Real Estate Problem

The sudden halt of operations by some mortgage lenders have left many home buyers out in the dry: Some have forfeited their earnest money deposit; some are compelled to resolve the matter in court.

The mortgage industry crisis has grown to be so serious that home buyers and real estate agents should take the following precautionary measures to avoid any devastating outcome that could emerge as a result of the home buyer’s inability to secure financing:

If you are the home buyer:

1) You should utilize the services of a mortgage broker and insist that the loan be locked with two or even three different lenders.

2) You should not remove the loan contingency. In today’s unstable mortgage industry anything can go wrong with your loan application - even after it’s been approved and the deal has been funded. You can never be too careful. Insist on an extension of time for your loan contingency until the transaction is completed. Prepare to walk away from the deal if the seller does not accept your extension request.

3) Ask your broker to provide a copy of the loan approval issued by the lender.

4) Review the conditions set forth in the approval with your broker and submit the requested information and/or documents to the lender as soon as possible.

If you are the buyer’s agent:

1) Advise your client to utilize the services of a mortgage broker and lock the loan with at least two different lenders.

2) Obtain a copy of the approval and follow up with your client and his or her mortgage broker to make sure that conditions are met.

3) Recommend your client not to remove the loan contingency until the deal is funded and closed.

If you are the listing agent:

1) Ask the buyer’s agent to provide a copy of the loan approval.

2) Communicate with the buyer’s agent and buyer to make sure that the requested information and/or documents are being submitted to the lender.

3) Communicate with the buyer’s broker or lender to make sure that the buyer has met the lender’s conditions.

4) If contingencies are not removed prior to an agreed upon date, give a written Notice to Buyer to Perform.

This entry was posted on Monday, August 20th, 2007 at 1:12 am and is filed under Buying a Home, Selling a Home. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.