All Forum Posts by: Tony T.

My wife and I are splitting up and she has a contract for a 2-unit where she will move in one and rent the other. The lender put her through the rigorous application process and suddenly the loan officer is telling her that he JUST discovered that the guidelines require her to put 15% down instead of the 5%.

I'm pretty sure that's false, but I want an official reference (on the web) to show him it's false (unless it's not). Thank you in advance!

Yes, I know that now (about spending money with a short sale), but didn't know it before. According to my agent the contract was legal grounds to move forward with spending money, but that turned out to be false. :-(

The line of credit was obtain to purchase this very unique house at a low price. We are not looking to move at all; we just thought that this home was so unique and at such a good price, we'd move to get it. We are not looking for a residence; ours is outstanding. so the LOC was opened solely for this one home unfortuntaely.

Thanks for all of your replies everyone. I know very little about short sales, so I really needed some info to start with.

To clean up some ither info:
* The property was indeed pre-approved for short sale,
* The selling agent got a verbal approval from the bank for my offer,
* The $2500 I spent on financing can't be re-used: I am not investing in R/E; we were moving into this home as a residence ...I'm not in the market for REO properties. I am set for life with my 12-unit.

It sounds like the main problems are:
1.) My agent and/or the selling agent should have had something in writing in order to tell me the closing was "a done deal;"
2.) My agent should have been in contact with the foreclosing attorney to be sure it wasn't going to occur.

Unfortunately, I know almost nothing about short sales. I relied on my agent to not only to get the property for me but to advise me on how certain it was that we were getting the property.

I instictively asked my agent for something in writing from the bank just for my own protection and was told by ny agent that typically nothing is given in writing for a short sale. I have found out on this forum that something in writing is indeed given for short sales.

I know from some of your perspectives I look foolish for putting money into applainces and $2500 of financing fees, but since I don't have the experience you all have, I relied on the expertise of my agent who advised me that the deal was an absolute done deal (4-5 times). This is what really upsets me; I was advised in a way that caused me to lose several thousands of dollars.

Jon: Thank you for your input:

I spent $2500 getting a commercial line of creidt on my 12-unit to pay cash for the house ...the appraisal alone is $2000 on a commercial property. The high end appliances were purchased on craigslist (no returns).

There was only one lien on the house (one bank).

So far, It seems that my agent failed by not requiring anyhting in writing from the bank. He also should have know the consequenses of a sheriffs sale.

The other agent also told him that the bank fully approved the short sale; perhaps that's inappropriate too?

Great info ...thanks.

I begged and begged my agent to get something in writing from the bank and he kept saying "it's a done deal" and he also told me that banks dont give anything in writing for a short sale when I'd request it.

This actually was scheduled for a sheriff's sale for Oct. 18th which we knew the whole time. The contract was signed on Sept. 5th and settlement in 45 days, so we never thought it would get to sheriff's sale.

As the sheriff's sale approached, it was just assumed that the bank would be bidding on it to retain poseesion and they prepared for my closing. So is this where Freeddie Mac took control of it?

My agent called the selling agent continually at my request, but got very slow responses with little content.

One last thing: My agent was told that the owners were filing bankruptcy before the sheriff's sale and the day before the sheriff's sale my agent said he was getting nervous since he never got verificatio0n that the papers had been filed.

I'm in PA by the way.

I made a cash offer on a house that was listed as a short sale with settlement within 45 days. My agent told me that the seller's agent told him that the bank approved the offer. We then signed a contract for sale with the buyers and all title work was completed and ready to go.

While waiting for the bank to close, my agent got a call from a new agent saying that he now represents the house and Freddie Mac took over the house and my contract isn't going to be honored.

WHAT? I spent over $2500 on getting financing in place and another $1000 on appliances based on the info that the original selling agent told my agent that the bank approved the short sale.

I don't know enough about short sales (very little actually) to know if someone acted inappropriately or fraudulently. I would like to get my losses back. The new agent representing Freddy Mac said that he thinks the bank never really did fully approve the short sale.

I don't know where to start as to finding who is at fault here. I would think that the original seller's agent telling my agent that the bank approved the short sale is where the fraud is.

Any advise or help is very appreciated.

Move into your 1st rehab as your residence. Living there will let you take your time and learn/research all the things you'd need to know. If you live there 2 years, then selling will ALSO give you profits that are totally tax free!

You should be able to purchase another rehab while in your residence since you've improved the appraisal dramatically (if you made a good pick).

OK, after the bank sent me the spreadsheet, found "Income" to be calculated:

Income (Sch. E line 22) + Depreciation + Taxes + Insurance + Interest - P&I - Taxes - Insurance.

Another way to put it: Income + Depreciation - Principle.

The bank I am applying to also adds 1-time major repairs back in.

Now my problem is that the bank is re-using my 12-unit when calculating the DTI ratio! Can someone verify that it is not to be used when calculating DTI since it has already been subtracted out when calculating my income? I can't convince the woman taking my application that it is NOT to be used. How should I handle this? I do need advice. Thank you everyone.

Question: What are the exact calculations a bank makes for a traditional mortgage (Fannie/Freddie) for a refi of my non-occupied duplex if my only income is a 12-unit rental property (plus the duplex)?

The bank told me I can go as high as a 45% DTI ratio but I did not qualify! This seems hard to swallow since I have no personal debt with an 800+ credit score and no mortgage on my residence!

I have heard that income would be the taxable amount on schedule E (line 22) + depreciation, but if that's true, I would have qualified. I have 10+ years of schedule E's, so the bank used them.

12-Unit Schedule E Details (with line #s):
3.) 91,521 - Rents
5.) 58 - Advertising
6.) 5559 - Auto
7.) 3966 - Cleaning
9.) 1490 - Insurance
10.) 29 - Legal
12.)35,313 - Interest
14.) 8979 - Repairs
16.) 7766 - Taxes
17.) 9184 - Utils
19.)72,344 - Add Lines 5 thru 18
20.)14,554 - Depreciation
21.)86,898 - Total Expenses
22.) 4623 - Income
NOTE: P&I on this loan was $3103 last year but I just refi'd and is now $2590.

Duplex Details for the desired Refi (value = $175,000):
1515 - Monthly Rents (in current leases)

620 - New P&I payment on $117,000 @ 4.875%/30yr/0 points
145 - Monthly Taxes
45 - Monthly Insurance
-------------------------
810 - Monthly Obligation for the Subject Property

Can someone tell me what the calculations are to qualify me?

I found an old post by David Beard (thank you) stating:
Income = Taxable Income + Depreciation + Interest - (Principle & Interest).
Mine would be: 4623 + 14,554 + 35,313 - 37,236 = $17,254.

So if $17,254 ($1438/month) is the Income from the 12-unit and the refi'd duplex adds $1515 in rents, isn't my monthly income $2998? ...the $810 monthly obligation for the duplex is only a 27% DTI (810/2998)?

Is the above formula for a Freddie/Fannie loan correct or did the bank make a mistake? If the formula IS correct, I'm wondering if the bank mistakenly added the 12-unit's monthly obligation into the DTI ratio when if fact it had already been subtracted when calculating income?

Any insight is highly appreciated! -Tony