Ask Phyllis!

Loan approval difficulties

Dear Phyllis,
I had been in escrow on a short sale for six months. My agent suggested that I apply for my loan but wait to order the inspector and the appraiser until after the bank approved the sale.  We completed the loan  paperwork and  after five months the bank approved the sale, but stated we had to close by January 25th.  We ordered the appraisal which was done without issue.  I thought we were ready to close but then the lender had a problem with my being in a debt management program.  He kept asking for more and more paperwork, then he wanted to switch who was on the loan.  My real estate agent could not get the short sale timeline extended.  I think my agent was upset because I didn’t use his lender in the first place.  I tried to switch to my agent’s lender, but we only had one week to close the deal. To make a long story short, we weren’t able to close on time and the bank foreclosed on the house.  I am still trying to figure out what went wrong.
Disgruntled home buyer

Dear Disgruntled,
What went wrong is quite simple: you picked a slacker lender.  Your lender had your file for five months: he had ample opportunity to get the income, credit and down payment aspect of your loan approved.  There is absolutely no excuse for him not evaluating your complete credit history in five months.

As far as getting the short sale extended, that is not your real estate agents fault.  The short sale lender communicates with the seller, the seller’s Realtor® and escrow.   They will not communicate with the buyer or their real estate agent.

There are certain time frames in the loan process.  Basically the loan paperwork  needs to be completed as well as an appraisal.  The appraisal is ordered through a third party.  There is no way to get a loan approved and closed in one week; there are too many steps.  Once the loan is approved, loan documents (your contract with the lender) are sent to escrow for your signature, once signed they are returned to the lender for review. Once reviewed your loan is funded and the next business day it records (closes).

I suggest that you apply with a new lender (likely the one your real estate agent recommend).  Once you resolve your credit issues and a obtain a preapproval letter you are ready to once again embark on your home buying journey.

  Phyllis Harb