Mortgage Blog

Some stories for the failed purchase loans

July 1st, 2009 9:57 PM by Eric Fang

I have the following purchase loan failed in the last a few months. I hope the
first time home buyers can avoid the errors.

1)REO. The property purchased at 400k with solar system and a lot of upgrades.But the appraisal report valueis only 355k, even though after endless dispute. And the seller does not wantto lower the price, so he buyer backed out.

Lesson: The upgrades may add "value" to the home for the current owner.
But the appraisal value may not reflect those upgrades. You can purchase those properties if you can make more down payment.

2)Short Sale. Borrowers purchased the property from divorced couples.
The loan completed, but the sellers are busy with their divorce cases, no
one is willing to sign the closing docs.

Lesson: Make sure the seller can sign the closing docs. Try not to buy the short sale with 2 lenders or divoced couples.

3)REO. There is a crack on the wall. The buyers are not comfotable with the
inspection report nad not sure whether the foundation will have the problem
in the future.

Lesson: If you can see visible potential foundation problem, unless it's worth
the hassle, forget it and try to get the next house.

4)Regular Sale. The owner was on the title for only a few weeks. They got it
very cheap from auction and flipped to sell to the buyer. The loans failed with a couple of lenders until one portfolio lender took it with higher rate.

Lesson: Fannie Mae andFreddie Machas the guideline that they will not purchase the loan if the current owner stayed on the title for less than 90 days. So wholesale lenders will not take this loan. You can not get the best rates for this kind of purchase since you have only limited options.

Posted in:General
Posted by Eric Fang on July 1st, 2009 9:57 PM



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