her proceeds from insurance to buy a new residence??? Never heard of such a thing! Once settlement is made and proceeds deposited, it is her money to use however she chooses. Just my opinion...
Don't feel bad about the work you did to get the shape even better for her than when she agreed to buy it. Your new Buyers (and they will come along!) will appreciate everything you have done and the freshly stained deck!
I'm so sorry that happened! I can't offer any words of wisdom about the situation -- but just wishing you good luck back on the market. If you found a buyer once, I'm guessing you'll find one again.
Last year my first buyer (a first timer) backed out at the last minute after I had packed and moved out. I was told I couldn't put my house back on the market unless I released the escrow money since the buyer refused to release it. Fortunately two weeks later I got another offer almost $10,000 higher than the first. It worked out for the best, but it was a very stressful two weeks! I hope it works out for you as well.
Remember mortgages are for the land and the structures. In a fire, the land doesn't go away so you are still on the hook for the total mortgage until you settle with the ins and sell the lot. Sometimes the HOI will try to make sure you rebuild. Some will release the money but with a substantial penalty.
I'm making a few assumptions here. One, she wasn't a first-time buyer as it sounds like she owned property in the fire and therefore obviously owned in the past 3 yrs. The pushes her out of FHA right there. She’d have to go straight conforming and take her chances.
Also, if she did own the structure in the fire, she would most likely still be carrying that mortgage and her DTI would have been huge. That would lock her out of FHA as well as conforming.
Either issue would bump her into manual underwriting, there’s the problem. There are people who are buying second homes and defaulting on the first intentionally. Add a fire into the mix and you have a great recipe for fraud. MI's are wise to this and you'll have a very hard time getting financing.
She'd have to be able to sell the raw land to get out from under the previous mortgage.
This could all be legitimate hardship but with current market conditions, even the most responsible person is going to experience delay or denials of funding.
This is why I always found people who torched their houses to get out of loans to be ironic; because they just made their circumstances 10 times worse.
** editted to remove ins on the land. The Mortgage liabilty on the land remains, my mistake **
This message has been edited. Last edited by: Gwynster,
Originally posted by Gwynster: When you insure a house, you are insuring the land and then the structures.
Really? Our ins. agent told us that we were insuring the home, not the value of the land. Even in a worse case scenario (like total loss due to a fire) we'd still have the land. I was watching a financial show the other day and a homeowner from the area where the CA wildfires were was asking about the level of homeowners coverage to have and the expert said that your homeowners does not need to cover the value of the structure + the land.
This message has been edited. Last edited by: HopeToSell07,
Posts: 415 | Location: Northeast | Registered: Jan 22, 2007
Thank you all for your kind words. The buyer needed to payoff her "burned up" mortgage before proceeding to buy my home but she was thinking she could use her payoff to buy my home and everything would be fine. This was her vacation home that was ruined to the fires back in Oct 2007 in Southern California.
My Realtor did speak again to the buyers agent yesterday and it was clear that the price per sqft really concerned her and she didn't realize this until the lender had pointed that out to her. My agent thinks maybe we should write a letter to her(buyer) and offer to pay her closing cost if she would reconsider buying our home again. I personally think that sounds desperate and foolish to deal with someone again that has kept us on a rollercoaster ride for almost 60 days. Anyway, we are considering paying $5,000 in closing cost to potential buyers when we do relist May 1st. Our goal is to stay in the low 270,000 range to make a decent profit but unsure what price to start with at this point. We are thinking 275,000 with a little room too reduce if needed. I don't know what to do, I'm still shocked we're not moving.
This message has been edited. Last edited by: Sandra215,
"sandra," I posted earlier re questions on the use of insurance proceeds and questioned the use but have to say, OF COURSE, the one who received the insurance proceeds HAS to pay off the underlying mortgage, that's what it's for!
Was someone sleeping throughout the 60 days? I have a difficult time understanding why all of this has been going on. Anyway, feel grateful you are not stuck with that particular Buyer. I'd be changing agents when listing is up!
This message has been edited. Last edited by: Idaho Resident,
Some people don't understand that the mortgage was on the land and the structures so they think is the house burns, they're off the hook.
Also, if you decide to rebuild or buy elsewhere and not replace the original structure, the premimum is around 15%. I'm guessing the seller didn't know and had a whoops! moment.
Whether she can make a sale happen even after she walked away the poster's contract is another issue.
The Buyer did have a whoops moment! She seriously thought she could use that money for anything she pleased. Another thing that occurred during escrow was the Buyer's agent went on vacation for three weeks and her replacement was horrible about following up with anything!
Speaking of replacing my agent(soon to be relative), we are starting to get phone calls from varies agents wanting our business. Very tempting!
We are currently buyers in a 60 day escrow and believe me we will use every one of those 60 days. We are taking out a jumbo loan and my DH is self employed--good job, good income, just became the head of his medical group. We've had to supply so much information to the lender. We were pre-approved for a 550K loan, and we are taking out a 540K loan. The house came in at the appraised value (actually 20K above our asking price). After we went into escrow we were told by the broker that the lender would not even l process the loan until we gave them our 2007 tax returns. So we had to beg our accountant to expedite the preparation of the tax returns by end of March. Then we had to give them one year's worth of cancelled rent checks to show that we made our payments in time--this in addition to corporate tax returns, letter from the medical group stating his partnership and income, brokerage statements, etc. The latest thing is a Profit-Loss statement for my DH business. Our accountant threw a fit over that one and said he couldn't do one until after April 15th. We close on May 2. We may need to ask for an extra week if the P&L doesn't get done in time. And what is the P&L doesn't meet the lender's criteria for a loan? I'm so stressed out!
I don't want to drop out of escrow--we also have a loan contingency. Had we known what a hassle this was we would have looked at smaller homes or at least saved up for a bigger downpayment. As it is we are putting 20% downpayment.
