Thursday, December 29, 2011

ARRRRrrrggggh!!! Closing Hits a Snag Due to Incompetence

We're down to the wire and we may not be able to close by 12/30, all because my loan processor is a freaking, lying, incompetent idiot.

On December 16, my loan processor inquired whether she can charge $85 on my credit card for an HOA questionnaire fee. I authorized the charge.

Last Friday, on December 23, I was contacted by my insurance agent that my lender requested Evidence of Insurance. I authorized payment on my credit card and my agent submitted a binder to my lender.

On Tuesday, December 27, my loan processor advised that all documents were received and that my file was with the underwriter for final approval.

On Wednesday morning, December 28, my loan processor advises that she needs me to authorize another credit card charge for an HOA certification for the second association. This time, she doesn't advise me of the charge amount in advance. When I inquired, the charge was $217. I discover that the charge includes an expediting fee. When I inquired why she didn't order the documents back on the 16th, she dances around the issue and blames it on the first association for not providing all documentation and the underwriter for not getting back to her until yesterday.

Now, we're scrambling to meet the 12/30/2011 closing deadline placed by the short sale lender. It irritates me that the idiot loan processor neglected to order the necessary documents from both HOAs back on the 16th. Because of her negligence, I may not be able to close in time by the 30th, which has tax implications and other monetary consequences like having to pay 31 days worth of interest in advance. The worst part is this idiot loan processor's failure to admit fault.

Friday, December 23, 2011

Holy Frick On A Stick - - I May Close By 12/30/2011!

I just got word that the State of California agreed to release the Seller's tax lien off of the condo I've been trying to purchase in short sale. I've been told that the Seller also negotiated the HOA delinquencies and it looks like we're sprinting to the finish line. We may actually close escrow by 12/30/11!

The only recent hiccup was that I had to waive the termite inspection. What really irritates me is that the purchase offer that my agent drafted specifically stated that the Seller would pay for the termite inspection. The Seller accepted those terms. However, the genius realtors (mine and the Seller's) failed to ensure that the Short Sale Lenders would set aside funds from the sales proceeds to pay for the termite inspection. (But they sure as hell made sure that their commissions were taken care of.) Since the Seller agreed to pay for it, I could look to the Seller to pay for it out of her own pocket.

Oh yeah... I forgot -- The Seller hasn't even paid her state taxes. Why would she even honor the terms of her contract?

My genius agent now tells me that termite inspections aren't required for condos because termite control is the condo association's responsibility and I'm buying the property 'as-is'. Bullcr&p. First of all, I'm responsible for termites within my unit. Secondly, her blanket statement that termite inspections for condos are never required is only partially true. FHA-HUD loans require termite inspections even for condominiums. She's only correct that my lender doesn't require it.

I agreed to waive the termite inspection because: (1) re-negotiating the term with the Short Sale Lender will only delay the closing, and most importantly, (2) even if I got a Seller paid termite inspection report with adverse results, I'd still go through with the sale. It's still irritating, though, that my agent is selling me a snowjob.

Once I close, I'll hire a termite exterminator to inspect the property. According to this report, experts in the industry say "there is an incentive to "undercall" (i.e., an inspector misses or overlooks something in an inspection) during escrow. Professionals recommend that homeowners should have three or four companies look at their property. They also advised homeowners to watch the inspector during the inspection, making sure he inspects the locations claimed, like an attic or crawl space. If inspectors find termites, experts said to ask the inspector to show where the infestation is and what they found. Experts advised not to accept a single inspection from a realtor. If a termite company misses the problem, they do have to come back and treat it at no cost to the homeowner."

Friday, December 16, 2011

Good News - Bad News on the Short Sale Purchase

My misadventures in purchasing a condo in short sale goes on. Like life, there are ups and downs. And for every good news I get, it seems to have a twin of bad news.

Goods news - I was approved for a conventional loan. I locked in a 3.875% interest with 20% down and 2.125 points. The lock is good 'til 1/20/12 (or so).

Good news - The appraisal for the property came back at $365,000. My accepted offer was $342,500.

Bad news - I noticed a $3600 State tax lien on the condo in the preliminary title report. When I reviewed the 1st mortgagee's consent to short sale letter, it gave an allowance of up to $6,000 to satisfy any liens on the property. The consent letter specifically identified the HOA lien and and the 2nd mortgagee's lien but nothing about the State tax lien. I brought this to my agent's attention. Apparently, the Seller neglected to disclose the fact that she hadn't paid her state taxes on her HUD-1.

The Seller is now scrambling to get a partial lien release from the State. According to the State of California website:
A partial release of lien releases a state tax lien from a specific piece of property. However, the lien remains in effect and will encumber the transfer of title of any other properties owned or subsequently acquired by the taxpayer. Reasons to request a partial release of lien include a need to transfer the rights to the property when there are insufficient funds to fully satisfy the state tax lien or the party with the lien has no rights to title of the property.

As part of the request, the Seller requested that I forward the appraisal (that I paid for) to the Franchise Tax Board. I gave specific instructions to the escrow company that it is only authorized to release the appraisal to the FTB and not to anyone else.

Hopefully, when the FTB sees that the condo was appraised $83,000 less than what she owes, it will release the lien off the property. I am hoping that the State does not demand that I increase my offer to cover the lien.

Bad News - Due to the deadbeat Seller's failure to disclose her State tax delinquencies, I probably won't be able to close on this condo before the end of the year, much less before the 2nd mortgagee's consent expires on 1/15/2012. My locked interest rate will likely also expire and knowing my luck the rate will probably increase. Oh... did I forget to tell you that this Seller will get $3,000 bucks if this deal goes through? Yes, you read that right. This woman who took out a "Liar's Loan" and hasn't paid her taxes will get $3,000 from this sale. I'm really starting to resent this Seller and I will be pissed if I end up paying her State taxes.

Sunday, December 11, 2011

Inspection Result of the Short Sale Condo

I had the short sale condominium inspected last week. As expected, the inspector found additional issues that require repairs. Many of the repairs are due to neglect and lack of maintenance by the Seller.

Before I go on to discuss the repair items, I learned something about the Seller that somewhat irritates me. The Seller purchased the home in 1997 for $180,000. In 1999, she was let go from her job that she had for 17 years. She was unemployed for 2 years until 2001. Her next employment only lasted 1 year. The Seller was then unemployed for another 3 years until 2005, where again, she was only able to maintain a job for 1 year. She's been essentially unemployed (or "self-employed") ever since.

In August 2006 (hopefully during the time she was gainfully employed), she refinanced her home to the tune of $375,000. In March 2007 (during her unemployment period), she took out a 2nd mortgage in the sum of $73,000, probably via a NINJA ("no-income, no-job application") loan.

I know I have no right to judge the Seller because I don't know her entire story. But considering that she's had a spotty employment history since 1999, I can't help but to think she was either greedy or irresponsible for refinancing, rather than selling her condo. Personally, if I wasn't confident about having a steady income to repay my mortgage, I would sell my condo. I certainly wouldn't take out a 2nd mortgage during a period of unemployment.

Had the Seller sold in 2006 or 2007, she could have easily sold for $483,000 - $508,000 and broken even or even made a small profit. The Seller instead chose to live off of borrowed money despite her unstable income. She spent $0 on maintaining the condo and it shows. Every repair item that I know I have to make due to "lack of maintenance," sticks in my craw. I guess it infuriates me because I should've asked for a bigger discount during the negotiation. *Sigh* Live and learn, I guess.

Oh... and did I tell you that the Seller is going to get rewarded with an additional $3,000 from the HAFA program? Oh righty. I'm finished ranting and raving.

Anyhow, here are some of the issues the inspector found:
  • Broken garage door hardware;
  • Corroded pipes underneath all of the sinks;
  • Chipped kitchen sink and broken garbage disposal;
  • Damaged fire door;
  • Leaky bathroom faucet;
  • Dirty and unmaintained air conditioning unit;
  • Dirty and unmaintained heating unit;
  • Unsealed platform at heating unit;
  • Rusted and discolored burners at heating unit;
  • Vent pipe at water heater stained;
  • Various locations of drywall damage;
  • Various locations of ceiling damage.
The inspector surmised that these repair items total about $2,000 or so, assuming I don't need to replace any of the major items like the AC or the furnace. Even assuming that those items need replacement, I can just choose not to turn on my AC and central heat. One of the benefits of living in a temperate climate like San Diego.

I'm a bit nervous now that I've underestimated what it would cost to make my unit "move-in" ready. I'm getting a dose of home ownership reality before I've even closed.

Saturday, December 3, 2011

I'm Officially in Escrow - - Budgeting for The Expiration of the Payroll Tax Cuts

Good news: The second mortgagee, Wells Fargo, consented to the short sale on 11/30/2011. Although the first mortgagee, BofA, has not agreed to extend its consent that expired on 11/25, I'm told that this is common and that it will likely do so later. Once a bank consents to a short sale, it is highly unlikely to refuse an extension, especially when there's a willing buyer. Or so I'm told.

I guess this means we're now officially off to the races. I just paid $315 for an inspection and another $400 for the appraisal. I was hoping to close by the end of the year, but looks like the target closing date is 1/15/2012.

Bad news: Interest rates are inching up right now because the stock market is doing gangbusters for whatever reason. I managed to lock in an interest rate of 3.875% (2.125 discount points) for the next 50 days. Knowing my luck, the rates will subsequently dip. *shrug* I'm okay because I doubt it will go down by much. I'd rather have the peace of mind of knowing what my rates will be for budgeting purposes.

Speaking of budgets, I've estimated that my paycheck will be approximately $95 less per pay period. The reason is two-fold: (1) my out of pocket costs for health/dental/AD&D insurance is going up by about $15/paycheck, and (2) my pay will decrease by $80/paycheck if our moron Congress members fail to come to any consensus regarding the Social Security payroll tax cuts. I will be flabbergasted if Congress makes a decision one way or the other by 12/31/2011.

I personally don't like to see my pay go down approximately $200/month, but I can absorb it. After all, when the payroll tax cut was implemented, I decided to hoard it rather than spend it. I wasn't a very good citizen since I didn't use the tax cuts to stimulate the economy.

Do you think the Social Security payroll tax cut will be extended? If so, are you preparing for this possibility?