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doodlebugger

USDA guaranteed - our homebuying update

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Recap: Filed bk7 in 2005, discharged Feb 2006. Dh has no baddies on report except Bk7. House we live in had two mortgages in 2005. Second reaffirmed, first did not. We stayed in house. Settled in 2007 for less than owed on first. Continued to live there and make payments. Two years ago, we hit one month rough patch and we asked for a modification. They said to be considered, we must stop payments. A few months later, while still monthly submitting new docs for modification, they start foreclosure proceedings. Foreclosure stopped more than once because we responded to docs stating we were trying for a modification, and their lawyers never responded to court. Almost two years later, trial mod for three months, then approved for perm mod. Terms are stinky - same rate, payment only $50 less, and they are tacking on 20 years and $15k to the mortgage. Dh quit claimed the house (including dower and curtsey rights) to me because this is what the lender told us would work. Since October of last year, we have been trying to buy a house through USDA guaranteed. We were pre-approved twice and couldn't find a house, and the one we found, we couldn't close on because of all sorts of complications (house was a short sale then foreclosure). The house became available this spring and when we went through for the third pre-approval we were denied based on a previous foreclosure (that took place in 2006 of a rental house) and based on our spending habits. Fast forward to now - we have been searching for another lender. All of them tell us the same thing - that the quit claim deed, although it includes dower and curtsey rights, is not a valid document to absolve dh of ownership of the house. We were put in touch with a senior loan analyst for USDA who looked over our previous pre-approval and said she didn't see why there would be a problem. She contacted the state office for USDA and they told her they would accept the quit claim deed if the title company accepted it. Whew.....if you have followed me this far, here is what I have finally learned about our situation.

 

The issue is NOT the USDA even though that is what every single lender keeps saying. The issue is the lender. The lender has to close the loan and get a title company to clear them for title insurance before the USDA can do whatever it is that they do (back the loan?). The lenders will not tell us that though. They keep telling us the problem is the USDA. So, I spoke to the state director for the program today and she cleared it all up for me. The lender has to be willing to take the risk that the title company will be able to procure title insurance which can't take place unless dh is cleared from this house ownership. The title attorney have some wiggle room as they interpret the law, and they may or may not agree with the quit claim being enough. That would leave the lender holding the loan with no backing from the USDA........a risk that many lenders aren't willing to take.

 

We have one more lender who is talking to us about our situation, but it's not hopeful. I am not admitting defeat yet. I will do that when every door has closed and there is no possibility left. But, I do feel I am running out of options. No rentals in our area that fit our parameters. We cannot move out of this county due to a program that my special needs child is in, and needs to stay in until he finishes school.

 

Funny how we had two pre-approvals and can't find a house, and when we finally have a house to buy, can't get the pre-approval! :sorry:

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I'm sorry to hear you're having so many issues with the lenders. This can all be very confusing as well. When you say the denial was based partly on "spending habits" what does that mean? Was it your utilization or ?. I am preparing to submit a mortgage application and am very concerned about things like you describe hampering the process.

 

Is it possible that there was some procedural error on the quit claim that makes them nervous? Is your husband the sole applicant? I guess I'm confused on why his ownership is an issue but not yours..this is all new to me so I apologize in advance if it's common knowledge.

 

ETA: Never mind the question - just read your other thread that answers all. :-)

Edited by babyarho2010

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And we are back! Got a lender who is willing to help, and they have an investor already lined up. Dh will app tomorrow, and hopefully we will get a GUS approval again. Then we will go from there. The house we have been trying to buy since October is still available as of tonight.....but I am not going to get my hopes up this time since we have had such a difficult time.

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Thanks! I'm going to need it!!! :rofl:

 

Dh applied today, loan officer says it looks pretty good. Dh's midscore was even higher than the last time. The guy said ratios looked good too. We have all the documents he said he will need. He said he was going to run dh's file by the underwriter and the investor, and he would get back to us tomorrow or Monday. I am hoping that he gets back to us with a pre-approval letter so we can go make an offer on the house! Things are moving in the right direction, but I am still not getting my hopes up. :stop:

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We found out the house we wanted is still available. We passed through GUS with no issues. They were processing the CAIVRS stuff Friday, but we know there is nothing there. They had to talk to their lawyers regarding the whole quit claim deed on the house we are currently in, but this lender didn't think it was going to be a huge issue. He said he thought by the end of the day on Monday we will have a pre-approval in hand! Then, we have made an appointment with our realtor to go see the house (because it supposedly had some work done, and they have jacked the price by $20k more, so it better be some major stuff!). We definitely know what we want to offer. Can't wait until Monday!

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Brian B - or one of the other "experts" - I have a question....didn't want to start a new thread, so I hope one of you see this. Funds have been a bit tight this month due to traveling, and last minute summer stuff with the kids. When I say tight, we have been paycheck to paycheck just for this month, but everything paid on time. We have already notified our lender about this, and he didn't seem overly concerned, but did say we need to start saving more money. We won't be able to really start saving up until after the first of the month when we consolidate our bills and pay them off. As a result, I am concerned that if we have to come up with our earnest money and appraisal money this week, I wouldn't have it in hand. Can we use a cash advance on a credit card for this or can we use some of the left over funds from a consolidation personal loan? It would only be for the earnest money and the appraisal money, and the rest would be funded by the loan. Then, after the first of the month, we will be able to save money.

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We are NOT under contract yet. Still waiting for the pre-approval which we should have hopefully by Monday afternoon or evening. Then, we will be able to put our contract on the house. I am just preparing myself for this whole thing should it go as fast as I think it might. So, it sounds like if we put the earnest money down on the house, we will need to do so after dh gets paid on Friday. Any funds before that will be proceeds from our consolidation loan which we will be disbursing this week too (we have to deposit some of the funds into our account and write checks for all the bills that are being covered by it). I don't want to mess this up! We are just too close again this time.....

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Heard from our lender a little while ago. Lender's underwriter gave the ok, investor gave the ok, we have the ok from USDA, and now we are waiting on one more piece of information - whether a title lawyer can get title insurance. If the answer is yes, and the lender thinks it will be, then we will get our pre-approval letter. As soon as we have that in hand, we will go and see the house (since it's had some "upgrades") and then submit our contract. The house is listed under Freddie Mac's Homesteps......so I think from what I have read it might take as long as 5 days for them to respond to our offer. If they reject it, we have decided not to wait any longer and we will immediately find another house. Our primary concern is that when we attempted to purchase the same house in the fall (before it was foreclosed on), the price was $89,900. Now, they are asking $109,000 because they put in new carpet (the carpet in it was only 2 years old and in very good shape), they painted (they put the same exact color all over the house in every room - a light tan), and they fixed one cosmetic issue above the shower in the master bathroom (the drywall cracked). They removed the above ground swimming pool that was there, removed the fridge, and they put in a new stove and over the stove microwave. The house already had a new roof, new doors and windows, new furnace, new a/c, and new water heater before the house was foreclosed on. The house is now move in ready, but I don't see how they could be asking $20k more with as little as they have done.

 

I'm just wondering if anyone has any experience in bidding for a house from Freddie Mac/Homesteps.......are they going to come down? Will they pay closing costs or some of the closing costs?

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Woohoo!!! Pre-approval in hand. This lender was extremely thorough and even got pre-approval from the closer, the investor, double checked with the USDA and made sure to check any possible issue that could come up. The issue we had before with our financial situation being scrutinized by the previous lender - not an issue here. No cash reserves needed - they will consider dh's small 401K fund as cash reserves. No other overlays that we have to meet. Brian B - you were absolutely on the money when you said credit card for appraisal and existing funds for earnest money. Sad that the rates have gone up about a point since we started this process last fall, but I am not going to be too upset as long as I can get out of the house I am in now. This guy completely checked and double checked everything before giving us this pre-approval. We are ready to buy! We will go to look at "the house" tomorrow to see what they have done to it, and then go from there. Still reserving my excitement until we are closing..... :swoon:

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Just got a call from our realtor. The seller's realtor says that someone is coming at the exact same time that we wanted to see the house. The seller's realtor said that they have booked two hours to see the house. Dh can't get home from work any faster, so if they are "serious" buyers, then we will be competing and likely they aren't going to take our max offer because it's going to be less than what they are asking. Ugh. Sooooo close.......just have to keep my fingers crossed that they are not "serious" buyers. But, I have a feeling that I should start looking at the listings again. :cry2:

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Does your hubby have to go with you? If you can go by yourself with the realtor.... wouldn't that be good?

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I went, and I was not impressed with what they have done to it since we were there last. They changed the locks, but whoever put them in, didn't do a good job. They removed the above ground pool and pump and left about a foot deep hole in the ground. They painted with cheap contractor paint all over the house, and the patch job in the bathroom was not impressive either. The carpet was the only nice upgrade. They had a pipe coming up from the crawl space into a storage/pantry closet, and it was not capped off and had a moldy smell. They removed the fridge, nice stove that was in there, and replaced with a cheap stove and an above-the-stove microwave. Then, we found a crumpled up note on the floor which said that there had been a water leak and they had used over 11,000 gallons of water!!! The water was turned off, so I couldn't test to see if that was an issue or not. There were a few other minor details that weren't a big deal. They do not have a propane tank, and they have a gas furnace. Freddie Mac told me they will have to provide that when we get our appraisal done. We offered 9,000 less than asking price AND for them to include our closing costs and prepaids. We also found out they have had a termite inspection, and only found evidence outside around a deck, not inside the house. It has had a treatment, and we can continue to have annual treatments/inspections for less than $100 a year. The plus side of things - this house has a new roof, new furnace, new a/c, new water heater, new carpet, and has been painted. I am worried that the water leak is caused by damaged pipes since the house was abandoned during the winter (and there were a lot of freeze days). We included that in the contract, and we are taking advantage of Homepath's offer to pay for an extended warranty as well (they cover up to $500 for a warranty).

 

We were late leaving, and no one ever showed up. Dh drove by there on the way to the realtor's house, and there was no one there. After signing contracts, we went by there and no one was there. I think the seller's realtor was lying about someone coming......but who knows!?!?!?

 

Now we wait. We gave them 24 hours and we told them this was our best and only offer. If it falls through, then we will be back to searching and there is nothing on the market available that is even remotely appealing.

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TX-Bluebonnet - not yet......originally we were not, but since the new realtor has taken over, and she filled out the disclosure with a bunch of X's and a statement that the seller doesn't have any knowledge of any issues......even though we found a note at the property that said they had a major water leak of over 11,000 gallons......we really didn't feel right without getting one. After everything we have been through, we want to make sure that we aren't getting a lemon. This house has been on and off the market for nearly two years.....there has to be some reason we don't know about that has kept people from buying it besides what we already know.

 

Thanks ugghh!! I am keeping my fingers crossed!

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Ugh....it's after 8 p.m. here and no word from our realtor as to whether our offer was accepted. We gave them a 6 p.m. deadline. Guess we will have to call our realtor tomorrow and see if she found out anything.......not feeling good about this.

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Heard back from our realtor. I am just so ticked! :aggressive:

 

When we went to see the house yesterday, the seller's realtor told us that someone was coming to see it for TWO hours around the same time we wanted to see it. So, I rushed down there with my realtor and without dh so we could see it one more time to ensure we still wanted it. We last saw it in the fall of last year. As soon as we left, we went to the realtor's house (which is very close by) and dh met us there within 10 minutes of arriving, and we filled out the paperwork, and our realtor immediately took it to the seller's realtor. She gets a call from the seller's realtor saying that she received a contract the night before for full price. So our realtor gets mad and tells the seller's realtor that she shouldn't have allowed us to see the house if she already accepted a contract for full price! Then our realtor tells her that we will just retract our contract, and suddenly the seller's realtor insists on sending it into Freddie Mac (this house is in the homesteps program) along with the other contract that offered full price. Whaaaaaattt???? So, do you think this lady is bluffing? I'm ready to walk.......I'm sick of trying to buy this house. We have tried since last October - this is the third or fourth contract we have submitted on the same house. The first time, the seller's realtor (a different ding dong) messed it up. The second time we ended up with the broker for the seller's realtor and our realtor's broker working together to get the contract submitted. The seller's realtor didn't submit it on time, and the house was foreclosed on. The bank bought the house back and it ended up with Freddie Mac. Freddie Mac assigned this new realtor to sell it, and she has even called me once to tell me to stop calling Freddie Mac to see when the property will be available. I'm done....I am calling Freddie Mac tomorrow to report this lady!!! She isn't even keeping the property up the way she is supposed to. :aggressive:

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If it makes you feel better, I would have lost interest after the first debacle. If it were me, I would move on.

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