Bank screwing with us?

5 Replies

I am talking with a motivated seller, very easy seller to talk with and seems willing to accept any reasonable offer. He has 60% equity.

He is telling me that the bank is “telling him things” that seem to make him feel that his hands are tied and cant sell.

Is there anything the bank could do, which would not allow him to sell?

Would the bank be herding him away from selling so they can take it?

Thanks

Jacob - What kind of things is the bank saying to this seller? Banks don’t like subject to deals so that’s what they were probably cautioning your seller on. They probably told the seller there is a due on sale clause and that the loan is not assumable. Please reach out if you have any questions. 

@Jacob Kline Something's not quite adding up here and I'm getting the feeling that the seller is not being completely honest with you.

Banks are heavily regulated and very, very risk averse. Some smaller banks or note servicers can be disorganized and difficult to deal with but it's rare that a bank would try to interfere directly with a homeowner like this.

The bank is entitled to what the borrower owes it and any costs related to enforcing a default, nothing more. If the owner has equity, the bank cannot go above and beyond to capture that equity as well.

If the borrower wants to sell, all they need to do is request a payoff from the bank. The CFPB requires that this be done within 5 or 7 days, something short, and the bank has to comply or face sanctions and/or penalties. The bank will be paid off during escrow and the seller can sell the property. If it's underwater, the seller will need the bank's consent for a short payoff.

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@Andy Mirza exactly, that’s why it didn’t make sense to me. I make sure everything I prospect has at least 30% equity for that reason and as far as I can tell there are no other leins or anything.

The payoff would show any and all debt owed to the bank though, right?

Also how would I confirm that the seller is telling the truth about having no other debts tied to the property?

Thank you!!

Originally posted by @Jacob Kline :

@Andy Mirza exactly, that’s why it didn’t make sense to me. I make sure everything I prospect has at least 30% equity for that reason and as far as I can tell there are no other leins or anything.

The payoff would show any and all debt owed to the bank though, right?

Also how would I confirm that the seller is telling the truth about having no other debts tied to the property?

Thank you!!

 Yes, the payoff includes everything that the lender is entitled to collect.

You can get an O&E report from ProTitle for $90 that shows what other liens are on the property. However, if you end up buying this property, go through escrow, title company, and/or a closing attorney to make sure that everything gets paid off that needs to.

How do you know there's 30% equity? You can't rely on a recorded deed of trust or mortgage for the current principal balance. That only shows you the original principal balance. You need the borrower's consent to get a current balance.