Lenders – They Don’t Use Logic – Nothing Has Changed…!

Beating your head against the wall feels better sometimes then dealing with them

This is what my old mentor,  Mickey Holland told me when I first started in Real Estate back in 1981.   What he told me then has really held up over the years.

Let me explain.  We are now down to the final stages of a “Short Sale” involving a 1st from Well Fargo Bank and an equityline loan from E-Trade.  This scenerio alone is enough to scare a lot of people away from this deal.   But… after almost 6 months of waiting for approval we have it from both lenders.

The Problems….?

1.  The Title Company has to make sure that the Buyer gets nothing back after the close of escrow.

2.  The Short Sale Approval Letter from E-Trade is a PDF file that is not signed by anyone and is not on a “letter head”.  I wish I could put up a copy here, but it is a letter that only folks involved in the transaction can see.

Why do these two things make me crazy…?

Regarding #1 – if you have ever purchased a home before…. buyers “always” get back some money because the “escrow” people can never zero you out unless they are assured that a deal is going to close on time.  I’ve been in this business for 30 years and there is always some last minute adjustment on the papers which means a Buyer will get some money back after the close of escrow.  IT’S ALMOST ON EVERY DEAL I HAVE DONE SINCE I HAVE BEEN IN THE BUSINESS.

Now I can understand that in the Seller’s case they want to make sure there are no funds going to them because they are taking a payoff for thousands less than what is owed.   But my question would be, why do they insist the Buyer get nothing… when it’s the Buyer’s money..?

Regarding #2 – When talking with the Escrow Officer at the Title Company, she’s prepared to close the deal based upon the unsigned letter that doesn’t have any letter head.

So..?   My question to the new lender is… “Why do you insist on the letter from E-trade be signed when the Title Company is prepared to honor it, close escrow and issue an ALTA Lenders Title Insurance policy showing you, ‘the new lender’, in first position on the new Title Policy…?” The Title Company is, after all, on the hook not the new lender.

Meanwhile, all the loan and escrow papers have been signed since last Tuesday,  April 27th and we can’t seem to get anyone to either sign the letter from E-trade or at least put the letter on some “letter head”.

I bet if you speak with other professionals out there, you will find many more cases of an “over reach” by Lenders in today’s economy that just slow down the process and therefore a quicker recovery.

Make it a great day…!

Ed Favinger, Broker CRS, GRI, SFR              favinger@rwnetwork.com      916-203-1260

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