Home Buying in Sunnyvale>Question Details

yy000111yy, Home Buyer in Sunnyvale, CA

Help~What can we do???Can we still get our deposits back? Or should we sue the loan brokerage??

Asked by yy000111yy, Sunnyvale, CA Mon Jul 30, 2012

We put zero loan contingency on the house-buying contract after confirming with our loan broker. He checked our situation and said we are approved before checked our situation. However, the the the 1st loan still got stuck even we have asked the seller for 2-weeks postponed since the initial closing day. Then the manager of our loan broker told us he could get loan approved within 14 days if applying for another loan bank, which they have a very good relation with. During this 14days, we have to pay extra 2000 dollars as penalty to the seller. As a result, the loan still gets stuck even tomorrow is the agreed closing day.....We're gonna lose almost 30,000?

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Mark Burns’ answer
It is time to talk to a good local real estate attorney. I would also go to the manager of your agent's office and get an appointment with that person to sit down and discuss the problem.

I'm guessing that your loan agent is:
1) too busy to pay close attention to your particular issues
2) buried with refinances and taking the easy path
3) new in the business and not able to handle a complex situation
4) stalling for time until they find some lender (at higher rates and fees) that will approve you
5) afraid to tell you that they were mistaken in the beginning about your qualifications

This is not to say that in general, loan agents are not good at customer service. Most are excellent and are superb problem solvers. Rates are so low and so many lenders are competing for business right now that you may have used a loan broker who promised more than they can deliver. It is commonplace for a buyer to gravitate towards the cheapest rate, the lowest cost terms, rebates, etc. These factors alone do not put you in the hands of the most competent person to help you. In other words; you get what you pay for.

It may work out if you have a higher down payment and put some pressure on the loan broker, their manager, your agent, their manager, etc.

Get a really good local real estate attorney. Not the cheapest, not a friend, not someone who knows some things about real estate, not someone who practices outside Silicon Valley; a good real estate attorney.

Mark Burns, Realtor®
Coldwell Banker Elite - Top 2% Worldwide, Top 100 Northern California
President - PRDS, Contracts and Forms for Silicon Valley Residential Real Estate 2008-2012
DRE #00896552 Licensed since 1985
Over 600 homes Sold in Silicon Valley
Web Reference: http://www.markburns.com
2 votes Thank Flag Link Mon Jul 30, 2012
Call a lawyer. Were you advised by your realtor not to have a loan contingency? The market is very crazy right now, but loan contingencies are needed more than ever. Even if you are approved by the bank many appraisals are not coming in at value because the market is appreciating.
There are some banks who can do loans quickly, but it sounds like you may have a problem that is going to be hard to overcome. Joel Spolin at Spoloan may be able to help you quickly. The Private Mortgage Banking at Wells Fargo is pretty quick as is Princeton Capital.
Again, call a lawyer to see what your legal options are, but you should also speak to another lender to see if you actually do qualify for a loan or not. I would not go to another broker, you need to speak with a bank directly, or a mortgage banker, not a mortgage broker. They are not the same thing.
Good luck!!!!
Please let me know if you want any more info.
Marcy Moyer
DRE 01191194
Web Reference: http://www.marcymoyer.com
1 vote Thank Flag Link Mon Jul 30, 2012
We have no idea why your loan failed but that does now matter since we cannot fix anything for you.

If you truly got bad advice, perhaps you should be made whole financially by the responsible party. Certainly worth discussing with the parties and their brokers who are involved.

Forfeiture of your deposit is not automatic and you should seek advice on how to avoid that loss. Mediation and/or arbitration may be in your future.

It may be necessary to seek legal advice.

I doubt that you will find a quick, clear and simple answer on a public forum.
0 votes Thank Flag Link Tue Jul 31, 2012
If you are able to complete the purchase it might be possible to pressure the loan broker into paying the $2000 penalty, especially if your real estate agent has had multiple clients use him.

The 3% deposit forfeit is not a guaranteed result for the seller. The seller may have to show that they suffered a loss equal to the 3%. As others have said, talk to an attorney.

Pursue getting a loan from other sources ASAP. The intent of the contract was that the seller wanted to sell the property to you and that you wanted to buy the property. Don't be the one who looks like you aren't trying to fullfill your contract obligations.
Web Reference: http://www.julianalee.com/
0 votes Thank Flag Link Mon Jul 30, 2012
Are you saying your agent let you put ZERO loan contingency on a contract knowing you were using a loan broker who didn't check your situation? Did your agent warn you of the dangers of doing that?

WIth all the bidding wars out there, it is tempting to get reckless. However, your agent should not promise something he/she can't deliver. I know your agent had good intentions, but if your agent does that too often, listing agents will think twice before accepting an offer written by your agent.

In your situation, your agent should be able to negotiate some way to get out without losing your entire deposit.

Good luck.
0 votes Thank Flag Link Mon Jul 30, 2012
You have received very good suggestions. What we can not do here is give you legal advice. We are a party to your contract, and you have an agency with another agent, and therefor your best resource are those closest to the transaction, such as Mark suggested, the managing broker. And of course a Good Real Estate Attorney.

Just because your lender felt that you personally can qualify for the loan, doesn't mean that the HOUSE also qualified for the loan. This is an FYI for you and other buyers. When your lender states you are approved, ask for the written approval. You will find that there are Several conditions to that approval, the house, appraisal, preliminary title report, insurance, and so forth. It is not clear cut. If a Buyer is not in a position to lose their earnest money, they should not waive those contingencies until they have all the documents needed to support satisfaction of said contingencies.

I've recently seen another situation where the Buyer went in with zero contingencies, they stated they were going to pay cash, provided the verifications of funds, and guess what? They didn't close and tried to get a loan. Now they don't want to lose their earnest money. I have a hard time feeling sorry for them, except that they perhaps received very bad advice for their agent.

I know this isn't what you want to hear. And I don't intend to offend you. The purchase contract is designed to protect both Buyer and Seller. When they operate in good faith all turns out well.

Take the advice and talk with the managing broker and attorney.

I wish you all the best.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Mon Jul 30, 2012
The close of escrow can always be postponed, IF BOTH PARTIES AGREE. I mean the buyer and the seller. You agent should start negotiating the extension.

Yes, there is a chance you may lose your deposit. But for that there should be complete loss of good will from the sellers.
Web Reference: http://talisrealestate.com
0 votes Thank Flag Link Mon Jul 30, 2012
As Marcy and Andrea have already advised, you should be talking--not to the Trulia community--but to an attorney as quickly as possible. This is a question regarding your sales contract and the interpretation of the contract given the facts, so work with an attorney to explore and exercise your best options.

Sorry, but this will need professional legal intervention now.

Grace Morioka
Area Pro Realty-People's Choice
0 votes Thank Flag Link Mon Jul 30, 2012
I recommend you go back to the agent who wrote your initial offer (your buyers agent) that was accepted on the property. That person is privy to the terms of your contract and what timelines were agreed to between the parties. There are many different scenarios and options to choose when writing an offer. Only the agent involved in the transaction can translate for you. Otherwise, it would be best to consult a real estate attorney.
0 votes Thank Flag Link Mon Jul 30, 2012
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