Foreclosure financing. Is it normal for Sellers to try and get the buyer to get financing from sister company?

Asked by Ch, Studio City, CA Wed Jun 10, 2009

In this house purchasing deal, the seller (a bank) wants me (the buyer) to get a loan from their sister company (a mortgage brokerage company). Is it a good idea to FINANCE THRU THE SELLER/SELLER’S SISTER COMPANY? Is there any precaution I should be aware of?

The bank wants me to close escrow on a specific date on the contract, but due to the delayed response of the bank with their counteroffers, my actual ESCROW PERIOD IS NOW MUCH LESS THAN 30 days from the contract close date and the per dim charge will apply once the contract close date is extended thru no fault of the seller. What should I do?

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Tara Steinke’s answer
Tara Steinke, Agent, San Diego, CA
Wed Jun 10, 2009
In considering offers on their REO properties, most banks are requiring "pre-approval" through a direct lender at a bare minimum (think Wells Fargo, Washington Mutual, B of A rather than just XYZ Mortgage Brokerage). And there are some that do require you get pre-approved with a specific direct lender of their choosing. Although they may offer incentives or it may seem pressuring, most of the reason behind this is that they want some solid assurance that you CAN close a loan. Many brokerages out there will provide a pre-approval letter on some documentation but not requiring all documentation. And sometimes this comes back to kill the deal.

On the closing date, your agent should work with the listing agent to get an extension approved with the asset manager. If you really want the property, make it clear that you are, in good faith, doing all that you can to close quickly. Get pre-proved with their lender. Again, if you show that you are doing everything in your power hopefully at least an extension of 5-7 days, if not longer, will be accomodated.

Best of luck!

Tara Steinke
San Diego Real Estate Specialist
Residential Sales and Appraisal
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Gabriel Diaz,…, , West Palm Beach, FL
Wed Jun 10, 2009
You are allowed to use any financing you choose however the seller can request that in order for you to submit an offer you must be pre-qualified first. They will usually offer you special incentives to use their in-house lender as well. I have seen where they will remove the per diem charge if you request an extension if you use their in-house lender. You should have requested a different close date once the counteroffers kept coming to ensure you had proper time to close the transaction. Are you being represented by an attorney?
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