closing delayed now what? - Posted by luke-NC

Posted by cathleen on May 26, 2005 at 07:42:20:

I was the buyer - days before closing the loan co says the lender will only allow 2% seller contribution when they were the ones who suggested that I write the contract with 5% seller cont.! So, we did an amendment to the contract to adjust the sales price/amount financed…

closing delayed now what? - Posted by luke-NC

Posted by luke-NC on May 24, 2005 at 15:10:22:

I have a deal where we were supposed to close and know we’ve got a problem.

We had initially agreed that we, the sellers, would pay $3,000 towards closing costs for the buyer.

Now, we get to closing, and the buyer’s agent says we have to bring a cashier’s check, payable to the buyer for $3,000. Which is not disclosed on the HUD. Apparently, they didnt tell his lender that I was paying the $3,000 in closing costs, and we have to do it this way, otherwise the buyer will have to go through the loan application process again. I have many times seen where the closing costs are just figured over again on the HUD, and the lender should have no problem.

I don’t get this, but if I’m not mistaken this is fraudulent is it not?

Re: closing delayed now what? - Posted by Dave T

Posted by Dave T on May 28, 2005 at 11:59:16:

Was this agreement specified in the language of the contract? If not, then you have an undisclosed side agreement that constitutes loan fraud.

If your seller concession is in the contract, then the settlement attorney should have no problem with putting it on the HUD-1.

If it Smells like BS… it probably is - Posted by Sean

Posted by Sean on May 25, 2005 at 13:11:58:

It takes them 5 seconds to print out a new HUD1… I say if it smells like the other bovine product that floats (not creame) it probably is.

Re: closing delayed now what? - blame escrow co. - Posted by DavidGOR

Posted by DavidGOR on May 25, 2005 at 12:34:55:

If it was written in the P&S that you would pay $3000 towards closing, the escrow company needs to correct that. It’s their error.

I’d agree with Ed that it would be fraud to pay under the table.

So depending how much time you want to invest, and if the damages are enough, your only remedy may be to sue the company for interest lost, days off work, the deal that you had under contract but lost since this particular deal didn’t fund, etc…

DavidGOR

Re: closing delayed now what? - Posted by Ben T

Posted by Ben T on May 24, 2005 at 21:17:57:

What does the contract say regarding the closing costs?

BT

Re: It’s fraud - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on May 24, 2005 at 17:31:55:

any time that cash changes hands from seller to buyer and the lender is not aware of this. In this case the buyer is going to show up at closing with $3K in hand, and then finance the closing costs, most likely. The lender then has a much higher risk. If you were the lender would you want to know that the buyer is a lot closer to broke than you had seen on the HUD.

Re: closing delayed now what? - Posted by Chuck

Posted by Chuck on May 24, 2005 at 17:01:11:

Whats the difference? If its not on the HUD and you agreed to it, that means you’re getting an extra $3,000 at closing that you shouldn’t get.

Give that money to the buyer as you agreed.

Are you trying to back out on your agreement to cover $3,000 in closing costs?

Chuck

Re: closing delayed now what? - Posted by Kristine-CA

Posted by Kristine-CA on May 24, 2005 at 16:58:40:

Luke: how are you doing for time and debt service?

If it were me, I’d tell the buyer’s agent that you have a problem with
paying any money out of escrow. Tell him that for your tax purposes
that all monies must be accounted for on the HUD-1.

Also, have you checked with the escrow/closing agent or mortgage
broker to find out if there really is a problem re-figuring the amount
on the HUD-1? I have learned to always question everything agents
say regarding the loan process. Not so much because they might
intentionally mislead, but because they often don’t understand the
process very well. Most agents I have dealt with are extremely prone
to hear-say and repeat everything like it’s fact.

Kristine

Re: It’s fraud - Posted by Kristine-CA

Posted by Kristine-CA on May 24, 2005 at 18:07:56:

I just love that about your posts, Ed. You are one of the few investors
who mentions what it’s like from the lender’s perspective. I’ve owned
only one note, but it made me aware of issues from another
perspective.

There is also that golden rule thing which seems pretty straight
forward. That is, of course, until you reach a point in a deal where it’s
easier to take a short cut. Then there is the less than golden rule: do
unto others as you please and then hope that others don’t pull
the same stunts on you. Kristine

uh…no guy… - Posted by luke-NC

Posted by luke-NC on May 24, 2005 at 20:49:34:

Not trying to back out chuck…just want to be sure everything’s on the up and up. I want everything to be in writing and above board. I have no problem having the $3k credited to the buyer from my proceeds as long as his lender knows and it’s on the HUD. I have a problem with it NOT being on the HUD.

Re: closing delayed now what? - Posted by luke-NC

Posted by luke-NC on May 24, 2005 at 20:52:23:

I’ve got plenty of time and can spare about 60 days before my costs begin accumulate significantly.

let me try your approach, i will call the closing agent first thing in the morning…

I hate this “dealing with the buyer’s financing stuff”

ugh…next time i get my cash upfront and i’m out…

Thanks!

Re: uh…no guy… - Posted by chuck

Posted by chuck on May 25, 2005 at 08:20:27:

Dude,

Help the guy out. You made a deal with him. The lender won’t allow closing costs to be covered by the seller. That is not your buyer’s fault. He just doesn’t want to pay $3,000 more than you agreed to. You can’t blame him for that. So either lower your price by $3,000 or give him the money.

It looks like unless he gets another lender, the deal is not going to go through otherwise.

Chuck

Re: closing delayed now what? - Posted by Kristine-CA

Posted by Kristine-CA on May 24, 2005 at 23:51:31:

Hang in there. I’m trying to get out that "get my cash upfront"
mentality. You end up giving away $$ just so as to not deal with retail
end of the biz. Believe me, I know that routine and I feel your pain.

IMO, these kinds of problems can be solved if our buyers use mortgage
people we trust to do the loan the way we want it done. It’s hard,
though, to find someone in the mortgage biz who works for the
seller…at least that’s been my experience. Kristine