Q–We need help desperately. Over six weeks ago we submitted our loan application to a local S&L for a $92,000 mortgage. The loan officer helped us fill out the complicated loan application, we submitted copies of our W-2 forms to verify income, and went to our bank to get checking and savings account verifications. We were told the appraisal would take about six weeks. Yesterday the loan officer phoned me to say our loan had been ”declined”
because (1) I am classified as a ”temporary” employee, although I have worked at the same job over three years, and (2) about 25 percent of my husband`s income is from a year-end bonus (which has increased each year for the last six years). Neither my husband nor myself will accept a rejection after waiting over six weeks. What can we do to fight this nasty S&L to get the loan we need?
A–Congratulations on not letting the mortgage lender push you around. Every rule has its exceptions and if you fight hard and long enough, you`ll get your loan. There is no valid reason for a loan officer assuring you everything was okay and then reversing his position six weeks later.
If necessary, insist on talking to the president of the S&L to get him to approve your loan. And don`t hesitate to complain in writing to the nearest office of the Federal Home Loan Bank Board or the state agency regulating that S&L.
The best lenders now approve mortgages within a week, contingent upon a satisfactory appraisal of the property. That way the borrower doesn`t waste time waiting for a loan that will be rejected.
In the 11 years I`ve been writing this real estate column, never before have I heard and received so many complaints about dishonest lending procedures. There is plenty of mortgage money available but many lenders aren`t prepared for the tremendous loan volume and some are handling it very poorly. However, I hasten to add there are many excellent lenders doing a fine job so borrowers shouldn`t be discouraged.
Q–Like many potential home buyers, my husband and I are amazed at the recent rise in home prices in our area. We have been looking for a home to buy since January. I estimate prices in the good neighborhoods where we want to buy have risen at least 10 percent this year. But I have heard of ”distress property” which can be bought cheaply. Since my husband loves to do carpentry work and works for a builder, how can we buy one of these fixer-upper houses? A–In my opinion distress property, such as foreclosures, IRS tax seizure sales, sheriff`s sales, tax deed sales, and repossessed properties, are today`s best bargains. But it takes work to find and track down these properties that can be bought at wholesale prices.
The last one I bought was a boarded up house I spotted as I drove by. I jotted down the address, checked the county ownership records to learn it was owned by a S&L that forclosed on it seven months earlier, and made them an offer to buy it if the S&L would finance my purchase. They said yes. I spent about $10,000 fixing it up but now it is a first-class home which cost me at least $30,000 less than market value.
There are many ways to find distress properties. In some cities there are distress property newsletters or legal newspapers which publish notices of default and foreclosure sales. In other areas, you have to go to the county office where such notices are recorded. When you learn about a distress property, then contact the owner to see if the property is for sale. Surprisingly, most distress property is not listed with realty agents so you must do your own profitable research.
Q–We have signed a contract to sell our house. The closing is to be at the end of the month. My question is how much time after the closing do I have to move out?
A–Well-written real estate sales contracts specify when title and possession are to transfer to the new owner. When I buy a property, I specify title and possession are to change at the same time. But sometimes the seller wants to stay for an additional week or so. Then I provide for daily rent, such as $50 per day, with the rent to be paid to me at the closing. However, if nothing is said in the sales contract about change of possession, the seller should move out by the day the sale closes. Consult your attorney for more details.
Q–We are trying to refinance our home. But the lender is not satisfied with a copy of my husband`s W-2 form and wants a copy of our income tax returns. Although my husband works for his father`s company, he has no ownership in the company. We don`t like the idea of having our income tax returns in a loan file. Is the requirement legal requiring us to submit our income tax returns?
A–Most mortgage lenders require self-employed loan applicants to submit copies of their income tax returns because it is the most accurate way to verify income. A few lenders require all applicants to submit their income tax returns because it is too easy to submit phoney W-2 forms.
I share your resentment of being asked for copies of income tax returns with loan applications but if I want the loan, I`ve learned I must provide that information. As for the legality of requiring tax returns, since it`s not illegal, it must be legal. Consult your attorney for more details.
