Editors Note: Written November 5th, 2010
So the roller coaster continues on this house purchase, but we're at the bottom of the slide this time. Just got a note from my real estate agent that we got a fax from the bank saying that they are cancelling the deal because they couldn't deliver a clear title...
What the hell. Are they only doing this for legal reasons so I can't sue them, or are they really cancelling the deal? No one seems to know... So now I've done all the hard work for them, I found the person at the state who seized the property and talked him into agreeing to release the property, and they are going to sell the place to someone else? Seriously?
This whole process is an emotional roller coaster, even more so than the usual buying or selling of a house, so don't get into this lightly... it is not for the faint of heart...
Monday, March 14, 2011
"We'd love to sell you the house, but we don't own it"
Editors Note: Written October 29th, 2010
So yeah, the title kind of says it all. The bank was dragging their feet on sending us a fully executed contract of sale and we couldn't figure out why. At the same time they were posturing saying if we couldn't close by the due date, then the deal was off, while not allowing us to turn on services to do a proper inspection, and all in all being a bunch of tools... Dealing with banks, not my favorite practice...
The house was apparently seized by the state for illegal activity, something about drugs and money laundering... Given that it is right across the street from the high school I can see the thought process of tapping into that market, but clearly it didn't work out as well as the owner had hoped. The bank fears that the state seizing the property means that they don't own it anymore, the state does.
So now what? Apparently nothing, the bank is not going to do anything, the title company has done their jobs and moved on, so its up to me to figure out how to get er done...
Went to the states web site, and if I had to do it again I wouldn't be able to figure out how I did this, and found a listing for all of the departments and their phone numbers in the state of new Jersey. There are literally thousands of phone numbers on this list... after about half an hour of trolling down the list I call some likely candidates and pray.. mostly voicemail.
Next morning I am shocked when someone calls me back. Sorry if you work for the government, but lets face it, you guys don't have the best track record for customer service... Anyways, this particular person was very helpful, as while she was not the right department she eventually figured out where I should call.
Now comes the waiting game, and the calling game. I'm particularly persistent and annoying, so I have been calling this person, on both phone numbers that I have, every hour on the hour until I get something other than voicemail, pray for me...:)
So yeah, the title kind of says it all. The bank was dragging their feet on sending us a fully executed contract of sale and we couldn't figure out why. At the same time they were posturing saying if we couldn't close by the due date, then the deal was off, while not allowing us to turn on services to do a proper inspection, and all in all being a bunch of tools... Dealing with banks, not my favorite practice...
The house was apparently seized by the state for illegal activity, something about drugs and money laundering... Given that it is right across the street from the high school I can see the thought process of tapping into that market, but clearly it didn't work out as well as the owner had hoped. The bank fears that the state seizing the property means that they don't own it anymore, the state does.
So now what? Apparently nothing, the bank is not going to do anything, the title company has done their jobs and moved on, so its up to me to figure out how to get er done...
Went to the states web site, and if I had to do it again I wouldn't be able to figure out how I did this, and found a listing for all of the departments and their phone numbers in the state of new Jersey. There are literally thousands of phone numbers on this list... after about half an hour of trolling down the list I call some likely candidates and pray.. mostly voicemail.
Next morning I am shocked when someone calls me back. Sorry if you work for the government, but lets face it, you guys don't have the best track record for customer service... Anyways, this particular person was very helpful, as while she was not the right department she eventually figured out where I should call.
Now comes the waiting game, and the calling game. I'm particularly persistent and annoying, so I have been calling this person, on both phone numbers that I have, every hour on the hour until I get something other than voicemail, pray for me...:)
Various 203k learnings.
Editors Note: Written October 12th, 2010
I will probably update this as we go along the process, but figured I would try and combine them all together in one post for those looking to undertake this for the first time.
1. Get a good bank rep. We used Sean Thompson of Wells Fargo, and he made a somewhat daunting task seem easy. He's since moved on to prospect mortgages, but we stayed with Wells, one of the reasons I picked him off the internet was that he was from a "real" bank. You have to understand that in Canada, there are only 4 banks, its not regulated (I don;t think) we just dont do mom and pop banks in Canada...
2. Know the difference between a streamlined and regular 203k. In reality they take as much time to close, so there is no real difference between them. The one thing is with a regular one you need a hud inspection which costs 600$ (depending on how much you plan on spending, they have fixed rates so from 35-50k its 600$). If you do this instead of a home inspection (they will find similar things but you can't sue them) you will be out 200$ more.
- Streamline: Limit is 35k, you can't borrow any more without getting into the regular program.
- Regular: No limit up to appraised value of the property after improvements. Requires a hud consultant and their fees are fixed and mandated by the government so find one you like.
3. You can finance mortgage payments. This was huge for us, I was tossing and turning for a couple of nights before I asked Sean and he confirmed that if the work is not done in a timely manner, you can finance a mortgage payment or two. Now what this means is you are losing money available to you to renovate, you are NOT deferring your mortgage payment. Also due to interest, you will end up paying 2X the amount of each payment, so you obviously don't want to do it forever.
4. They are really picky... they will find stuff that you would just walk past like the fact that the lock in one of the bedrooms was missing from the window. I mean ok, I'd fix that on a weekend project, but it will be required to be fixed before you move in. Don't think you can buy a house as a fixer upper project and do it under the 203k program, as they will require you fix everything before moving in.
5. You can't do most of the work yourself. Unless you are a licensed contractor, plumber, electrician, you can't do any of the work yourself. You could paint, but you will still have to keep the budgetted amount for paint in the loan until complete, just in case you suck and someone else has to do it for you.
I will probably update this as we go along the process, but figured I would try and combine them all together in one post for those looking to undertake this for the first time.
1. Get a good bank rep. We used Sean Thompson of Wells Fargo, and he made a somewhat daunting task seem easy. He's since moved on to prospect mortgages, but we stayed with Wells, one of the reasons I picked him off the internet was that he was from a "real" bank. You have to understand that in Canada, there are only 4 banks, its not regulated (I don;t think) we just dont do mom and pop banks in Canada...
2. Know the difference between a streamlined and regular 203k. In reality they take as much time to close, so there is no real difference between them. The one thing is with a regular one you need a hud inspection which costs 600$ (depending on how much you plan on spending, they have fixed rates so from 35-50k its 600$). If you do this instead of a home inspection (they will find similar things but you can't sue them) you will be out 200$ more.
- Streamline: Limit is 35k, you can't borrow any more without getting into the regular program.
- Regular: No limit up to appraised value of the property after improvements. Requires a hud consultant and their fees are fixed and mandated by the government so find one you like.
3. You can finance mortgage payments. This was huge for us, I was tossing and turning for a couple of nights before I asked Sean and he confirmed that if the work is not done in a timely manner, you can finance a mortgage payment or two. Now what this means is you are losing money available to you to renovate, you are NOT deferring your mortgage payment. Also due to interest, you will end up paying 2X the amount of each payment, so you obviously don't want to do it forever.
4. They are really picky... they will find stuff that you would just walk past like the fact that the lock in one of the bedrooms was missing from the window. I mean ok, I'd fix that on a weekend project, but it will be required to be fixed before you move in. Don't think you can buy a house as a fixer upper project and do it under the 203k program, as they will require you fix everything before moving in.
5. You can't do most of the work yourself. Unless you are a licensed contractor, plumber, electrician, you can't do any of the work yourself. You could paint, but you will still have to keep the budgetted amount for paint in the loan until complete, just in case you suck and someone else has to do it for you.
The continuing saga of closing a bank owned property
Editors Note: Written October 12th, 2010
Since its bank owned, and no one lives there they take precautions that otherwise would be bizar for a home owner... such as turning off the water, gas, pulling the electrical meter, draining and covering the pool...
Now they don't just turn them off in the house, no thats too easy and someone could turn them on, turn on a tap and flood the house (or open the stove valve and blow the house up) they have the service provider turn them off. This makes house inspections impossible, well not impossible, but basically useless.
Turning the services back on is a challenge because you don't own the property yet... if your agent is creative like mine is, you can get most of them turned on... water will be on tomorrow, and gas later this week. Electrical is more complicated because they pulled the meter and didn't simply turn it off from the street, so we have no idea when that will happen.
The HUD inspection is complete, we have our estimate and it puts us outside of the streamlined 203k program. But since we had a hud inspector come through instead of a home inspector (they are often able to accomplish both, so if you are in line to do something similar make an agreement with your inspector for a discount to get both done) we were in a position that the bank didn't care if it was streamlined or not, it really came down to what we could afford. Now I am waiting to hear back from 3 contractors that were recommended to us, to see who can do the work in the timeframe we want, and at what cost...
Since its bank owned, and no one lives there they take precautions that otherwise would be bizar for a home owner... such as turning off the water, gas, pulling the electrical meter, draining and covering the pool...
Now they don't just turn them off in the house, no thats too easy and someone could turn them on, turn on a tap and flood the house (or open the stove valve and blow the house up) they have the service provider turn them off. This makes house inspections impossible, well not impossible, but basically useless.
Turning the services back on is a challenge because you don't own the property yet... if your agent is creative like mine is, you can get most of them turned on... water will be on tomorrow, and gas later this week. Electrical is more complicated because they pulled the meter and didn't simply turn it off from the street, so we have no idea when that will happen.
The HUD inspection is complete, we have our estimate and it puts us outside of the streamlined 203k program. But since we had a hud inspector come through instead of a home inspector (they are often able to accomplish both, so if you are in line to do something similar make an agreement with your inspector for a discount to get both done) we were in a position that the bank didn't care if it was streamlined or not, it really came down to what we could afford. Now I am waiting to hear back from 3 contractors that were recommended to us, to see who can do the work in the timeframe we want, and at what cost...
203k mortgage process and purchasing a house
Editors Note: This was originall written September 19th, 2010
So we found a place, put in an offer and now are in the process of closing the deal... what is involved in this.. well...
1. Make an offer. If a bank owns the house, expect it to take 2-4 weeks for them to get back to you, this was weird for us where we make an offer and give the seller 7 days to come back, not a month...
2. Get it approved by the seller, if this is a bank, then expect the counter signature to take a week
3. Once its all signed, your not safe. Next is going to the lawyer to ensure that you are protected by the offer, in the case we are talking about, this is especially important. until you are out of attorney review, someone can make a higher offer and steal the place from you, so while you want to make sure you are diligent, you need to MOVE.
4. Once the attorneys are happy (ie they earn their money) you have to get a building inspection done. In the case of a 203k mortgage you also need to have someone come in and give you estimates of what it would take to resolve whatever the building inspector finds at fault. You can actually do both at once with a HUD inspector who is also a licensed building inspector. The goal in selecting a building inspector or contractor would be someone who has done FHA before, as they will know what they are dealing with. Sean Thompson our mortgage broker from Wells Fargo was able to point us in the right direction.
5. The building inspector is about the only security blanket you have in NJ, its buyer beware down here, except that if you have someone come in and do a building inspection (someone licensed...) you can sue them for up to 10 years after the purchase if they missed something, this makes all of them VERY detail oriented. If you forego this, and go with a HUD consultant, you are running a risk. In our case we had no choice because all of the main areas of concern (Plumbing, electrical, gas) were disabled and would not have been possible to inspect them anyways.
6. FHA appraiser comes by. Most times you will not be present, if you are worried or want to pitch your case you can discuss with the appraiser but by law your bank rep doesn't know who it is, and your agent can have limited contact with this person. Its a federal program, so don't expect much in the way of negotiating capabilities with this individual.
7. If all is good, your loan is now approved and you can close the deal. Sign the 43 pieces of paper in triplicate, call your contractor and start the work! 203k streamlined versus normal differ here in that under the normal package the contractor cannot get any money up front, so they really need to be someone who is used to working in this program.
8. GET THE RIGHT PERMITS. Your hud consultant will call out what needs permits, what can and can't be done without his inspection. You are stuck with the consultant until the job is done, so make sure you enjoy his company... He will inspect the work and release funds in the form of a check that is addressed to you and the contractor so that both have to sign to cash it. This is another safety net, and the contractors again have to be aware of this so that they don't close up the electrical work behind drywall before the hud guy has seen it, even if the building inspector from your town has signed off on it. They will have to take it all down, for which they will want to charge you so be aware.
So we found a place, put in an offer and now are in the process of closing the deal... what is involved in this.. well...
1. Make an offer. If a bank owns the house, expect it to take 2-4 weeks for them to get back to you, this was weird for us where we make an offer and give the seller 7 days to come back, not a month...
2. Get it approved by the seller, if this is a bank, then expect the counter signature to take a week
3. Once its all signed, your not safe. Next is going to the lawyer to ensure that you are protected by the offer, in the case we are talking about, this is especially important. until you are out of attorney review, someone can make a higher offer and steal the place from you, so while you want to make sure you are diligent, you need to MOVE.
4. Once the attorneys are happy (ie they earn their money) you have to get a building inspection done. In the case of a 203k mortgage you also need to have someone come in and give you estimates of what it would take to resolve whatever the building inspector finds at fault. You can actually do both at once with a HUD inspector who is also a licensed building inspector. The goal in selecting a building inspector or contractor would be someone who has done FHA before, as they will know what they are dealing with. Sean Thompson our mortgage broker from Wells Fargo was able to point us in the right direction.
5. The building inspector is about the only security blanket you have in NJ, its buyer beware down here, except that if you have someone come in and do a building inspection (someone licensed...) you can sue them for up to 10 years after the purchase if they missed something, this makes all of them VERY detail oriented. If you forego this, and go with a HUD consultant, you are running a risk. In our case we had no choice because all of the main areas of concern (Plumbing, electrical, gas) were disabled and would not have been possible to inspect them anyways.
6. FHA appraiser comes by. Most times you will not be present, if you are worried or want to pitch your case you can discuss with the appraiser but by law your bank rep doesn't know who it is, and your agent can have limited contact with this person. Its a federal program, so don't expect much in the way of negotiating capabilities with this individual.
7. If all is good, your loan is now approved and you can close the deal. Sign the 43 pieces of paper in triplicate, call your contractor and start the work! 203k streamlined versus normal differ here in that under the normal package the contractor cannot get any money up front, so they really need to be someone who is used to working in this program.
8. GET THE RIGHT PERMITS. Your hud consultant will call out what needs permits, what can and can't be done without his inspection. You are stuck with the consultant until the job is done, so make sure you enjoy his company... He will inspect the work and release funds in the form of a check that is addressed to you and the contractor so that both have to sign to cash it. This is another safety net, and the contractors again have to be aware of this so that they don't close up the electrical work behind drywall before the hud guy has seen it, even if the building inspector from your town has signed off on it. They will have to take it all down, for which they will want to charge you so be aware.
Hurry up and wait, and wait, and wait...
Editors Note: Written October 4th, 2010
I hate banks.
There I said it, everyone says it, usually when they see some other ridiculous charge on their account that is marginally justified by the bank (all banks charge you for taking out your money, so we do too) but I really hate banks. so the bank counted our offer, which bizarrely they countered under, yes thats right, under our original offer by thirty thousand... No, didn't carry the comma, that's thirty thousand... Someone screwed up, but being the good capitalist that I am I said, sure sign me up.
Then, we waited in silence for a week, repeated attempts to contact the realtor (theirs, not ours, still love Robert) all of which met with immediate voicemail, we finally hear back that they have signed, the deal is ours. The house is off the market, no longer on mls, and through the real estate broker we find that it is market as under contract, awesome, however we don't have the contract. More on that later.
Next we want to challenge some of the clauses in attorney review, not happy with the attorney I chose so there won't be a nice blurb here for him as he doesn't seem to want to worm for the money I will be giving him, but the bank just keeps shooting us down. Thinking more and more that the bank might have realized they scewed up and is hoping that we can't meet the ridiculous 30 day deadline they have set for us (which since Sean and I went ahead with the mortgage approval ahead of time all we need is the cost of improvements and were all set) they are thinking they can get us to walk from the deal.
Screw them, even though there is a little more work to be done than I anticipated (fully documented in posts to come) and some scary issues with the pool that will have to be looked into, we are going to do it anyways... God help us one and all. For sure, this blog will get a lot more interesting, as I will post a summary of the work that got completed, or didn't as we go through this thing... Once we have the full estimate from the contractor I will decide if we do this. Jenn has already decided, but unfortunately for her, takes two to tango...
I hate banks.
There I said it, everyone says it, usually when they see some other ridiculous charge on their account that is marginally justified by the bank (all banks charge you for taking out your money, so we do too) but I really hate banks. so the bank counted our offer, which bizarrely they countered under, yes thats right, under our original offer by thirty thousand... No, didn't carry the comma, that's thirty thousand... Someone screwed up, but being the good capitalist that I am I said, sure sign me up.
Then, we waited in silence for a week, repeated attempts to contact the realtor (theirs, not ours, still love Robert) all of which met with immediate voicemail, we finally hear back that they have signed, the deal is ours. The house is off the market, no longer on mls, and through the real estate broker we find that it is market as under contract, awesome, however we don't have the contract. More on that later.
Next we want to challenge some of the clauses in attorney review, not happy with the attorney I chose so there won't be a nice blurb here for him as he doesn't seem to want to worm for the money I will be giving him, but the bank just keeps shooting us down. Thinking more and more that the bank might have realized they scewed up and is hoping that we can't meet the ridiculous 30 day deadline they have set for us (which since Sean and I went ahead with the mortgage approval ahead of time all we need is the cost of improvements and were all set) they are thinking they can get us to walk from the deal.
Screw them, even though there is a little more work to be done than I anticipated (fully documented in posts to come) and some scary issues with the pool that will have to be looked into, we are going to do it anyways... God help us one and all. For sure, this blog will get a lot more interesting, as I will post a summary of the work that got completed, or didn't as we go through this thing... Once we have the full estimate from the contractor I will decide if we do this. Jenn has already decided, but unfortunately for her, takes two to tango...
We got the DEED!
OMG, so relieved to actually have this stupid piece of paper that says the house that i have been fighting to get for the last 6 months. I haven't been this happy to see a single piece of paper since my first paycheck from Phoenix International...
Now, the hard part starts. I have already had a glimpse of how much fun this will be with trying to get permits and play the he said she said game with my contractor about who should get the permits...:) Will actually publish the blog tomorrow, am going to pull some images from back in time and spruce up the blog a little bit but will also layout the plans for the weekend. This blog is going to be MUCH more interactive than my iPad one, with video, photo's and some give aways so get ready to enjoy...:)
Now, the hard part starts. I have already had a glimpse of how much fun this will be with trying to get permits and play the he said she said game with my contractor about who should get the permits...:) Will actually publish the blog tomorrow, am going to pull some images from back in time and spruce up the blog a little bit but will also layout the plans for the weekend. This blog is going to be MUCH more interactive than my iPad one, with video, photo's and some give aways so get ready to enjoy...:)
Subscribe to:
Posts (Atom)