Conventional Financing Nightmare

2 Replies

So I am new to this whole process, and trying to gather some thoughts and see if this is somewhat commonplace, or as ridiculous of a situation as I feel it likely is.

We are closing on a Triplex in the Kansas City area with a conventional loan.   The Purchase price is 100K, and we are putting 25K down.  I shopped around quite a bit for a good interest rate on the mortgage, and managed to snag 5.125 with US Bank, which seemed pretty good to me!   We had had an issue with US Bank on a refinance on our personal property about a year back, where a streamline refi became a several month process and the locked in interest rate changed repeatedly, but understand that sometimes issues happen.  We have used them for a few other things and never had an issue. so thought to give them another shot.

The Inspection came back with more issues then we were expecting, but no big deal, we can work through that.

The appraiser came through and did her thing...  She noted a couple repairs, but I wanted to have an extra inspection done on the electrical based on the inspection results. 

Then we got her report from the bank, and the house was valued right at 100K.  As thats what we were paying, no problem.  However, they had a list of 4 needed repairs from the list the assessor noted.   They needed a couple gutters fixed, foundation patching from the structural engineers report completed, a new sump pump, and a roof inspection completed.

So, we informed the sellers of the required items.   They grumbled a bit but got them taken care of.    They also were willing to discount the price of the property a bit to help cover the cost of the needed electrical repairs.

So yesterday, 8 days from closing, the lender reschedules the assessor for her final inspection.  Later during the day, we get a letter from the lender.  'We apologize but both the loan processor and underwriting missed several of the repairs the assessor required.  So, you will have to get these done as well.'    This list includes replacing a couple windows, replacing or repairing a furnace, and getting the gas service inspected to make sure it is up to code.   

To explain real quick, one of the units does not have a working furnace or water heater, due to the gas being turned off for that unit.  (not only turned off, but for whatever reason the meter has been removed at some point.  This item was on our short list of immediate fixes after closing)

So I called the lender today to complain about the short notice, and ask for some recourse as we were only notified of these other large repairs they wanted completed such a short time before closing.

The result?

....I am notified that on the e-mail we received yesterday, they still did not mention that they also now require all hot water service be repaired to that unit  prior to the closing.  There was no mention of the water service from them prior to this point.  These repairs were all listed on the original appraisal, but after underwriting and the loan processor reviewed the loan, we thought they were only requiring that specific repairs from the appraisal be completed prior to closing.

Is this anything remotely close to a normal situation?

I feel that this early in my journey in the real estate world, contacts and reputation are going to be at least as important as any actual deal that goes through, and this is certainly not helping that cause.

If this falls through, which is looking more and more likely, I will be diving back in with a different lender on something else in the Kansas City area, I will just need to find other another property. 

This post has been removed.

Hi Dennis,

This sounds like a HML property. On a refi sometimes lenders will just order the appraisal and submit to underwriting to see what comes back, but this is a purchase mortgage. This should have been identified as a HML property on day one to save you all this hassle.... if not by your agent, then by the lender talking about the property with you.

That being said, while true that rates and property/underwriting standards are inversely correlated, everything you described has me pegging this one as a HML property no matter what.

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