How far can a bank bend commercial lending rules, for their own REOs

[John Adamkewitz]

Hi BP,

Just what the title says. I have 4 reo condos under contract, not a snowballs chance in hell, of being financed conventional. I asked for and received (on Paper) a 3yr lock @4%, with a 25yr AM. in house.

Now were haggling over purchase price. I don't see how this deal could ever get thru Underwriting at their asking price. The 4 units could either be rentals or resold. Offering flexibility for Me.

I guessing that My loss mitigation contact has not spoken with the loan department. I've seen this before and have used it as leverage, but this is a different bank.

Where is this going? What about DSR and other loan criteria in this case?

John

[Mehran K.]

I'm not sure how far banks are willing to bend their own criteria when underwriting their loans. BUT, you should have a good idea of your maximum purchase price (PP), regardless of what the bank is trying to sell the properties for. I know of a bank that operates in Wisconsin (WaterStone) that has their REO's listed wayyy above market value. I believe it's for negotiation tactics.

If the DSCR doesn't meet their general 1.2 criteria, it's probably a bad deal at that price either way.