One of my escrows fell apart yesterday, not because the buyer of the home I have listed couldn’t qualify but rather because the person buying the buyer’s home couldn’t get their loan secured.
Multiple calls to the agent representing this one-off buyer and to the buyers’ lender led to the standard response – all is well, they’re qualified, they can close on time, nothing to worry about. Except there was.
It turns out the person purchasing the buyers’ home wasn’t buying the home for himself but for a friend. The plan was to buy the home, deed it to the friend and have the friend refinance the loan in their own name. The agent/lender combo (do I even have to add that this person worked at a 100% commission brokerage?) assured this buyer that this could be done without a problem.
Except … the buyer’s friend is an undocumented alien. The friend has no credit history because he has no ability to obtain credit. And without documentation, there’s no way he could qualify for a loan.
This isn’t a political debate about undocumented aliens (and if any comments try to take things that direction, I’ll likely issue a rare editorial veto.) Instead, it’s about the lies some lenders still are telling buyers in the interest of securing a paycheck.
The agent/lender had to know … HAD to know … that the buyers’ plan couldn’t work. Yet instead of telling the buyer the truth, the agent smiled and said “no problem.” It probably will surprise few to know this agent apparently has resigned their position with this real estate brokerage.
I’ve talked in the past of the lack of supervision with many 100% commission brokerages. Here’s the proof. And here are the victims:
A buyer about to get sucked into purchasing a home they didn’t want under the mistaken impression they could refinance the home away in six months.
A seller who purchases another home and finds out their sale can’t be completed only after they have moved out of their own home at their expense.
A second seller now looking at turning their home into a rental after losing a full month of marketing on a buyer contingency based on one-off falsehoods.
Neither the buyer nor seller in my transaction did anything wrong. Everything started with the one domino before and the agent/lender combo more interested in their own bank balance than the needs of the client (or current lending law, for that matter.)
Tighten lending standards as much as you want, but you’ll never find a way to squeeze the slime completely out of the market. For more on the joy of agent/lender combos, check out Jay’s recent screed.
[tags]real estate financing, Phoenix real estate[/tags]