All Forum Posts by: Patrick Senas

Hi,

So I've started previous discussions on here regarding my dispute with the sellers over the EMD. Essentially I removed all contingencies on day 17 (part of the counter offer from seller) under the impression that my loan was fully funded. The lender told me I was good to go and only minor things were needed from me, i.e. updated paystubs and statements. I was using the rent value the seller advertised to boost my qualifying income. The VA appraiser came in with a lower rent value. The lender led me to believe that he has seen the actual appraisal and we were solid.

Fast forward to today. Since I removed contingencies my EMD was "hot". I told the seller everything and they were working with me as far as timelines. My lender challenged the appraisal 2.5 weeks AFTER I told him to do it and were still waiting on the VA to respond. Were well past the close of escrow date at this point.

We kept escrow open in case I was able to get the loan funded. I worked it out with the seller that when the time came, we either close together or close when they have a new buyer. So they have a new buyer now with multiple offers on the home. They want me to close escrow but put off making the decision on the EMD after they close with the new buyer.

I told them no. I sent them a new cancellation of escrow with the seller returning my EMD to me, minus escrow fees. They came back and told me if I don't sign their cancellation of escrow with their terms then they will come after me and sue me for damages. I want to close escrow, I'm not trying to hold anything up. I told them I want to make a determination on the EMD now and not after they close with a new buyer. I have nothing to do with their deal. I am willing to negotiate but I feel like they want me to wait so they can stiff me after the fact.

So my question is, can they really come after me? The way the escrow docs are written any disputes we have over the EMD will be hashed out in mediation and arbitration. I'm not trying to block their deal. I've already sent multiple cancellation of escrow over to them. They're trying to delay making a decision until after they close. Should I get a RE lawyer involved or wait until they file an action against me?

Thanks,
Patrick

Hi @Ralph R., well I think it really hinges on how a person views money. I see it as a tool that I can use to benefit me, like growing more wealth for example. Which hopefully will turn into an upgraded lifestyle down the line. If I look at it this way, I'm not so attached to it which enables me to stay level headed. Though that doesn't mean I'm not going to fight tooth and nail to keep it. 

The EMD I put down is actually less than 2% of the purchase price. I originally wanted ~1% but it came down to multiple offers and the seller wanted at least $10k. As far as contingencies, I'm no expert or anything but my agent told me that 17-21 days is the standard for removing contingencies. Granted if I went with 21 days I would have been safe. But it was part of the sellers counter offer. It's a sellers market in my area so I didn't want to push my luck and I just wanted to close a deal.

My biggest mistake out of this whole ordeal ultimately comes down to the team that I chose. My agent is ok but I feel like he could have done more or at least pushed for more protection for a first time homebuyer like myself. The lender I chose was just utter crap. I was baited with the false promises and sweet talk. All I had to go off of was other investors recommendations.

@Chris Mason - Correct me if I'm wrong but don't lenders have to carry various types of insurance in case of instances like this where they were negligent in their duties and cost financial harm to their customer/client. 

@Nick G. - I've already spoken with an attorney regarding my case. So far I've been recommended to threaten the lender with legal actions unless he compensates me for my losses. If not then I would have to take him to small claims court for the $10k EMD.

@Dave Toelkes - Sorry, I didn't mean to sound like an a**. I just wanted to note on here that we didn't just remove it without the lenders consent.

@Chris Mason - I spoke with a different lender and he said the same thing. My lender shouldn't have said anything unless the appraisal has been fully approved. It's not like we were pressuring him to give a definitive answer right away. It's not that big of a deal to ask the seller to extend the contingencies until they do get it finalized or I just walk away. Instead he dug me into a hole. 

I may have to just order a new appraisal using FHA with a new lender to override that VA appraisal. We actually brought in 5 lenders to see if they can salvage the deal. My main concern is how they're calculating DTI. My pay structure is a little different than most 9-5ers.

I work 12 hr shifts. The first 8 are regular pay and the last 4 are 1.5x pay; 4 times a week. So I get OT each day no matter what. That's just CA law. The lender I am talking to right now originally thought that the OT is just extra and not part of my normal income. So now I'm thinking that all of the lenders have been ignoring a third of my pay for the DTI calculations. Hence why I wanted to know the exact numbers they were using for these calcs, yet they won't give me a straight answer. Is it taboo or something to know my own financials?!

AUS results? I'll bring that up with the new lenders to get their take on it. As well as the Freddie Mac's Home Possible program. You're the first to mention those. 

I wish I knew how horrible BBMC was before I went with them. That person came highly recommended from a few BP members so I figured why not give it a chance. His track record on LinkedIn looked clean as well. I guess you don't really know until the worst happens.

I'm sorry but who in their right mind would lend a TENANT, a convict at that, such an obscene amount of money. Psh I couldn't even get my family to lend me that much without a full contract written up and collateral. Did they use that as a down payment for another home? Since they're claiming that the landlord agreed to rent their property. This whole story is just crazy. 

Lawyer UP!!! Like other's have said, don't even deal with them. If your family member doesn't have the capacity to handle this themselves maybe you can hire a lawyer yourself and deal with the situation remotely. 

@Kevin Phu @Melvin List @Wilson L. @Russell Brazil @Nick G. @Dave Toelkes

Hi All,

Sorry for being MIA. It's been a hectic 12 days. So here's the breakdown:

1. My original lender, BBMC Mortgage, messed up and didn't catch that the appraised rent value came in $600 lower than what we needed it to be.

2. I told my lender to challenge the appraisal after he informed me of the issue.

3. My agent and broker in a conference call told my lender to challenge the appraisal immediately.

4. I asked the lender last Friday via e-mail if he actually challenged the appraisal... Guess what, he DIDN'T.

After 2 weeks he completely ignored our instructions and didn't even tell us.  So his reasons for not challenging the appraisal, even after we instructed him to are as follows: the rent appraisal is low and the units are vacant.

First off, if he actually looked at the appraisal when he received it he would have known that the unit was vacant and that it came in low. Second, that is the REASON we are telling him to challenge it! Just by challenging the appraisal and getting it fixed will solve the those 2 issues that he is citing! I'm pretty sure there is some other underlying issues with his underwriting that he did not want to disclose because those 2 reasons sound like BS to me. Maybe he underwrote me for a loan that I didn't really qualify for.

Now to address some of your remarks:

 @Russell Brazil - So the VA addendum, as far as I can tell, only protects me if the appraised value is under the purchase price. Unfortunately for me, the appraised value came in $20k above the purchase price.

@Wilson L.@Kevin Phu - I solicited the help of other mortgage brokers to see if they can help and they put together rent comp analysis and validated them with PMs in the area. I also have the most current lease agreements and Schedule E's showing that the units have been renting for the amount that we specified. The issue I am running into now is that the VA appraiser won't even entertain the idea because they are not the primary lender on record. The lender won't even try to challenge it like I've previously mentioned.

@Nick G. - The sellers are aware of the situation and they are trying to help. We are bringing in various lenders to see what they can do to help me out. The big road block is still the VA appraisal. I literally paid down all of my debts. The only one left is a credit card with a minimum payment of $25/mo so it doesn't even make a difference. The gaps too big. I'm not entirely sure what they are using to calculate my DTI though. Each time I ask for the actual numbers they skirt around the question.

@Dave Toelkes - So I have e-mail correspondences between my lender and agent showing that he told my agent that I can remove my contingencies and I will have no issues with the loan getting funded besides termite repairs and showing Section 1 clearance. 3 separate days prior to the removal date, we asked him specifically if we are safe to remove contingencies. We told him that the deposit will go hot after we do. Each time he told us that I am safe to remove them and that we will have no issue closing. He said he has reviewed the appraisal and that everything checked out. He gave us the green light. We wanted to make sure that I can get the loan funded. We wouldn't have removed contingencies without his assurance that everything checked out. So why shouldn't the lender be liable for being negligent. Why should I pay for his mistakes? We have plenty of proof that he didn't even read the appraisal thoroughly.  

David C. I was using a VA loan. The seller was in charge of the termite report and all repairs. We received the updated termite report a couple days ago. Hence why we used it as an exit. I'll bring up that section to my broker when I contact him in the AM to go over a game plan. Thanks for all the advice. I will also be getting in contact with a VA lawyer next business day to provide legal counsel. Possibly with arbitration if it goes that far.

@Account Closed I apologize, the document we are using is the RIPA ver 12/15.