RealTown's RealTalk

mloves2sellrealty@msn.com writes:

I am in California and my client and I wrote up an offer on an REO property listed on the MLS. My client was required to get cross qualified with the bank. I understand completely and I explained to my client that it would help to get her offer accepted since we are the only offer. She received the approval after 8 days of nagging. However, the lender called and left a message on my voice mail that said if my client does not use her then our offer will be automatically rejected if we are asking for closing costs. I immediately called the lender and informed her that we raised the price of the home to cover the closing costs requested so as not to affect the banks bottom line and that the requirement she is stating was NOT listed in the MLS.

The agent says that he has no control and he has to follow the banks requirements. I then requested a copy of the letter she mentioned on my voice mail and she said it is for in-house purposes only citing that this document has been used for illegal activity. Any ideas where to look for the rules on this one? I know I have seen or heard of collusion somewhere, but I am having a hard time finding a citation. Right now it's the principle of the matter. Taking my clients to look for another house is the easy part, but seeing them mistreated is hard to swallow.

Reg responds:

Assuming the listing agent is representing the bank, there should be disclosures and corresponding addenda disclosing the lender requirements. This could be a RESPA violation if the lender did not disclose this requirement to the listing agent at listing time or possible misrepresentation by the listing agent where this information should have been disclosed to the selling agent before the offer was made (via MLS listing or communicated from the listing agent), and failed to do so.  The listing agent should have made these documents readily available to you prior to submitting the offer. Discuss this with your broker and/or the listing agent’s broker to determine how to proceed as I am not familiar with the laws of California or of your respective MLS. RESPA requires full disclosure by the lender.

I hope you’re able to work it out.

Regards,

Reginald Potts, REALTOR®, ABR, GRI, CHMS, e-PRO

Century 21 Signature Realty, 2800 Buford Road, Suite 204, Richmond, VA  23235
(c) 804-536-1319, (o) 804-330-4222, (f) 866-233-2093
Reg@ReginaldPotts.com,  www.ReginaldPotts.com

"Your Trusted Agent Serving All Your Real Estate Needs!"

‘Move to sell’ writes in part:

I am in California and my client …wrote up an offer on an REO property listed on the MLS. My client was required to get cross qualified with the bank. …the lender called and left a message on my voice mail that said if my client does not use her then our offer will be automatically rejected if we are asking for closing costs.

Any ideas where to look for the rules on this one?

Right now it's the principle of the matter. ….Taking my clients to look for another house is the easy part, but seeing them mistreated is hard to swallow.

Mark Jay comments:

Look no further “Move to Sell” …I’ll provide the rules on this one.  I have a copy of “the rules” right in front of me….  Print out this message and tape these rules to your bathroom mirror so you can see them each day.   Memorize these rules!

THE RULE:

“The Bank will NEVER pay closing costs to one of their competitors.  N-E-V-E-R!  Almost all-- if not ALL of the closing costs are things that the Bank—being a lender—can provide in-house using people that would otherwise just be sitting around because-- in case you haven’t heard yet-- business is slow.  Maybe not slow in the REO area but certainly slow in the loan origination and closing department area.  Banks generate revenue and make money on closing costs!  Getting the loan AND the closing costs on the REO increases the bottom line to the bank.  Yes, I know you “built in” the closing costs.  That doesn’t matter.  Even if you wrote the offer at full list price PLUS the closing costs—it doesn’t matter.  Even if you wrote the offer at full list price plus 2 times the closing costs—it doesn’t matter.  Even if you wrote the offer at 110% of asking PLUS 3 times closing costs—it doesn’t matter.  The Bank will NEVER pay closing costs to one of their competitors.  N-E-V-E-R!    

You WILL use the bank’s closing person, appraiser, and anyone else the bank wants to use.   You’ll use the Bank’s choice of Title Insurance Agency.  You’ll even be agreeing to use the Bank’s choice of Title Insurance Agency for the Mortgagee’s policy.  Every penny of the deal will go to the Bank.  Are we clear on this rule?  ARE WE CLEAR!”    

Oh…I almost forgot—does the bank have a Homeowner’s Insurance Agency as a subsidiary?  If they do then get ready to have your buyer cross sold on using the Bank’s “Independent” Insurance Agency for the Home Owner’s Policy and maybe a discounted Home AND Auto policy.  Your clients DO have a car or two, right?

OK, then….  Now you know the RULES—one of them.  This always has been one of the rules and it always WILL be one of the rules… so get over it.

Now to another rule you mentioned-- “the principle of the matter”.  Here’s the rule on “it’s the principle”

Whenever anyone says ‘it’s not the money, it’s the principle’… it’s always the money.   Memorize THIS rule too….

THE RULE:

“When offered a choice between feeding your ego or feeding your family.  Put your family FIRST-- even if you’re an adult single guy or gal living in your parent’s basement and really don’t need much money.  In other words…Do you REALLY want to kill this deal and spend time and money to find a different property so this Bank-- stuck with an REO that it can sell and your client can buy at the price in the offer-- doesn’t make a profit on providing closing costs services?  Is that the principle?  The only principle that’s served by “doing it all over again” is how stupid you can be….  Do everything twice and get paid once?  How stupid is THAT?  Are we clear on THIS rule?  ARE WE?

Ok, then….

All the closing services will be at the usual high level the Bank provides its customers.  The closing person will be professional and nicely dressed.  The closing room—if it’s at the Bank—and it will be—will be a lot bigger than it has to be.  They’re will be coffee available.  You’ll get your parking ticket validated.  You’ll have a wonderful time!  Your seller will get the property, the Bank will make money, the Loan Officer you’re now resisting will make money, your broker will make money and YOU will make money.  WINNERS all around.  Win, win, win, win, win, win.  It will be a beautiful thing!

…and there’s never a reason to fight a beautiful thing… and certainly not because your client gets closing services and a Fannie/Freddie or other agency loan and mortgage from this lender rather than some other lender.

One more thing…  No matter where you get the mortgage money it will always be light green on one side and dark green on the other.  OK, there won’t be any cash money at the closing….  Conceptually though, the checks will all have the same numbers after the dollar sign no matter what lender’s name is printed on those checks.  Money is fungible.  Your favorite lender and loan officer won’t get the deal but YOU will.  Feed your favorite lender the NEXT deal—unless THAT deal is a Bank REO—trust me—he or she will understand.  Your favorite Loan Originator also has a copy of these rules…  J

…a closing note to the particularly dour and humorless….  I wrote this post using the following rhetorical styles: humor and sarcasm… and I had some fun doing it that way.

Mark Jay, e-Pro

REALTOR and Mortgage Consultant

414-771-7713  Voice

262-853-6001 Voice

Southeast Wisconsin MLS Region

Mark@MarkJayRealty.com