This began in the spring and ended in the fall. Tom and Lisa came in to me to be pre qualified for a mortgage. After doing my spiel, running credit, discussing income and assets I found out that Tom had very low credit scores (590), very very low income (self employed sheet rocker) and a large untapped Home equity line of Credit on their current home. I told them, take all the money out of the HELOC and park it in the bank. I told Tom what he needed to do to improve his credit score. And then I told them about the small regional savings bank that I have a relationship with, a bank that would do a No Income Verification loan in 2009 (and now 2010).
July 2009. Tom and Lisa found a home. It was a foreclosure. My antennae went up. I asked him, how is the condition of the property? He told me it was fair, it needed a little TLC but nothing to worry about. I asked, are there any safety issues? They said NO. I asked is the house broken or just ugly? They told me a little ugly. I asked how is the kitchen and bathrooms? They looked at each other and said some of the cabinets have been removed. I called the Realtor, and I asked the same questions. He told me, the house is in good condition, maybe a little cosmetic work and about the kitchen, I told him there needs to be a stove, a sink and some cabinets at the minimum or else they could not get a loan.
Once contracts were signed, at the end of August, I sent out the appraiser.and now the fun began. The appraisal came in with a 10,000 cost to cure. The pictures showed gaping holes, about 5 feet wide and 7 feet tall between the dining room and kitchen. Spindles were missing from the steps, the walls were bashed in and the front window next do the front door was boarded. The kitchen was vast, about 25 feet by 14 feet. On one side there was one bottom cabinet. There was a long countertop and one corner top cabinet. Somewhere in the middle was an exposed kitchen sink.. Someone had taken a bat and had a party in that house!!
We cleaned up the appraisal. She gave a minimal cost to cure, mentioned damaged sheetrock but eliminated the photo of the large hole in the wall. We are now at the end of September. The Listing agent sent me a form that he wanted me to fill out. It was a form that he had to send back to his asset manager. I filled out 2 sections, the name of the borrower, and the date the appraisal was completed. He called me SCREAMING that I must fill out all of the form including setting a closing date or my clients would lose the house and I am taking so long I must be the worst mortgage broker in the planet if I don’t have a clear to close for a borrower putting down 30%. I tried to explain to him that it is not 2005 but 2009, and he just didn’t get it.
Then the bank committed the loan, despite the low credit, despite the non verification of income but they required a final inspection from their approved appraiser showing that the utilities were on and the window was repaired and the sheetrock damage was repaired.
Well my guy was a contractor...All ended well.
The coup de grace was in one of our hostile conversations, where I informed the listing agent that I wouldn’t share my clients personal information with, nor would I fill out his paperwork to the asset manager and I would not set a closing date, only the bank attorney would, he gave me a little tip..”Ann, never deal with foreclosures since you are not good at them”
When we were clear to close, I said to him: Joe, I have a tip, when you list a foreclosure, do your research and save yourself the stress that you went through in this deal. Go through the home and inform the asset manager that when there are man sized gaping holes in the walls and broken windows, they need to be fixed prior to listing and marketing the house”
Contrary to "unpopular" opinion, lately I have been doing a lot of loans on foreclosure properties. Dorit Katz, a local REO agent with Realty Teams in Pomona told me “I take an appraisal into the house before marketing the house and I work with the asset manager so that the house can be marketed to all buyers, not just the cash buyer”. People all seem to want foreclosures, they think they will get a better deal, which they do in some cases, but beware of the issues that come up with the property condition!!
i like this kind of stories!!!!
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