Home Buying in 92307>Question Details

Mark, Home Buyer in California

Can a Bank decline the best offer just because of the type of loan we are using?

Asked by Mark, California Fri Mar 6, 2009

Hi, My wife and I put a bid in on a foreclosed property recently and the Bank that owns the property came
back and declined our offer because we were using a USDA loan. We are pre-qualified and our offer was 10,000 more than the listing price and several thousand more than other offers they recieved. We are utilizing the USDA loan because the property qualifies for it and it only requires $1000 down. The bank rep. implied to the listing agent that since we were only putting $1000 down, they were afraid we wouldn't be able to make our payments and the property would just go into foreclosure again. We are pre-qualified and obviously can make the payments. Can the Bank actually do this? I feel like we are being descriminated against just because we chose to go with a $1000 USDA loan.

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Answers

6
Bank can do anything !!! HENA MARTIN
0 votes Thank Flag Link Mon Feb 4, 2013
Hi Mark,

In the present market of "multiple offers" on almost every property due to lower inventory, sellers (banks, lenders, servicers, etc) can & will look at the lowest risk/highest return/shortest escrow offer that's on the table with many to choose from. A year ago, your offer would likely be acceptable but with the way the market has turned, these sellers are again holding the cards as demand vastly outweights supply & they are going to take advantage of this present market as long as possible. As many other have already responded, they own it & it's their choice as to which offers looks most attractive. It is not an issue of discrimination but more an issue of timing. I constantly get calls from selling agents & buyers who vent their frustration with what;s going on. It unlikely to change for sometime but might improve for buyers as a higher number than has been of foreclosures should come on the market in the next 3-4 months that all of us who have been doing REO's have expected with the moretoriums coming of age. No one knows for sure what the numbers will be but the projects appear to lean in favor of a substantial increase in inventory, which should help buyers have a bit more leverage.
0 votes Thank Flag Link Wed Sep 16, 2009
Yes, unfortunately this happens on a daily basis. It is very difficult to compete right now with conventional and cash investors. You will have a better chance of getting an acceptance if you find a property that doesn't have multiple offers. Make sure your good faith deposit is more than 1% of the sales price and that you show more money in your accounts than needed to close escrow. Banks only care about the bottom line and if the buyer looks strong enough to close escrow. They don’t care if you can make the payment in the future when they are not providing the financing. You will have more of a choice in properties in the near future because of the moratorium being lifted. The banks are going back to business as usual and bumping up their foreclosure process.
0 votes Thank Flag Link Wed May 20, 2009
For some reason my answers are getting cut off....I was saying conventional can have more difficult underwriting guidelines if
0 votes Thank Flag Link Fri Mar 6, 2009
Hi Mark,

Unfortunately yes the seller can and often will take a lower offer because it's cash or a larger down payment conventional loan. The only difference between an FHA, VA or USDA loans vs. conventional loans is the appraisal. There's a misconception that FHA and VA loans take longer to close. Totally unture. Sometimes FHA and VA close faster. Also, FHA and VA have much more flexible underwriting guidelines than conventional, so in my opnion, conventional has a greater chance of not closing, especially if conventional
0 votes Thank Flag Link Fri Mar 6, 2009
HI Mark,
I have found out the hard way that USDA loans often have the same condition requirements as FHA or VA loans- so if the house is not in livable condition, or even if it needs some moderate work done, it stands a likelyhood of not passing appraisal anyway- so the property would be tied up, unavailable to other buyers if that is the case, until repairs are made- and banks don't usually do repairs.

Sellers always have the option to decide which offer/type of financing that is acceptable, just as a regular seller does.

As to what was implied- then if that was the case, they wouldn't trust veterans who were using their VA loan eligiblity, since VA loans are 100% loans.

Hope this helps!

Krisan
0 votes Thank Flag Link Fri Mar 6, 2009
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