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We have offers!! I know that the local real estate market is hot, but we had been warned that it was starting to cool. We weren’t ready to go on the market earlier. Now has proved to be a good time to sell.
Knowing that there are multiple offers, I expected that the buyer’s real estate agents would have been more careful in writing up offers. Sending a letter about how their client really liked the property would be more convincing if it had the correct address. Offering well over the asking price, and then asking for appliances that are not physically present doesn’t give a great impression either. All did get it correct that the range is free standing, and it needed to be specified.
The offer we accepted wasn’t quite the highest offer, but appeared to be the strongest and was the only offer without errors.
Our real estate agent complimented us on getting our home ready to show. They were complimented by other agents on our disclosure documents. Apparently, it is a challenge to get home owners to complete disclosure documents or prepare for inspections. The cost for inspections isn’t trivial. It seems ridiculous to schedule inspections, then not provide the required access. It is common for the inspections to list what couldn’t be inspected, and recommend re-inspection.
Most of getting the house ready for market was listening to our real estate agent. We had the inside professionally cleaned. It makes a significant different. There were some items like one of the dials on the range, I couldn’t get clean. I didn’t have time to do any cleaning better the time we moved out and the cleaning service was scheduled. For some reason I can’t explain, I felt guilty about not doing some cleaning. The house wasn’t extremely dirty, just had been lived in and was now empty. Our agent gently insulted our furniture. We did agree to have our home staged. The change was amazing.
There were a few small items that they didn’t bring up, but we felt should be done. Exterior doors were painted. After the interior or the house was cleaned and staged, cobwebs and dirt on the eaves looked bad. We had the painter also pressure wash the exterior of the house. It made for a much cleaner appearance.
We didn’t go quite as high for an asking price our agent recommended. Prices were already up more than 10% in the last couple of months. I didn’t want to get into a situation where we needed to drop the price. We chose a price that was $10K under what was suggested. It didn’t matter, the offers were all well over the price that our agents suggested. I just didn’t believe that anyone would pay that much for a starter home.
Most of the offers did not have a contingency for property inspection. We had been warned that was risk for the sellers. We were told that if the offer we were going to accept didn’t request time for property inspection, it would be countered with an offer specifying time for property inspection.
I am watching the competition that chose a bad real estate agent. Their house came on the market a few days ahead of us. The house has the same floor plan, but without some of the updating. It is similar condition and in a better location to the same floor plan that closed a couple of weeks ago. The photos are really bad, and the house isn’t staged. With proper handling the property should have sold. They have dropped the price and scheduled another open house.
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The offer we accepted wasn’t quite the highest offer, but appeared to be the strongest...
... professionally cleaned... staged...painted...pressure wash...
We chose a price that was $10K under what was suggested. It didn’t matter, the offers were all well over the price that our agents suggested....


You did everything right, and have the results to show for it, congrats! Best wishes on everything continuing to go well through closing.
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but appeared to be the strongest and was the only offer without errors.

Yes, neatness counts in real estate.
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CONGRATULATIONS!!!

Most of the offers did not have a contingency for property inspection. We had been warned that was risk for the sellers. We were told that if the offer we were going to accept didn’t request time for property inspection, it would be countered with an offer specifying time for property inspection.

I realize things vary greatly from state to state, but this is the first I hear of this. Did your agent tell you why? I assume it has something to do with increased risk of being sued?

I did have one buyer who did get an inspection, which then led to 4 more specific inspections. When she got buyer's remorse and threatened to sue the seller and his agent for improper disclosure, (which in turn meant I too would have been sued,) I pointed out to her that all those problems had been disclosed in one of the inspections or another. I had to badger her into reading any of the reports, not letting her get away with "I trust your judgement." I guess she still blew off all the reports, even the summary pages.

Some people you just can't protect from themselves.

IP
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I realize things vary greatly from state to state, but this is the first I hear of this. Did your agent tell you why? I assume it has something to do with increased risk of being sued?

Yes, claiming they were pressured into not have time to inspect the property or have time to properly review the provided inspections and disclosures.
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Yes, claiming they were pressured into not have time to inspect the property or have time to properly review the provided inspections and disclosures.

Unless the pressure consisted of a gun to the head, or something similar, I don't know why that would not be thrown out of court. Our "justice" system sadly has little to do with actual justice.

IP
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Most of the offers did not have a contingency for property inspection. We had been warned that was risk for the sellers. We were told that if the offer we were going to accept didn’t request time for property inspection, it would be countered with an offer specifying time for property inspection.

I realize things vary greatly from state to state, but this is the first I hear of this. Did your agent tell you why? I assume it has something to do with increased risk of being sued?

Just reading between the lines and going on past experience, I expect the agent wanted to make sure the buyer had an independent inspection. The owner, or owner's agent, may have had a "favored" inspector. Having the buyer pay for their own inspection removes that concern.
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Just reading between the lines and going on past experience, I expect the agent wanted to make sure the buyer had an independent inspection. The owner, or owner's agent, may have had a "favored" inspector. Having the buyer pay for their own inspection removes that concern.

It is giving the buyer the option of having their own inspections and to take time to review the disclosures.

The inspectors that our agent recommended didn't overlook issues. They were recommended because they are good. The reports included water damage, termites and roof issues. There were also a number of small items noted.
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I hope the buyer's rate is locked. From Mortgage News Daily.

We began the trading session today in MBS with liquidity conditions possibly WORSE than they were on May 27th, 2009--aka "Black Wednesday." Unquestionably the past 4 sessions of selling in broader bond markets has been far, FAR worse than Black Wednesday, even if no individual day has matched the 2-point sell-off. The Week Ahead post was all about this sort of liquidity problem and bears a read if you haven't had a chance yet. In fact, it turns out to have been all too relevant right out of the gate.

The gaps between buyers and sellers this morning blew out to levels that made it literally impossible to know what the actual price of a mortgage-backed-security was at any given time. Slowly, traders began to get closer to each other in a sort of agonizing version of "Marco Polo." Just like in quantum physics where you only have a "probability" of finding an electron in a certain area around the nucleus, Fannie 3.5 MBS are probably somewhere between 99-09 and 99-13 for the past hour. No one really knows, but we do know the range of probability earlier this morning was around 20 ticks!

The improved liquidity (improved, NOT healthy though) will help us hone in on actual price levels to a better extent as the morning progresses, as will the increasing stability of benchmarks. In that regard, 10yr yields are coming down off a series of "lower highs" starting just above 2.66 and most recently having a small supportive bounce under 2.63.

The bottom line to this "special alert," is to get an earlier-than-normal word out that prices have begun the day in a state of disarray. Rate sheets are destroyed, and the proverbial knife is still falling. We're essentially STILL waiting for the first evidence of a sideways consolidation in the trading range before we can hope for any sort of bounce back. This morning has a chance to develop into such a thing depending on how it shapes up into the afternoon.
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PolymerMom:

<<<Most of the offers did not have a contingency for property inspection. We had been warned that was risk for the sellers. We were told that if the offer we were going to accept didn’t request time for property inspection, it would be countered with an offer specifying time for property inspection.>>>

{{{I realize things vary greatly from state to state, but this is the first I hear of this. Did your agent tell you why? I assume it has something to do with increased risk of being sued?}}}

"Just reading between the lines and going on past experience, I expect the agent wanted to make sure the buyer had an independent inspection. The owner, or owner's agent, may have had a "favored" inspector. Having the buyer pay for their own inspection removes that concern."

I fail to follow. What does the buyer paying for their own inspection have to do with whether the offer contains a contingency for porperty inspection.

The only two things that might make sense are:

1. The buyer had an inspection done before writing the offer (not likely because most buyers do not want to incur the expense before having the proeprty under contract), or

2. The buyer is afraid that his/her offer will not be accepted with a contingency, and would rather get the property under contract, inpsect and then either (a) rengotiate if desired or (b) bluster on about lawsuits and return of earnest money, and Seller will have likely removed the proeprty from the market and even if not, showings will decline because many buyers do not like to look at houses that recite contract pending, continue to show, open to back-up offers.

Regards, JAFO
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2. The buyer is afraid that his/her offer will not be accepted with a contingency, and would rather get the property under contract, inpsect and then either (a) rengotiate if desired or (b) bluster on about lawsuits and return of earnest money

The local real estate market is very hot. Buyers are concerned about not have an offer accepted with a property contingency. We ignored the overall bad offer than had a 3 week contingency for property inspection.

We had a two day delay between the open house and when offers were due. This gave the potential buyers time to review the disclosures and provided inspection reports. Still our real estate agent is cautions, and prefers to avoid problems when possible. Giving the buyer a chance to schedule their own inspections and to review the disclosures while under contract avoids the appearance of undue pressure. Since all offers had a 10 day loan contingency, giving a couple days for property contingency really didn't make any difference. There weren't any cash offers.

Appraisal is scheduled to be in before the end of the week. It will be interesting to see how it appraises. The buyer is prepared to increase their downpayment to handle any difference between appraisal and purchase price.
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The buyer is afraid that his/her offer will not be accepted with a contingency, and would rather get the property under contract, inpsect and then either (a) rengotiate if desired or (b) bluster on about lawsuits and return of earnest money

I bet the buyer is sorry now that he was so spooked by a big nothing issue when interest rates have risen nearly an entire point as the buyer worried. That's what can happen when you sweat the small stuff.
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I bet the buyer is sorry now that he was so spooked by a big nothing issue when interest rates have risen nearly an entire point

????? This article states 30 year FMR have dropped

http://www.dailycamera.com/boulder-realestate-news/ci_235232...
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????? This article states 30 year FMR have dropped

All I can tell you is; This is *SO* typical of the financial media regarding mortgage markets... worse than clueless.

If you want to know which direction the mortgage rates are going, look here, and understand that rates are the opposite direction as these FannieMae mortgage bonds;
http://www.mortgagenewsdaily.com/mbs/charts.aspx?Product=FNM...

Cheers,
Dave Donhoff
Leverage Planner
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Mortgage Rates Continue Unprecedented Surge Higher

Jun 24 2013, 5:16PM -- Mortgage rates finally lost less ground than they have over the past few business days. The problem is that this still left room for rates to go higher at a much faster pace than normal. Some borrowers will have seen their quoted rate move up another eighth to a quarter, depending on the lender. After rising to 4.625% on Friday, Conventional 30yr Fixed best-execution is currently between there and 4.75%. Lenders continue to offer lower rates in exchange for increased upfront costs, but those rates have deteriorated (meaning costs have increased) significantly faster than rates in the best-execution zone.

As we often say, "volatility" is unkind to mortgage rate sheets. The wider the range of potential outcomes lenders are forced to defend against, the less aggressive they can afford to be with rates, regardless of whether or not today's rates improved. In other words, an awesome day for mortgage rates is made less awesome by volatility, and a bad day is made extra bad. In that sense, current rate levels are a product of a double whammy between current trading levels and the need to account for volatility. As of now, volatility should be assumed to be expanding or steady at high levels until we have clear reason to believe it's receding, and we're not there yet.

This continues to be one of, if not THE most significant move in the modern history of mortgage rates (in terms of the pace of change). Instead of retelling the "story" of this crash, we'll simply catalog some of the recent relevant discussions for those wanting more background on the abrupt movements. More at:

http://www.mortgagenewsdaily.com/consumer_rates/314072.aspx
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This continues to be one of, if not THE most significant move in the modern history of mortgage rates (in terms of the pace of change).

Maybe you're just looking at a different time frame, but I do remember that in April 1987, mortgage rates shot up about a point or more in a week. It actually might have been in a day, but it was a long time ago. I remember this because it was the week we signed the offer on our last house, and between signing the offer and signing the P&S a couple of days later, the rates had gone up so much that we were priced out of the FRM and got our first ARM.

Rates were also much higher back then than the current rates which seem to be at a historical low anyhow, so going up from the 3's to the 4's, although a big jump, doesn't seem that bad to me. But then, my first mortgage back in 1982 was at 13.75%, and that was because the rates had come way down. I had friends with mortgages in the 18% range who bought in 1981.

I'll take today's rates, even with the jump, any day.
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Thanks Dave, but for some reason that link gave me a not available for non subscribers message. Here is another link: http://www.mortgagenewsdaily.com/mbs/

They don't seem so sure that rates are changing much yet:

Fading Slightly After Hours. Reprice Behavior May Vary
Fannie 3.5s are down 12 ticks from recent highs. On almost any other day in history, that'd be good for widespread negative reprices. Today, however, the "widespread" part is less of a certainty, though we may be at risk for a few. That will depend on how recently the last reprice came in and how nimble the lender in question normally is.

Bottom line, there's some growing risk as the rally abates, but no massive, panicky afternoon sell-off (Fannie 3.5s at 100-00 still 24 ticks off morning lows). Bigger picture, it's a negative daily technical picture given that MBS were generally capped by Friday's lows and that Treasuries were unable to break back below Friday's high yields, so we wouldn't assume today marks "the turn" in rates just yet.


IP
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They don't seem so sure that rates are changing much yet.

The graph tells it all. MBS fell off a cliff!

http://themortgagereports.com/12915/mortgage-rates-in-motion...
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Dave, it sounds like some board members don't believe you that MBS (e.g. 3.0 coupon) went from 105.00 on 5/1/13 to 97.00 on 6/25/13. A walk in the park, I guess.
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The appraisal came in at the selling price. I am surprised. Briefly, it made me think that maybe we should have countered with a higher price. That feeling wore off fairly quickly. Prices are up 20+% this year. Remembering old stock market saying “bulls and bears make money, but pigs get slaughtered” helped. We might have been able to get an additional 1 to 2%, or we could have lost the offers. Interest prices are unstable. The traditional high point of the real estate season is over. We are no longer living in the house. Having the house on the market makes it obvious that it is vacant. The neighbors know we have moved. I am ready for it to be owned by someone else. Waiting for the sale to close makes me nervous. I keep thinking there could be a serious earthquake, fire or the buyer’s could become the victim of identity theft. We are ready for it to be owned by someone else.

The lender has promised loan approval tomorrow. Our agent seems confident that the buyer’s loan will be approved tomorrow. I am not so confident. Lenders do not care about commitments other make in real estate contracts.
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Waiting for the sale to close makes me nervous. I keep thinking there could be a serious earthquake, fire or the buyer’s could become the victim of identity theft. ..

LOL, yep, waiting is hard! Not time yet to break out the champagne, but you can (and I think should) have a glass of wine...
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The lender has promised loan approval tomorrow. Our agent seems confident that the buyer’s loan will be approved tomorrow. I am not so confident. Lenders do not care about commitments other make in real estate contracts.

That's right. Realtors routinely make unilateral contract obligations without consulting the transaction participant most responsible for completion of the sale: the party with the money.
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That's right. Realtors routinely make unilateral contract obligations without consulting the transaction participant most responsible for completion of the sale: the party with the money.

Interesting. As a buyer I've always thought it was my responsibility to check with the lender I got my prequal letter from to see if a loan commitment date was OK, NOT the Realtor.

IP
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Interesting. As a buyer I've always thought it was my responsibility to check with the lender I got my prequal letter from to see if a loan commitment date was OK, NOT the Realtor.

IP


It doesn't mean that the loan approval will occur on the promised date. Optimism is often punished. I am keeping my expectations reasonable. Extending the loan contingency over the weekend isn't a deal breaker. I am remembering when my MIL sold her mother's house. The loan was approved and all paperwork was done, but there was an almost two week delay in the loan funding. There never was any clear explanation from the lender. They just didn't get around to processing it.

The appraisal came in yesterday. Even though the lender has the appraisal and the buyer's are prequalified, I will find it surprising if the lender actually approves the loan today. It feels like a tight schedule.
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There never was any clear explanation from the lender. They just didn't get around to processing it.

The lender "just didn't get around to processing it?" Really? You mean the file just sat there in the underwriting queue with no one paying any attention to it for days on end?

I guarantee that was not the case. Like a duck--calm on the surface and paddling furiously underneath--the loan originator and his/her processor were feverishly (but purposefully) putting together the always-present PTD (prior-to-doc) and PTF (prior-to-funding) conditions that are always and absolutely necessary for a loan to fund.

Fundings are always a Chinese fire drill, with several sets of eyes taking that last minute look--dotting i's and crossing t's--to make sure the file contains nothing and is missing nothing that would make the loan subject to a buy back after the loan funds.

http://video.cnbc.com/gallery/?video=3000122813

Just because the external parties to the transaction aren't notified of every daily action taken to fund a loan doesn't mean nothing's happening. The lender is the party with the gold. I've never known a lender that thought an "explanation" was necessary or desirable.
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It doesn't mean that the loan approval will occur on the promised date.

There are never any guarantees in life, other than taxes and death.

I went through my email files recently, deleting old emails related to a mortgage we tried to get 18 months ago. Trying to get financing on that place was such a PITA that we just finally paid cash for it. I had weeks of emails with the lender, trying to find out when he had submitted the appraisal, (10 days after we had approved it in an email,) and many inquiring where the heck it was in the revue process two weeks after they received it. Those lenders made going through Amerisave feel like a walk in the park.

None of it was the Realtor's fault, however, which was my whole point. ;-)
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As a buyer I've always thought it was my responsibility to check with the lender I got my prequal letter from to see if a loan commitment date was OK, NOT the Realtor.

That's the optimum response, but many real estate agents put together a contract without even bothering to call the lender to ask, "what are average lender turn times these days?"

Lenders post their turn times on their websites or rate sheets. Example:

June 28, 2013 - We are currently underwriting loans that came in the door on 6/27.
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Just because the external parties to the transaction aren't notified of every daily action taken to fund a loan doesn't mean nothing's happening. The lender is the party with the gold. I've never known a lender that thought an "explanation" was necessary or desirable.

Once the process is that far along, it is difficult to change lenders. When a lender misses their stated funding dates by weeks, the other parties are going to be asking questions. Getting answers isn't easy. To all appearances there wasn't anything preventing funding.
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June 28, 2013 - We are currently underwriting loans that came in the door on 6/27.

Did you mean 4/27 or 5/27? One day seems short.
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To all appearances there wasn't anything preventing funding.

But you don't know what the obstacles were/are. That's my point. The lender's not going to tell you what obstacles they're overcoming. Why should they? Ultimately, they answer to their investor. That you or your buyer gets a loan out of it is secondary. That's the way lending works today, for the reasons I cited: fear of buy backs, investor restrictions, oppressive legislation, etc.

I'm working on a file right now that, were it a purchase, everyone would be up in arms, I'm sure. But the obstacle got resolved and the loan will fund. This obstacle, which I could not have anticipated, took about a week to resolve.
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There are six distinct steps to the funding of a loan:

~ Disclosure
~ Underwriting
~ Prior-to-doc (PTD) conditions
~ Prior-to-funding (PTF) conditions
~ Docs out
~ Funding

Provided that disclosure was done correctly, the file can proceed to underwriting, which turn time at the example lender is 24 hours. I see other turn times as 48-72 hours, etc.

When the conditional approval is distributed, the fun begins. Depending on how thoroughly the file was documented before submission, there will always (and I mean always) be PTD and PTF conditions to a greater or lesser extent. Most of the PTD conditions are fairly simple to meet; other are wild hairs that make you go "Huh?!"

I would rather take enough time to thoroughly originate the loan so as to get a short PTF/PTD condition list. Others just slam it through and then fulfill the conditions, even if the condition list is as long as your arm.

This happened with my son's recent purchase loan that, because the property isn't located in my state, I couldn't originate. The LO at Fifth Third Bank just took the loan app and, from the way the loan went, just threw it over his shoulder into the processing pool. When the condition list was provided to my son, I couldn't believe the LO didn't handle all the stuff on the list waaaay before it went to the underwriter.
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The correct order is...

~ Disclosure
~ Underwriting
~ Prior-to-doc (PTD) conditions
~ Docs out
~ Prior-to-funding (PTF) conditions
~ Funding
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But you don't know what the obstacles were/are. That's my point. The lender's not going to tell you what obstacles they're overcoming. Why should they?

Why shouldn't they? If they aren't going to be able to fund in a reasonable amount of time, the customer should have the information to seek a loan elsewhere. No lender is the only game in town. The customer is being held hostage with a lack of information. (A practice the airlines have down to a science.)
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When a lender misses their stated funding dates by weeks, the other parties are going to be asking questions.

Has the lender in this transaction missed their stated funding dates by "weeks?" Seriously?

Factually, whose funding date was it--the lender or the realtor?
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Has the lender in this transaction missed their stated funding dates by "weeks?" Seriously?

Not it this transaction. In a previous transaction, the lender did. It was the lenders date. We were told the loan was approved and would be funded. The lender then became uncommunicative for a significant amount of time.
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If they aren't going to be able to fund in a reasonable amount of time, the customer should have the information to seek a loan elsewhere.

The consumer can do that, anyway--go elsewhere, that is. What's "reasonable" to you may not be reasonable to the bank and "unreasonable" to you may be completely reasonable to the bank. Indeed, everything they do is reasonable to them.
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The lender then became uncommunicative for a significant amount of time.

What's a "significant" period of time?

In my son's case, it was ten days between communications, which is why, when the closing date was blown, the bank extended the lock for free, but did they apologize or explain? No.
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Indeed, everything they do is reasonable to them.

What it means is that there should be regulations that define reasonable.
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Buyer's loan approval didn't come through today. Our agent will send e-documents to extend the time for the loan contingency. I thought it was tight when they probably didn't receive the appraisal until yesterday. The explanation was simple, the application didn't make it to the top of the stack.
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What it means is that there should be regulations that define reasonable.

"Regulations"--endless regulations--is why we're in the mess we're in.

We already have regulations governing "important dates" for disclosure; then more "important dates" regarding re-disclosure when "change in circumstances" occurs. Then there are cost tolerances, the circumstances under which a lender can decline a loan...ad nauseam.

As I explained before, here's why processing sometimes extends beyond "reasonable."

http://www.housingwire.com/news/2012/07/03/growing-threat-le...

http://www.bloomberg.com/news/2010-11-30/banks-in-u-s-resist...
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I thought it was tight when they probably didn't receive the appraisal until yesterday.

Duh.

The explanation was simple, the application didn't make it to the top of the stack.

According to the Home Valuation Code of Conduct (yet another of your precious regulations), the appraisal must go through quality control at the Appraisal Management Company, a third party between the loan originator and the appraiser. This law is fraught with problems and is thought by many to be the reason the real estate market isn't more robust.

New Home Appraisal Rules Cause Chaos
http://realestate.msn.com/article.aspx?cp-documentid=2108026...

Is the lender going to 'splain all this to you? No. Their pat, time-saving answer is, "The application didn't make it to the top of the stack." In other words, "Go pound sand. We'll get to it when we can get to it. You don't call the shots around here with our money."
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Is the lender going to 'splain all this to you? No. Their pat, time-saving answer is, "The application didn't make it to the top of the stack." In other words, "Go pound sand. We'll get to it when we can get to it. You don't call the shots around here with our money."

Basically, a borrower should start multiple loan applications. The cards are stacked against them. Since a borrow has no access to information, causing lenders to do unnecessary paperwork is the only protection.
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Basically, a borrower should start multiple loan applications.

All in all, not a bad strategy... if said borrower's not minding multiple $500 non-refundable appraisal charges.

Dave Donhoff
Leverage Planner
(Loves my clients, *HATES* the mortgage industry!)
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All in all, not a bad strategy... if said borrower's not minding multiple $500 non-refundable appraisal charges.

Ah, yes, the non-transportable appraisal, courtesy of "regulation."
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The cards are stacked against them.

No, the regulations are stacked against them. Anyone who voted for Democrats in the 2008 election has no one to blame but themselves. Libruls luuuuurve regulations--the more the better.
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Basically, a borrower should start multiple loan applications. The cards are stacked against them. Since a borrow has no access to information, causing lenders to do unnecessary paperwork is the only protection.

Not only would that be expensive, (appraisal fees,) but it would gum up the system even worse if everyone did it. The answer is everyone being realistic about timing, including the lender. There are reasons why buying/selling a house take time. It is not a small transaction unworthy of proper consideration.

IP
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(Loves my clients, *HATES* the mortgage industry!)

I am glad to hear that I am not the only one who dislikes the mortgage industry.
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New Home Appraisal Rules Cause Chaos

Appraisals are done at the front end of the process. Not appraising will break some deals in a hot market, but it will be early in the process.

We would not have accepted an offer contingent on appraisal. The offer we accepted were from buyers prepared to make up the difference between selling price and appraisal.
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The answer is everyone being realistic about timing, including the lender. There are reasons why buying/selling a house take time. It is not a small transaction unworthy of proper consideration.

Bingo!
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I am glad to hear that I am not the only one who dislikes the mortgage industry.

I can't stand it, either! I'm just 'splaining why it is the way it is.
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Appraisals are done at the front end of the process. Not appraising will break some deals in a hot market, but it will be early in the process.

OK, I give up. Have it your way. The industry needs to straighten up and fly right. Oppressive legislation's got nothing to do with nothing. You, the consumer, are fully in control--or ought to be. After all, you're paying fees! Uh huh.
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OK, I give up. Have it your way. The industry needs to straighten up and fly right. Oppressive legislation's got nothing to do with nothing. You, the consumer, are fully in control--or ought to be. After all, you're paying fees! Uh huh.

Everything in the link referred to issues with appraisals. Appraisals are one of the first steps in the process. It doesn't explain the black hole that occurs after loan approval.
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I can't stand it, either! I'm just 'splaining why it is the way it is.

A problem with text is that you can't read intention. I thought you were defending the current system.
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Appraisals are one of the first steps in the process. It doesn't explain the black hole that occurs after loan approval.

Surely you know better than I. Carry on.
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A problem with text is that you can't read intention. I thought you were defending the current system.

Hell, no. It's a wreck and, guess what, it's not ever going to get any better. You said it yourself, "We need more regulation."
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Why shouldn't they? If they aren't going to be able to fund in a reasonable amount of time, the customer should have the information to seek a loan elsewhere. No lender is the only game in town. The customer is being held hostage with a lack of information.
Heh. You just answered your own question. There is no advantage to them to give the customer an incentive to take their business elsewhere.

Nobody -- NOBODY -- likes to let outsiders peek underneath their kimono.
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Basically, a borrower should start multiple loan applications. The cards are stacked against them. Since a borrow has no access to information, causing lenders to do unnecessary paperwork is the only protection.

CC is right about this and you are wrong.

Go ahead and start multiple applications, and see what kind of service you'll get when 5 lenders realize that 4 of them will go through all the work but won't get the loan. What you'll get is all 5 of them dumping your app to the bottom of the stack.

Just accept the fact that the industry doesn't work the way you wish it worked. Go with the flow. Give them adequate time to process your paperwork, and when that's gone by call them every 2-3 days to ask for a status update. Don't bug them so much that you piss them off, or you'll get an upclose example of slow-walking.

Nobody gets paid until the loan closes. They have all the incentive in the world to get it closed.
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Give them adequate time to process your paperwork, and when that's gone by call them every 2-3 days to ask for a status update. Don't bug them so much that you piss them off, or you'll get an upclose example of slow-walking.

Fortunately, I will never need to apply for another mortgage.

If a borrower starts multiple applications, they wouldn't tell the lender. With the recent significant change in interest rates. It may not be in the lenders interest to issue the loan under the existing terms.

Our buyer received loan approval. We now enter the black box part of the sale. On average loans have been funding in 2 to 3 weeks. We will see if it does or if the previous experience is repeated.

The previous sale was an example of a lender losing track of a loan. Status every couple of days would be reasonable. After the lender misses their funding date by weeks, I expect a clear explanation of what is happening. Just not with the feeling that someone when on vacation and the loan application is on their desk.

What is adequate time? Time for the lock to expire so they can charge a higher interest rate?
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Mortgage servicing can also be a headache.

I received a voice mail that there was a problem with my check. I called, there was no record of why the message was left. The person leaving the message was now on vacation. After multiple calls to their 800 number, they finally found my check. I had reversed the cents on the check, and needed to immediately send a check for $0.63. How much did it cost them for the first person not just leaving a useful message? If I hadn't been persistent in demanding an explanation, they would have charged me $100 for a late payment.
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Go ahead and start multiple applications, and see what kind of service you'll get when 5 lenders realize that 4 of them will go through all the work but won't get the loan. What you'll get is all 5 of them dumping your app to the bottom of the stack.

FYI: All lenders WILL know what's going on because each one will ask what all the credit inquires are for. It's called an LOE (letter of explanation).

To Whom It May Concern:

I've been asked to address the numerous credit inquiries on my credit profile. All credit inquiries were for the purpose of selecting this loan provider and only this loan provider. I inquired about but have applied for no new credit other than this application within the past six months.

[signed under penalty of perjury]
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With the recent significant change in interest rates. It may not be in the lenders interest to issue the loan under the existing terms.

This has nothing to do with anything. If a rate is locked, the lender gains nothing by not funding at that rate.
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I had reversed the cents on the check, and needed to immediately send a check for $0.63. How much did it cost them for the first person not just leaving a useful message?

Under the Privacy Act, the servicing lender cannot leave a detailed messaage that could be intercepted by someone other than yourself.
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Under the Privacy Act, the servicing lender cannot leave a detailed messaage that could be intercepted by someone other than yourself.

Great, they can leave a message that the check is "defective", but can't say because it was filled out incorrectly. I believe you, it just makes my head hurt.
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No, they can't. They can't say anything but call us back.
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No, they can't. They can't say anything but call us back.

So, they had already broke the privacy law by leaving information as to the nature of the problem but refused to leave enough information to fix the problem. This makes perfect sense. They made the situation worse by not entering the information in my file before leaving on vacation.

Waiting for the buyer's mortgage has brought up all of the bad memories associated with mortgages. Remembering brings up all the old emotions. I working on emotionally detaching, but it isn't easy.
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So, they had already broke the privacy law by leaving information as to the nature of the problem but refused to leave enough information to fix the problem.

That's right. They're not allowed to leave a message that might be interpreted by anyone other than the borrower as being in violation of the Privacy Act.

This is the servicing lender's bible for collecting a debt.

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.shtm

Most employees of servicing lenders must be certified as passing a test based on their knowledge of the FDCPA.
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Here's why the collector typically won't leave a detailed message on an answering machine.

THE FAIR DEBT COLLECTION PRACTICES ACT
As amended by Public Law 104-208, 110 Stat. 3009 (Sept. 30, 1996)

§ 805 (b) COMMUNICATION WITH THIRD PARTIES. Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

~ and ~

THE PRIVACY ACT OF 1974, 5 U.S.C. § 552a, As Amended

§ 552a. Records maintained on individuals (b) Conditions of disclosure

No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains, unless disclosure of the record would be--[etc.]

***

I'm working on a short sale and have permission of the debtor to speak with his servicing lender. What I have to go through every time I want to speak with a collector would satisfy Edward Snowden.
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Waiting for the buyer's mortgage has brought up all of the bad memories associated with mortgages. Remembering brings up all the old emotions. I working on emotionally detaching, but it isn't easy.

Work on it! It is generally the case that in finances, the more emotionally comfortable something is the less remunerative it is.

In the case of a mortgage these days, having a big mortgage is a financial no-brainer. A 30-year non-callable loan at a fixed rate of ca. 4%, which you can unilaterally refinance to a lower rate whenever you choose.
It's not that difficult to earn 6%+ inproperly chosen investments (bonds & preferred stocks).

Jumping through the hoops when getting a new mortgage is a pain, but after that you can earn a steady net 2%-3%. Set your payments up with automatic bill-pay, and you never need to fiddle with checks.
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Work on it! It is generally the case that in finances, the more emotionally comfortable something is the less remunerative it is

It has taken the discussion with Catherine to realize how emotional I am regarding mortgages. It is past being reasonable.

In the case of a mortgage these days, having a big mortgage is a financial no-brainer.

When buying a new property or refinancing an existing mortgage and importantly are financially responsible. Unfortunately, I have family members and friends who can hold on to money. The worst example is someone who refinanced to remodel. Remodeling was a dream. She and her SO are hoarders. There was no way remodeling was going to happen. As I predicted, she ran through the money in a couple of years.

I bought my home over 30 years ago. Except for interest on a $100K for regular income tax would be deductible, but that wouldn't make any difference. We frequently pay AMT, and this year will be deep in AMT territory.

If all goes well, we will have cash from our other property in a few weeks. I need to work on investing it wisely. Preferred stocks are new to me, and I am researching.

Set your payments up with automatic bill-pay, and you never need to fiddle with checks.

It is still necessary to verify that payments are properly applied. I know someone who didn't check their bank or mortgage statements until they received a foreclosure notice.

(Yes, I know a number of people who are financially incompetent. Some of which don't understand why I don't take financial advice from them.)
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vkg, this ought to make you feel better as in "it could be worse." Here's a loan challenge I've been working on for two weeks. (Of course, from your vantage point, it looks like nothing's happening on the file.)

http://www.privacytimes.com/fannie-mae.html

Pertinent portion:

After our story broke, and after [syndicated financial columnist Kenneth] Harney inquired about the practice, Fannie Mae Spokeswoman Amy Bonitatibus conceded that its key program, "Desktop Underwriter," had begun scanning credit reports for the term "dispute." But she said Fannie itself wasn't rejecting applications outright. Instead, it was kicking applications back to lenders and requiring them to determine if consumers' disputes were valid.

'Punting' To Creditors

"Fannie Mae's eligibility requirements do not prohibit the delivery of a loan to Fannie Mae where the borrower has disputed information on their credit report. In order to protect borrowers from adverse impacts resulting from inaccurate reporting data, our policy requires the lender to determine and document whether or not the disputed information is accurate and underwrite the borrower's credit accordingly," Bonitatibus said. [...]

Fannie actually adopted the policy late last year [2007]. But it appears that Fannie's only mention of it came in the October 16, 2008 "Release Notes" for Desktop Underwriter Version 7.1, under the section "Miscellaneous," in which it told lenders:

"The following Verification message will be issued on DU Version 7.1 loan casefiles to remind lenders of this requirement: DU identified the following tradeline(s) as disputed by the borrower and did not include the tradeline(s) in the credit risk assessment. The lender must verify the accuracy of the tradeline(s) by determining if it belongs to the borrower and by confirming the accuracy of the payment history. If the tradeline does not belong to the borrower, or the reported payment history is inaccurate, no further action is necessary. If the tradeline does belong to the borrower and the reported payment history is accurate, it must be taken into consideration in the credit risk assessment. To ensure it is considered, the lender may obtain a new credit report with the tradeline no longer reported as disputed and resubmit the loan casefile to DU, or the lender may manually underwrite the loan."

It would all be humorous if it weren't so pathetic.
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vkg, this ought to make you feel better as in "it could be worse." Here's a loan challenge I've been working on for two weeks. (Of course, from your vantage point, it looks like nothing's happening on the file.)

I just don't understand why secrecy is such an issue.
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Hi vkg,

I just don't understand why secrecy is such an issue.

I suspect you might think that what appears to be 'secrecy' is somehow an intentional withholding of available information... it's not. The mortgage industry has an overwhelming sense of internal systemic instability & uncertainty. There are so many vague and ambiguous regulations (real, imagined, pending, or threatened) that require discretionary interpretation, and the complexity is beyond byzantine.

The borrower *wants* to know 'the score'...

The loan officer *wants* to be able to stand tall, with full honest disclosure, and full support of their client...

The Processor, Account reps, and Underwriters *want* to be able to satisfy the requests for information/decision/discretion/timing....

However, because every loan file is 'fingerprint-unique', and in ways that trigger different degrees of uncertainty about different areas of regulation... it is literally impossible to answer these questions faster than on a 'just in time' basis, as the loan deadlines rush forth (and as often as not zoom right past.)

As I said; I *LOVE* my clients... *HATE* the mortgage industry.
(And I am far from alone... though every day there are fewer like me who are sticking it through.)

Dave Donhoff
Leverage Planner
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Well said, Dave.
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The mortgage industry has an overwhelming sense of internal systemic instability & uncertainty. There are so many vague and ambiguous regulations (real, imagined, pending, or threatened) that require discretionary interpretation, and the complexity is beyond byzantine.

Here's what's behind it all. B-U-Y-B-A-C-K-S

http://www.bloomberg.com/news/2010-11-30/banks-in-u-s-resist...
http://www.housingwire.com/news/2012/07/03/growing-threat-le...
http://www.nationalmortgagenews.com/origination/Lenders-Skit...
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We put in a written offer on a FSBO a month ago and had a mortgage approval/commitment/lock @4.0%/.25% points from our credit union in less than a week. Truth in lending: both our FICO scores are 800+, purchase is not contingent on sale of a home, and our down payment is in excess of 20%. Is that why we haven't experienced some of the lending horror stories I'm reading about here?

It blows my mind that people are having such a difficult time with lenders. I would think that with rates at historic lows, affordability and hence, qualifying, would be easier. What am I missing?

PS
Also: appraisal came in above contract purchase price.
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~ both our FICO scores are 800+
~ purchase is not contingent on sale of a home
~ our DTI [debt-to-income ratio] is in the single digits
~ our down payment is in excess of 20%
~ appraisal came in above contract purchase price
~ all the comps are model matches
~ there are no screwy liens against the subject property
~ we're not self-employed and have been at the same job(s) for 20+ years
~ we've been customers of the same bank for 20+ years
~ we have only one account wtih them that contains all our transaction money

What am I missing?


Why, nothing.
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Also: appraisal came in above contract purchase price.

Sounds like the current owners left some money on the table that an agent might have helped them get, if not from you, from another buyer. Depending on how much the appraisal is above the purchase price, they may or may not have come out ahead.

AJ
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"Sounds like the current owners left some money on the table that an agent might have helped them get, if not from you, from another buyer. Depending on how much the appraisal is above the purchase price, they may or may not have come out ahead."

Believe it or not, appraisal came in exactly $1K above purchase price.
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All is going well. I am becoming cautiously optimistic that it will close on time or maybe even early. This is considerably different from my last experience.

The buyer's and our agent are good real estate agents. It has made a difference on how smoothly things are proceeding.
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This is considerably different from my last experience.

One Year Later: Consequences of the Wall Street Reform and Consumer Protection Act of 2010 [a/k/a Dodd-Frank Act]

http://financialservices.house.gov/uploadedfiles/financialse...

The Dodd-Frank Act was signed into law by President Obama on July 21, 2010. Dodd-Frank saddles American business with hundreds of new job-crushing regulations. Spencer Bachus & fellow Republicans warned
against the devastating effects of Dodd-Frank. The one-year anniversary of Dodd-Frank’s enactment seems an appropriate occasion for evaluating the competing claims of the law’s proponents and opponents. The economy’s continued sluggishness – characterized by elevated unemployment levels and constrained credit conditions – calls into serious question the claims made by Democrats that Dodd-Frank would increase entrepreneurial activity and investment, trigger robust economic growth, and increase average Americans’ economic security.

Indeed, the opposite appears to be the case. A pervasive climate of uncertainty about government policies is leading to fewer opportunities and less economic security for American families. Faced with a tsunami of new regulatory mandates from Washington, lenders are reluctant to expand their balance sheets and job creators are deferring plans to purchase inventory and add new employees.

In the meantime...

http://www.zerohedge.com/news/2013-07-11/david-stockman-born...

No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In fact, 120,000 or 62 percent of the June payroll gain consisted of part-time jobs in restaurants, bars, hotels, retail and temp agencies. The average pay check in this segment amounts to barely $20,000 per year, which is a sub-poverty level income for a family of four, and compares to upwards of $50,000 per year for goods producing jobs in the BLS survey.

Measured on an income equivalent basis, then, a majority of the big rebound in the BLS headline number has consisted of “40 percent jobs”. Granted, these fractional jobs do provide a monthly feed to headline stalking HFT algos and the gist for the moronic jobs number guessing game conducted by unemployable Wall Street executives otherwise known as “street economists”. But not by a long shot do they prove that the Fed’s money printing spree is beginning to bear fruit, as claimed by the cheerleading section of the Wall Street Journal shortly after the BLS release.

Indeed, once upon a time financial journalists actually worked for a living by digging for facts, rather than simply re-posting the spin issued by Washington’s various ministries of truth. In this instance, even a modicum of investigation by the WSJ would have revealed that the 2.8 million part-time jobs “created” since June 2009 reflect the rebirth of the very same 2.8 million jobs that were first generated between 2000 and 2007. That this obvious fact has been completely ignored is not surprising. After all, the reigning doctrine in the Keynesian puzzle palace inhabited by officialdom and financial journalists alike, calls for digging and refilling economic holes as the national policy of first resort.

http://meganmcardle.com/2013/07/09/is-the-mba-going-away/

According to the Wall Street Journal, the Thunderbird School of Management is having to sell itself to a for-profit operator after applications tumbled. The Journal is presenting this as an example of the decline-and-fall of the MBA, but I’m not sure that’s actually what’s happening. The Journal calls Thunderbird a top-ranked program, but my recollection from the MBA application process is that Thunderbird was pretty far down there in the rankings, though they did have an international specialization that was attractive to some students.

***

Thanks to the Chrissy and Bwaney Show, the U.S. is becoming, relative to other countries, less competitive and more strangled by regulation.

And all vkg wants to do is sell his house.
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And all vkg wants to do is sell his house.

I am not a he.
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