Posted by Alex Gurevich, TX on October 13, 1998 at 23:35:55:
One other thing that you have probably learned.
Get your loan pre-approved in advance (and get
pre-approval letter in writing). This is called
credit pre-approval for up to a specific amount,
subject only to appraisal and survey. When you have
got to that point, you can close within 10 days on
any property you get via HUD bidding process or otherwise.
Turning to the experts here - Posted by Rhonda in Fort Worth
Posted by Rhonda in Fort Worth on October 10, 1998 at 22:26:38:
Hi you guys,
Long time no talk to!
Well, I’ve got a good one for you, and I need help. I won a HUD bid on a house I want to live in and rehab, then resell after twelve months. The area is excellent, and the houses sell for $80,000 up. I got the bid for $50,000, and it will take about $5,000 to have it at about $85,000 in value.
I picked a loan company out of the phone book, after calling several, because they said they had an appraiser who would work with them, and the house does need some rehab, although livable. I didn’t want anyone putting a deadline on the fix up, because I’m good at that stuff, and want to do it myself.
Here’s the deal. My bid was accepted by HUD on August 19th. It took over two weeks for them to send in the accepted contract. I had already located my lender, and had all the necessary documents ready to go. I am buying the house with my boyfriend, and we both have A+ credit, and great stability. It should have gone right through, but because of the big rush out there to refinance, our little loan got put on the back burner, with bigger loans taking priority.
They have demanded the most ridiculous things, and I have provided it all. Our deadline to close (by Hud standards) is this coming Tuesday. We can’t close then because the lenders have dragged their feet so badly. This means that Hud expects a $375 extension fee to be paid on Tuesday.
I have called the lender two or three times a day, and, no they hadn’t done this or that.
The bid that Hud accepted was for them to pay $3,000 closing costs. Friday, my lender called and told me that Hud could only pay 3% on closing, which upped our closing costs from $3400 to $5100. Quite a surprise. I am so ready to get out of this deal, even though we’ve paid $325 for an appraisal, and $40 for a termite inspection, and now we won’t get the $500 earnest money back, because the loan was accepted. This loan company has turned out to be a nightmare. They claim they will have the papers to the closing agent on Tuesday, but they have not kept their word yet. I found out it is now taking Hud one entire week to complete their paper work, once it is received.
The deal is, the house is close to my boyfriend’s parents, and he has already bid on a route in the area as a postman. He doesn’t want to lose the money already invested.
I will take to heart any other comments, but I would really like to know if anyone knows how to get HUD to waive the extension fee. After all, in this case, they are getting $1500 more net than what the accepted contract stated. I need help with Hud. I do not want to pay another $375 in extension fees, with the way this deal has been going. I only have Tuesday until the close of business to deal with this, thanks to the lender.
I’m going to lease option the house we are in now, and I really had a plan going, but the politics have weighted me down to where my head is the only thing showing above the quick sand.
Help.
Rhonda
Re: Turning to the experts here - Posted by Dave T
Posted by Dave T on October 11, 1998 at 23:26:11:
In January, I also won a HUD sealed bid austion. My contract called for a $1000 closing bonus for closing in 30 days, and for HUD to pay $1500 in closing costs. My lender’s underwriting guidelines would only allow the seller to contribute a maximum 2% toward closing.
I also had to come up with another $1500 at closing but I had the lender reduce the mortgage amount by $1500. In essence, HUD paid down my mortgage at settlement because the lender would not allow more than 2% of seller’s funds to be applied to closing costs.
I still got the property at the agreed price, and with the agreed seller contributions. It’s just that the seller’s contributions weren’t applied to the settlement statement in the way that I expected.
I suggest that you clarify with the lender exactly what they propose to do with the extra $1500 HUD is putting into the deal. Perhaps they are planning to reduce the mortgage amount, but just did not explain it that way to you.
Re: Turning to the experts here - Posted by JPiper
Posted by JPiper on October 11, 1998 at 16:39:40:
There are 4 parties involved in this transaction??you, HUD, the lender, and your realtor. Of these 4 parties the only one you can really control is you. So let’s talk about some actions YOU can take.
First, I would call my lender bright and early tomorrow. I would inform them that if they can’t get it closed Tuesday, then I expect to be compensated by THEM for the extension fee with HUD due to their slowness. I would inform them I want this in WRITING. If they balked at this I would jerk the loan?..IMMEDIATELY. This may cost you money, but sometimes my feeling is that I would rather lose a little money than to continue on with someone who is either incompetent, lazy, or both.
Your deal, by the way, looks fine according to your numbers. That extra extension fee doesn’t ruin your deal at all?.so keep this in perspective. I would recheck my contract as well regarding what actually was agreed upon in terms of the closing costs. My guess is that HUD did not agree to pay $3000. But I’d recheck it anyway, and if they did, I would raise hell with the lender and HUD regarding this. I might add that an extra $1500 in closing fees is not going to ruin your deal either. One other comment, $5K in closing fees is very high at this price level, unless you have added in your down payment to that number.
I’m with Carol. Where’s the Realtor?? The Realtor is earning 6% commission perhaps, so what is the Realtor doing?? I would have some very firm words with this individual. Get the Realtor up off his tush and make him earn that 6%. In fact, maybe the realtor needs to compensate you for the extension fee.
If you end up jerking this loan, or in the future, don’t call lenders out of the phone book. That’s my opinion. I don’t call lenders unless someone referred me to them, or I have reason to believe they are good. All lenders aren’t equal. Some lenders will fight for your deal?.others won’t. Some lenders come up with solutions for problems, other’s don’t. I have one loan officer locally who does conforming type loans who I would follow anywhere she goes. Why? Anyone can do deals with no problems, but this loan officer has proven herself to be a problem solver, she gets deals done that fall into a gray area in terms of the guidelines.
The minute a loan officer doesn’t return my call, a red flag goes up. I have a BIG problem with that. When it happens, which it does far too frequently, I discuss that with the loan officer. If it happens again, I’m out of there. There are plenty of other loan officers out there who are interested in your business?.that is if you explained why they should be to begin with.
If you want to locate a good loan officer, first determine the type of loan you’re involved with. There’s a difference between conforming, and non-conforming. I’d call some of the large Realtors in your area, ask them who they use and what type of loans that person does. Check with an investor club, ask who they use. Don’t assume that all loan officers are competent, because they aren’t. It’s your responsibility to pick a good lender, it’s not the lender’s responsibility to be competent unfortunately.
Finally I would mention that once you have an accepted contract is when the deal really begins. If your expecting a problem free experience?.DON’T. All kinds of problems can and will come up. Your job is to be on top of things, to face the problems as a problem solver. You’re not required to be helpless, or to stick with one lender, or to sit quietly and watch things happen around you. Reality is that there is incompetence out there, so expect it. Get your knowledge level to a point where you recognize it?.and it’s opposite. Don’t be afraid to switch if other’s aren’t serving your needs, that’s what they get paid for. Switching lenders, if it’s necessary, may cost you a little but it may make your life considerably easier than trying to deal with incompetence and laziness. Problems are going to be a part of this business?.they’re constant. Your ability to deal with problems is going to be a important precursor of your success.
JPiper
Talked it over with my local expert… - Posted by carol
Posted by carol on October 11, 1998 at 13:34:36:
and I have some suggestions. Please email with your phone number and I will give you a ring.
Meanwhile, for anyone else who may be interested, on HUD Code I and II, one can request up to 5% closing costs. Code III is max 3%.
Check your contract as it was returned signed to you by HUD. That’s why the lender came back with what they did.
SEcondly, there is a form letter for an extension which your Realtor has and should know how to use.
Third, if you close win a couple days of the extension date, they likely will prorate per diem.
Fourth, you can get the loan package assigned to another lender if this one is really messing, and perhaps close in time.
Fifth, you don’t say if the appraisal, terminte and survey have acutally been DONE or just paid for.
Lastly and most important - where in the world is your danged realtor who wrote this thing up in the first place?
He/she should be in there pitching for you - my guess is that they didn’t know what
they were doing to begin with, which is why they submitted the contract the way they did.
Just a guess.
There is more - too much for this forum.
Good luck!
Carol
It’s a wonder that any deals close - Posted by Kevin(OK)
Posted by Kevin(OK) on October 11, 1998 at 07:27:22:
You would think that people would be more professional. After all, for most people a house will be their biggest expense, ever. I think people who deal with loans and closings (title co.'s) should be required to have moderate to extensive traiming and licensing before they can enter the business. A loan originators license in my state requires no training, just an application and a fee. However, if one wants to be a stock broker, one must take extensive training, pass a difficult (so I have heard)written test, plus pay a $500 fee.
More training is what is needed!!
Kevin(OK)
Re: Turning to the experts here - Posted by Rick
Posted by Rick on October 11, 1998 at 24:57:57:
Call HUD and explain the situation and see if they will waive the extension fee. They might not, but it is worth a try.
Re: Turning to the experts here - Posted by Rhonda
Posted by Rhonda on October 10, 1998 at 22:32:20:
Also, just as JP stated, the interest rates took a turn, and I was promised a 7 1/4 rate. On Friday afternoon, the lender was supposed to see if they could lock in that rate, and call me back. They never called. I wanted to lock it in earlier, but was advised to wait, by the lenders.
Re: Turning to the experts here - Posted by JPiper
Posted by JPiper on October 11, 1998 at 16:49:44:
I forgot one thing. The fact that the interest rate was not locked in is your own fault. All you had to do was to tell them to lock the rate in. To do otherwise is like shooting craps. And in this case, you lost. That’s normally how it works. If the lender told you the rates were moving down, and that you might get a lower rate by waiting?.shame on him, and shame on you for listening. At the instant you went along with that you became a speculator on the direction of interest rates, something I would not recommend for most people. No one controls your decisions but you. It was your choice to lock the rate, or not lock it. This is a lesson provided by the school of hard knocks. Next time, lock the rate.
JPiper
Re: It’s a wonder that any deals close - Posted by Mark (SDCA)
Posted by Mark (SDCA) on October 12, 1998 at 14:38:39:
They really don’t (have training that is). I have dealt with many, many escrow,title and loan employees who were really bottom of the barrel. VERY sad. And even more frustrating.
Re: It’s a wonder that any deals close - Posted by JWM
Posted by JWM on October 12, 1998 at 04:06:54:
Interesting comparison. However, I have delt with commodity brokers. Who are required even more training then a stockbroker. And one supposedly in the biz for 20+ years. Had me shaking my head and ready too file with the SEC. Some people don’t know their job’s or care. Many just want too make their salary, with as little effort or attention too detail as possible.
Re: Turning to the experts here - Posted by Rhonda
Posted by Rhonda on October 11, 1998 at 18:03:27:
JPiper,
You are absolutely right about everything, as usual. My problem stems from trying to believe for so long that these people were trying to do theirs jobs. I’ve closed on many houses, and I’ve never been up against anything like this. My faith in the “experts” has paid off in the past. This school of hard knocks isn’t fun at all.
About my realtor, this guy claims to have been in the business for 20 years. I bargained for a 3% commission, and he seems to think that he doesn’t have do to any work at that price. He even told me that, should an extension fee be required, he won’t travel the 30 miles to get it to the closing company, because he thinks the loan company is screwing me. If only this weren’t a Hud deal, with all their legalistic rules, I would be doing everything you suggested, and I really still need to kick everyone’s butt. I’m sure loan companies get people into these types of situations all the time, where the clients want the house so bad that they will take the bull.
But, I’ve got a secret. I happen to know that the loan guy I’ve been dealing with sent the appraiser back home to rewrite the appraisal (in other words, cheat), so that it would pass. The problem was that the garage has been closed in, but not completely finished as a room, so he had the appraiser call it a carport or something. I’m sure this sort of thing happens all the time, and at the time, I was happy about it. But, it’s not something he would want an unhappy client to know. I could tell him I’m going to blow him wide open if he doesn’t pay for the extension and get this thing finished. But, could that backfire on me?
My closing deadline, set up by HUD, was Oct. 10th, which was Saturday. Because it fell on the weekend, it went to the next business day, which should be Monday, but everything is closed because it is Columbus Day. So, after a three day weekend, I have to find out what I can on Tuesday morning, including requesting Hud to waive the extension fee.
Yes, JPiper, I knew all of the things you mentioned, but I was stupid. He kept telling me that it would happen tomorrow, and I believed him until the time ran out. This has taught me more of a lesson than I was ready to learn, since I am probably going to lose a house that I had big plans for. I really wanted to live there, too. My biggest problem, besides all the feet dragging, is that they let me pay for all that stuff, and accepted the loan knowing that I would lose my earnest money if it was accepted. Then, the day they accepted it, they called to tell me about the change in the GFE, and that they hadn’t locked in an interest rate.
I remember very well the conversation I had with them about the interest rate. I said I wanted to lock it in, and it was when the rate had jumped up a little for just a couple of days, a few weeks ago. He advised me to wait a few days, and if it didn’t go down he would lock it in, and if it did, he would surely lock it in. I gave him my permission to do just that. So, I believed that he had done it.
This is getting too long, but, if they don’t get the papers in by Tuesday morning, and if they won’t pay for the extension, I’m going to blow their whole scam wide open, including the BBB, and an attorney who will help me file official charges. Causing someone to lose a house, and cheating during the process, and lying…aren’t those good enough charges?
Thanks for all your advise.
Rhonda
Re: It’s a wonder that any deals close - Posted by Nancy(NC)
Posted by Nancy(NC) on October 12, 1998 at 19:48:07:
Interesting that you should mention stock brokers.
I have used several but none I really felt were
looking out for MY best interest. If they are so
good at investing, why are they working in an office
representing others and not retired at home at their
own computer doing their own deals???
That’s probably not a fair question, but having been
in sales, I know salespeople get bonuses for selling
certain things…not always what is best for the
client.
Hope I’m not stepping on anyone’s toes…just my
humble opinion.
Nancy(NC)
Re: Turning to the experts here - Posted by JPiper
Posted by JPiper on October 11, 1998 at 19:03:09:
Maybe I missed something?..but why are you losing the house??
It looks to me like you get an extension, and you either do the loan through the existing lender, or you do the loan through a new lender. You may be able to use the appraisal you currently have with the new lender. As I understood it the extension is for 30 days, which would give a new lender plenty of time.
The point is not to get people into trouble. The point is to get the house, and to make your profit. That’s where I would concentrate my thoughts. Call the manager of the office, get the deal done.
JPiper
Re: Turning to the experts here - Posted by Rhonda
Posted by Rhonda on October 11, 1998 at 22:22:52:
Yes, JPiper, the extension is for 15 days, with no other extensions available from Hud after that. I don’t know what interest rate they are going to try to get away with, even though I told the guy to lock it in.
The main point is, I don’t feel that I have time to go with another lender, and this lender has proven that they do not keep their word.
I’m going to fight like hell on Tuesday. I’ll let you know how it turns out. No, my intentions are not really to get anyone into trouble…at least not until I get my house. But, someone has got to stand up against this kind of thing, and that’s what I intend to do. Until then, my battle is to get the lender to submit the accepted papers to the title company.
I’ve learned my lesson. No more lenders or agents that aren’t personally reccommended.
Regards,
Rhonda
Extension is for… - Posted by Carol
Posted by Carol on October 11, 1998 at 20:28:54:
15 days, calendar.
Re: Extension is for… - Posted by Rhonda
Posted by Rhonda on October 11, 1998 at 22:25:29:
Carol,
Thank you SO MUCH for all your help. I will keep in touch.
Sincerely,
Rhonda