Thursday, September 3, 2009

House #4 - When House Dream became House Reality -- or Nightmare?

House #2 in Mokelumne Hill became house #4 when it came back on the market with a new clearing agency and listing broker and a new lower price by $87,000... when the email alert came in to my inbox I was sure there was a mistake. So I called Kathy.. and she looked it up and just kind of gasped and said something about that being a crazy price. So I packed up the kid, his friend and the dog and headed back out to the hills. (My son had just got his driver's permit the day before so I let him drive. That was the longest 2 hour drive of my life!) I looked at it again and even though the floorplan was wacky and it had pink walls I decided to make an offer. I bid a little bit lower than asking and surprisingly.. they accepted it! We were so excited!
 After you have a contract, you have to start working many channels at the same time to get to a closed sale. You have inspections and repairs, financing, insurance requirements and working through anything that might come up that is unexpected. We started down that road and everything was going good.  We got inspections and there was some damages like the septic tank had a crushed D box etc. But the bank was very good and agreed to pay for most of the things that were considered essential to make it habitable. At the same time I was working through the financing. I had approval for a loan from the bank who owns the mortgage on my primary house. They like me.. a lot! I sent all the information requested and waited... and then it hit 2 weeks.. so I started calling. Got lots of answers like we are really busy and we need one more piece of documentation and we have moved to a new office and we are on vacation... on and on.. finally we are within a couple of days of closing. And the title company has nothing in the way of documents yet and I keep getting strange answers to questions.

Two (2) days before closing I get an email that this bank has decided that they don't like the appraisal and they can't go through with the loan.

2 days before closing and just 1 week before I incur a late penalty of $300/day for not closing on time from the selling bank. I was flabbergasted! I talked to everyone at that bank and they all said the same thing, we can't help you. On May 1st, 2009 the rules about appraisals changed dramatically in an effort to stem the pressure that appraisors were getting from banks who wanted a certain value to justify the loan. During the housing boom, this happened a lot because everyone was making money! The rules now are pretty bad:
1. The banks can't contact the appraisor directly but through an "agency". This of course has raised the fees.
2. The appraisor has to use comps that are 6 months or younger.
3. The appraisor has to use comps within a mile of the house for sale.
4. And if the bank doesn't like the appraisal they can't ask for a do-over. That is it, finished, done...

After going through 3 failed deals and finally getting through to almost closing the rug was pulled out from under me... I called Kathy and had to tell her and she was in disbelief as well.  I had to take a day and figure out what I was going to do next. The only options available were to pull out of the deal and lose my deposit money or start the financing over with a new company.

The next day I decided to try it one more time and got hold of the local mortgage broker that Kathy recommended. He knew exactly what had happened to me and told me that he couldn't promise a better outcome but he would try. And he did... in about 2 1/2 weeks we had gotten a new bank, a new appraisal and a new loan. This bank like the appraisal, which was exactly the same, and closed the loan. So on June 16th I had a new house! 5 acres of oak trees, wild turkeys, peacocks, deer and the neighbors goats! All mine!
And when I turned on the water... I had a brand new indoor swimming pool!
In the basement bedroom!

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