Real Estate Lessons from Lisa Orme, Realtor®

Are Big Banks Getting Too Bossy??

Jumping through Hoops for Mortgages!

Are big banks getting too bossy?? You bet they are!

Since When Does the LENDER Decide on the Contract Terms?  That's supposed to be between the Buyer and the Seller.

Just when I think I've seen everything the banks could do to make the buyers jump through a few more hoops, I am amazed to find something new.

Now I'm not talking about property repairs or closing cost concessions which could affect value and the bank's potential interest in the property.

My seller's listing is under deposit and the buyer's loan commitment with a "big bank" lender came through with 34 conditions to the approval....yep, 34!

And that was AFTER delays with the lender which had already required two extensions...

This is not just the buyer's fault as far as we can ascertain. Only five of the conditions were "Buyer to provide...."  Six of the conditions had to do with details on the appraisal. (If there are that many problems with the appraisal, maybe they should have just gotten another one!) And sixteen of them were specific items that the loan officer or underwriter still had to verify or obtain (not from the buyer) in order to complete the file. (Why these weren't done before it was sent to underwriting, I can only imagine!)

Of the remaining 12 conditions, many were fairly standard, like "All borrowers must complete, sign and date an IRS form 4506-T at closing" and "No secondary (subordinate) financing is permitted".

But here's the one that really got me wondering "WHAT is going on??".  It seemed fairly reasonable and inocuous ... "All pages to contract of sale for subject property to be initialed where applicable by all applicable parties."

What the bank has required, however, is that the buyer go back to the original contract and initial that they WAIVED their 10-day statuatory right to conduct a lead-based paint inspection. Yes, you read that right. The federal government gives a buyer, by law, 10 days to conduct an inspection, and the bank wants to force the buyer to waive that right. Isn't that somehow illegal?

The truth is, the buyer did NOT waive their right to conduct the inspection. While they chose not to have the test actually performed during the ten day period, they had still retained their right to do so. 

Regardless, the lender is requiring the Buyer to initial that they WAIVE their right to the inspection and therefore they are requiring the Seller to initial acknowledgement of the Buyer's waiver.

Now I realize this particular item doesn't have any great impact on the buyer (this time), as they had allowed the statuatory period to lapse without doing any testing. And it doesn't really impact the seller after the fact either. Except that it is HIGHLY INCONVENIENT upon all parties to have to arrange to get these papers re-signed. 

But more problematic to me is the idea that the bank is coming in after the fact to require that an agreed upon contract between the buyer and the seller be changed.  What is next?

We all know that the lending environment has been less consumer-friendly of late, and while minimum credit scores are rising, the lending process continues to get tougher. But I think the Big Banks are just getting too Bossy!

Has anyone else had the lender force a buyer to waive their rights to inspection? 

 

Photo courtesy of Mike Souza via flickr.com, Creative Commons license.

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Serving the North Central Connecticut region, Hartford County, and the communities of Windsor, Bloomfield, Hartford, East Hartford, South Windsor, Manchester, Windsor Locks, Suffield, Enfield, East Windsor, Somers and the Granbys...

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Licensed in the State of Connecticut, ABR, CRS, GRI, PSCS, SFR, Notary Public, Lic. #REB.755648

 Broker/Owner of The Master's Key Realty LLC, 340 Broad Street, #320, Windsor, Connecticut 06095

To contact Lisa, call 860-688-1400 or send an e-mail to lisa@masterskeyrealty.com

Copyright, Lisa Orme, 2010.  All rights reserved.

Comment balloon 9 commentsLisa Orme • February 21 2011 09:45PM
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