How Many Ways can Lenders Prevent a Closing?

How Many Ways can Lenders Prevent a Closing?

It’s a rhetorical question. I do not want to know. I am certain that the answer is a number way larger than I care to think about.

However, I did just find one more answer to add to my list of personal experiences.

We have a buyer for a flip who is very qualified; high credit scores, plenty to put down, good job.

Well, the closing took longer than promised (no real surprise today) and our buyer had to be out of the rental he was in. As we were scheduled to close any day (we had passed the first date because of “lender error”) we let the buyer move in and he is paying us a daily amount until we close.

The property itself also passed qualification with flying colors; passed inspection, appraisal came in high (we sell below market value to keep our properties moving).

So here’s the rub, the warning and the frustration.

His lender is Wells Fargo. The day before their scheduled closing, we inquired about the HUD1. At this point, we find out that a processor at Wells Fargo had forgotten to submit a form. About a week later, Wells asks for another form from our buyer. He put down on the form that the new property is his current address as he had moved in 48 hours earlier.

That’s when we got hit with it… New rule: anyone living in a property must live there for 6 months before they can get a loan.

What???

We’ve had lease option tenants convert to owning within four months in the past.

Smacked in the face with another new regulation. And again I ask, “for what?” What sense does that make? What difference does it make? Both the buyer and the property had qualified through the lender, now the lender actually wants to disqualify them?

We now have to wait six months and start the process over. So, does our buyer still get the $8000 tax credit? Not if he closes after June 31st! And no fault of his. He has done everything right.

We do everything we know to do. We bought and renovated a property that had been allowed to go into disrepair and to foreclosure. The neighbors were thrilled. A realtor brings us a highly motivated and qualified buyer who absolutely fell in love with the home.

We all filled out every required form and jumped through all the hoops set before us. Low and behold, a new hoop. And for what?

We’re out there struggling to do what we can for the economy and it seems that the lending institutions and regulators just keep putting ceilings on all our best efforts.

How many ways can lenders prevent a closing? Too many and counting.

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6 Comments

  1. I agree, Gary, and I’m hearing more stories than ever from Realtors about lender “interference”.

    Thanks for the comment.

  2. Hi Karen,

    Hope you and Jim are doing great!

    I loved you article. I think all Realtors have a story or two about how lenders and the government screw it up and make it more and more difficult to sell a home.

    Take care,
    Gary

  3. Wells is an obvious problem. Lenders do, however, all use the same guidelines but they are able to choose which ones they more strongly enforce.

    It’s just getting constantly harder to work with lenders which is why we try so hard not to!

  4. I’ve noticed several issues with Wells-Fargo. Too many anecdotal stories about them delaying/preventing closings to qualified people. I wonder how effective it would be to avoid buyers (or sellers, for that matter!) who are depending on Wells-Fargo.

  5. Regulations are making it so hard on buyers and sellers.
    We’re trying to remain patient and just keep moving forward, one step at a time.

  6. OMG, this is soooo frustating! I’m also having a really hard time trying to sell one of our properties to a qualified buyer…I just can’t see the point with delaying the process if the buyer has been approved and everything is in place. Let’s take a deep breath and keep hoping for no more requirements!!
    Thanks for the post!
    We will sell our properties soon!!

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