I need to terminate a pre-construction purchase I cannot afford...I am told I will lose my deposit...

Asked by Sean, Orlando, FL Sun Aug 19, 2007

I purchased a perconstruction townhome in 2006 and I am supposed to close in 1-2 months. However, I am questioning how I was apporved for this loan now that my monthly estimated payments are beyond my range. I understand that I am at risk of losing my deposit upon terminating the sale, but I have discovered that my income amount was modified to almost twice the amount by the seller/lender. Is there anything I can do about this or do I need to suck it up and lose my 10% deposit. I do realize that I am responsible for my own actions, but something just seems illeagal and misleading about my builder/lenders actions.
Thanks,
SS

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13
Bridgette Ko…, , Florida
Sun Aug 19, 2007
Sean,
We are not attorneys. But the advice Deborah just gave you was very sound. It is probably worth the time and money to consult an REAL ESTATE attorney in this instance (given your clarification). Do you have a buyers agent? If not, may I suggest you use one in the future? Please do let us know how it turns out. Best of luck!
2 votes
Deborah Madey, Agent, Brick, NJ
Sun Aug 19, 2007
The fact that you just learned of this, and you have documents showing what you provided as info on the application are big pluses in your favor. You might try to contact the corporate office of the builder and explain your concerns about loan aps that are modified and your concern that there have been too many red flags and delays.

Some might advise you to consult an attorney first. And, that might be wise. If you try a frank discussion with the company and they say no, then you could take it to an attorney.

Do not give up possession of your copies of the papers showing the income that you stated.

From your more detailed explanation it appears you may have a chance to get your deposit back.

I am not an attorney and have not reviewed your documents, so this is definitely not legal advice.

Best of luck to you
2 votes
Deborah Madey, Agent, Brick, NJ
Sun Aug 19, 2007
If there has been a lengthy time elapse since you found out about the altered income on the ap and today, the question will be raised as to why you did not address this sooner. You do need an attorney to review the contract, and provide legal advice.
2 votes
Bridgette Ko…, , Florida
Sun Aug 19, 2007
Sean,
Generally builders contracts heavily favor the builder in most all instances. You are likely to lose your deposit UNLESS, if I understand correctly, your mortgage application income was modified without your knowledge or consent? Is that the case? Please clarify...
2 votes
Greg Traub, Agent, Orlando, FL
Sun Aug 26, 2007
I feel you my friend. I have heard many a story with builder's lenders doing anything to "get the deal done". And I'm not surprised they are affiliated with Countrywide. I know of many people that went with KB's Countrywide and had similar things happen, in fact they almost got my brother to go with a No Doc loan because his job couldn't even support a stated income as high as they wanted to make it. Luckily he called me before he signed anything.

I know Beazer homes was under investigation (and still may be) as a much larger than normal percentage of their homes were going into foreclosure.

On your previous loan application when the loan officer stated your income at 5800, did you put your signature on this application? If so it may be much harder to claim a fraudulent loan, as you may be found responsible for stating the false amount. Another thing going against you is the builder may have a clause in their contract that states you should have gotten your loan commitment 30 days after deposit....in which case after those 30 days you are in default of the contract and they won't give your $ back.

Your best plan of action is to CONSULT A REAL ESTATE ATTORNEY. If the builder doesn't offer you your money back after explaining your loan situation (which they most likely will NOT) get an attorney.
Web Reference:  http://www.gregtraub.com
1 vote
J Lo, Home Buyer, California Glory, Brentwood, CA
Mon Aug 20, 2007
Hi Sean:
Thank you for clarifying your position. I am most concerned that the sales agent has been "after" you to make another purchase within a year of purchase. It doesn't add up...

Something is smelly in Denmark - because even with a 3-5% appreciation it wouldn't yield you enough to cover the closing and new loan processing fees, let alone the fact that you haven't lived in the residence for two years...

Since you are making a second purchase - you are not really a novice - but you didn't have adequate representation - you had a salesperson looking to up her quota. She represented the seller - not you.

I am sorry you are in this predicament and I hope you can avoid the cost of an Attorney - but if you state your claim clearly and concisely IN WRITING to the powers that be of RYLANT Homes; you may be able to get your deposit without the assistance of an attorney.

But - you must (MUST) document all occurences from the statement the salesperson made about "yielding a great profit" from your first home purchase to be able to afford the second.

Furthermore, google "fraudulent mortgages" to see if they are one of the companies being investigated for this type of activity.

A little leg work on your part could save you attorney's fees. I just wish you didn't have to go through this in the first place. It is this type of practice that has placed so many homeowners in jeopardy of losing their greatest asset - their home AND their good credit.

To take it a step further I would find out if there are others in your predicament in your area - because if it happened to you it happened to others. I would also look into making a formal complaint against this loan company and anyone involved in changing your information.

This is FRAUDULENT behavior anyway you slice it - THANK GOODNESS you didn't bite that one! I applaud you for seeing the writing on the wall....

But does this mean you are also without a home of your own now? You've sold your first home at a loss? This is unbelievable to me and I hope you get some restitution.
1 vote
Carrie Crowe…, Agent, Southaven, MS
Sun Aug 19, 2007
Sean,
Ths sounds really bad! I wish I had something to say different than what the others are saying. I would suggest that you get an attoney to look over your contract and see if you have any outs. I would also explain your complete situation. Find out if there is anything you can do to get your deposit back.
Web Reference:  http://carriecrowell.com
1 vote
J Lo, Home Buyer, California Glory, Brentwood, CA
Sun Aug 19, 2007
Culpability is in question here and responsibility. You have been under contract since 2006, we are almost done with 2007. Sounds as if you knew something was fishy but kept up the fascade.

Having stated the above - I have to say that you are not alone. Depending on the company you could have recourse - the big IF is when you determined your information was inflated and IF this is one of the companies that has had quite a bit of bad press lately for just those tactics.....

Even IF you were culpable - you could ask the company to let you walk away quietly - HOWEVER - IF you signed a document that has the INFLATED figures - you don't really have a leg to stand on - I wouldn't waste any more time giving your funds to an attorney.

You just "suck up" the ten percent and learn that even some guilt is the same as some innocence....
1 vote
Pam Winterba…, Agent, Danville, VA
Sun Aug 19, 2007
Are you saying the builder and lender changed the numbers on your loan application to get approved? Have you been approved? If this is the case it sounds as if there might be lender fraud. If the numbers are accurate you could loose your deposit unless you still have a contingency left. You may want to consult with a Real Estate attorney.
Web Reference:  http://pamwinterbauer.com
1 vote
LLoyd Nichols, Agent, Fort Myers, FL
Sun Aug 19, 2007
You are talking about breaking a contract and in that case, not only will you lose your deposit, but you may be sued, also. If, however the builder or developer has not lived up to all of the terms of the contract, then you be able to procure the return of your deposit. If there is any question of this nature, then you should take the contract to an attorney. Otherwise, if it's just a matter of your not being able to afford the property, then you will probably lose the deposit. An option may be for you to put the property on the market now before closing and sell the property, if the property has a market value of the contract price.But it seems you just want to get out. Chances are you will lose your deposit.
1 vote
Sean, Home Buyer, Orlando, FL
Sun Aug 19, 2007
Thank you all for your insight. I discovered that my income was modified just last week as I got a call from my loan officer, asking me if it was okay to increase my stated income to: $6200 per month inorder to have a "better ratio". I asked if this was common practice because the amount is $2k greater than what is actual. I then asked what she had on the paperwork previously, and she stated $5800. This raised a red flag to me as I know that I would have never stated such an amount. I referred to my copies of the loan app. and confirmed what I had stated at $4000. The builder is Ryland and they are also the lender, under Countrywide homeloans. The builder has reduced the base price by $20k because of my wait and offered some free options also. Not until very recently have I thought about terminating this sale. There has been just too much stress along with this purchase with the delay and figuring out why I missed the signs. I am in my mid 20's and this is my second purchase. The first was also from the same builder and salesperson. I owned this property for exactly one year and was constantly contacted by the salesperson to make another purchase with her as she was "certain" that my previous purchase would yield a great profit inorder to get me into the new home. Needless to say, the market was not good to me this year as I ended up selling for $30k bellow expected. I'm not trying to blame anyone else...I do understand that my own imaturity in realestaete got me in this situiation. I would just like to know if I have a leg to stand on in regrards to my hard earned deposit. Thank you all for your help and knowledge.
Sincerely,
Sean
0 votes
Herman Chang, Agent, Palm Beach Gardens, FL
Sun Aug 19, 2007
Review contract and look for kick out clauses and see what it says in regards to deposit. If you prefer, have the contract reviewed by a lawyer.
0 votes
Christine Bo…, Agent, Gainesville, FL
Sun Aug 19, 2007
I strongly suggest you contact a real estate attorney in your area, and make an appointment with them. Take a copy of your contract with you and hire him to resolve your issues.
0 votes
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