All Forum Posts by: Bill Hamilton

Keep in mind, I am not an attorney, but it looks to me like California is a community property state and therefore any debt acquired by one spouse while married, becomes the responsibility of both individuals in the marriage. Because she automatically owns half of any property or asset you acquire during the marriage, she is also on the hook for the debt.

There are too many variables involved in this type of deal for anyone to give you a really good answer on here. You really need to take this to a good mortgage broker who can run the scenario through various underwriting systems to see what will fly. First, they need to run a full credit report to see what is showing as your monthly obligations. Second, you need a broker that is experienced in analyzing self employed deals. Many brokers are not overly comfortable with this and there are many nuances. In many cases your income from the 1099 side ends up being closer to your net income than your gross (even though from a W2 deal it uses gross) but there are add backs and subtractions. Also, Fannie and Freddie have different rule sets and they AUS (automated Underwriting Systems) will give and Accept/Eligible with different things i.e. the acceptable DTI can be very different from one system to the other depending on the level of liquid assets, credit profile etc. And @Chris Mason is correct. With a good lender/broker and some advice from your CPA you may be able to change your 1099 income profile to help your situation.

If I remember correctly and assuming things haven't changed, VA loans are similar to FHA loans in the aspect that they require a house to be move in ready (yes....I know about 203k loans but) meaning that they don't allow for hardly any repairs that are required for livability. This even includes things like peeling paint and cracked sidewalks sometimes. Hopefully someone else will chime in on this. The parameters may well have changed since I last looked at a VA loan.

If you can purchase in cash, then you have the cash to take the lenders deal. All conforming loans are going to use the same criteria. Take the lenders deal and then either refi in 6 months or see if you can pull a HELOC in 6 months. @Upen Patel is correct on this.

From a business standpoint, in many ways I understand the people who are saying take the loss of $2,000 and move on. But, assuming you did everything right and can prove it; I hate people who try and screw you out of earnest money, or anything else for that matter. I say take everything to an attorney, make sure you have all bases covered, and then sue the seller. This is a large enough amount that it goes to big boy court. Which also means your attorney gets to sue for his fees. Point being if the attorney is sure the case is good, he will be willing to do it on a contingency basis. And if your state allows for triple damages, as someone else mentioned in this thread, then the seller is facing massive losses both of the EM, possible damages and their own legal fees. I would also think that if you and your agent followed all procedures correctly, the sellers agent should be screaming at her clients to return the money and/or dropping those clients like a hot potato. I know that in some states, if the sellers agent is in essence colluding with the seller to illegally withhold funds and/or extort funds from you, then the sellers agent could be facing huge sanctions including loss of license and a visit from the fraud division of the local police. I know this may sound a little over the top but I have seen transactions go far enough off the rails that agents ended up with a felony conviction over it.

On the over hand, court is always a risk and can be a very expensive roll of the dice. You need to figure out what your level of risk tolerance is.

And by the way, this has been very eye opening for me. I did not realize that this type of escrow issue ever came up. I used to be a wholesale loan account exec and a mortgage broker so I have seen a huge number of transactions. Then again, I guess from the loan side of things either the loan closed and there is no issue with the escrow, or the deal fell apart and I was no longer involved in the deal. But having dealt with escrow in many states, I had never heard of this type of horror story. Now I need to do some further research of the procedures in the states I do business in and want to do business in, in order to minimize the potential for this type of problem.

If you can qualify without using the rental income, it will simplify your loan. But, from experience, you may have a very difficult time convincing an underwriter that you are going to commute that far every week when this is your primary residence. Not saying you won't be able to but it may be difficult.

What I didn't see mentioned in here, was if you are using the property as collateral. This could heavily affect which laws/rules are involved. 

This is where you bring in a good title company. Before they issue title insurance, they will tell you what needs to be paid in order to acquire clear title to the property. Federal taxes will often subordinate to a the lender of a new buyer. State taxes might be happy to do the same. I imagine that varies considerably by jurisdiction. But you are shooting in the dark if you don't get a full title report and see what they are requiring. That should also answer the question of whether or not there is a mortgage out there that still has a lien against the property. Also the post about pulling the BK info from PACER is a very good idea. It is relatively cheap to get those if I remember right.  You should be able to see everything that was included in the BK with those records.

There has been so much of this type of scam in the past (I am not calling out this particular company but.....). I would never pay fees of any type in advance except for the appraisal. And the appraisal belongs to me because I paid for it. Some HML lenders don't even do a true appraisal. They walk the property themselves and decide yea or no. Although I have seen lenders try and charge stupid amounts fly out and walk the project, even though they almost never fund a deal. As Jay mentioned earlier, they tend to fund just enough deals to keep the Attorney General at bay.

@Tamara V. meant to be condescending at all in his reply. Or least I wouldn't take it that way. He has a huge amount of insight and experience in this game and simply calls it how he sees it.