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We placed an offer on an REO house. Actually, the house was in a multiple bid situation and the bank accepted a higher offer (we offered list price). Long story short, the 1st offer did not go through, and so we resubmit our offer, and was told it was accepted.
Last week, the REO bank sends us a contract, we sign contract and wait for the bank asset manager to sign it so the contract is executed. In the meantime, we get the house inspected since we put in a 30 day closing and we put in a 10 day option period. When the bank sent us the original contract it was clearly indicated that our down payment is $0 since this was what we submitted in our offer.
On Monday, we get the contract back from the bank with their asset manager signature. The bank asset manager made changes to the original contract and is now requiring 3% down payment. I should mention that the offer we submitted is for 100% financing (my credit union has a special program for certain professionals which does not require a down payment faculty). The problem is that my lender states that in order for the contract to get approved the 3% down payment must be removed.
The REO bank is saying that in order for the loan to get processed in their system that it has to have a down payment. What I don't understand is why do they require this down payment? I mean, why did they even accept our offer (knowing that we were not putting $$ down), just to change it after we signed THEIR paperwork? If anyone is taking a risk, it would be my lender. My lender has already agreed to give us the loan, so why is the REO bank having a problem?? Our real estate agent has spoken to the bank's listing agent multiple times and he was also confused as to why the bank is requiring a down payment.
We have already been preapproved for the 100% financing loan; it is really only subject to the house appraisal. In fact, we also got prequalified (with no problems) from the REO bank too, so they know we are solid. To make it more interesting, when I called the mortgage loan person at the REO bank and asked told them about loan programs with 3% down (hey, I figure since they put it in the new contract, they must have some special program), she told me that the minimum down payment is 5% and it is strange that they put in a 3% down payment since they don't even offer that. BTW,The price of the house is outside of the FHA loan amounts in this area, and I don't even know of any lenders that offer 3% down. Normally my credit union requires 10% down payment, but due to my job I can get the loan with $0 down payment.
So now we are at a standstill, and we are asking the REO bank to remove the 3% down payment since my lender is stating that they cannot give us the 100% financing loan if the contract states we have to put down a down payment. To make it even worse, apparently the contract is not "officially executed" yet since the REO bank made changes to the down payment option, and we have not signed off on it (mainly due to the fact that our lender said that they could not get the loan approved due to the changes of the REO bank made).
We really want the house, but it does need some work and we want to keep as much $$ liquid as possible so we can make the repairs. If we do put down 5% down payment, then our repair $$ will be gone. Plus, when I run the numbers, our best option is to do the no $$ down since the breakeven point for loans with the 5% down is 8 - 12years (and we are thinking we will stay in this house for about 5-6 years).
Sorry for this long post. If anyone has any advice on how to handle this situation, it would be appreciated. Has anyone heard of a situation like this....?
We don't want to lose the house. But unless the REO bank removes the down payment contingency, I doubt we will go through with it.
We placed an offer on an REO house. Actually, the house was in a multiple bid situation and the bank accepted a higher offer (we offered list price). Long story short, the 1st offer did not go through, and so we resubmit our offer, and was told it was accepted.
Last week, the REO bank sends us a contract, we sign contract and wait for the bank asset manager to sign it so the contract is executed. In the meantime, we get the house inspected since we put in a 30 day closing and we put in a 10 day option period. When the bank sent us the original contract it was clearly indicated that our down payment is $0 since this was what we submitted in our offer.
On Monday, we get the contract back from the bank with their asset manager signature. The bank asset manager made changes to the original contract and is now requiring 3% down payment. I should mention that the offer we submitted is for 100% financing (my credit union has a special program for certain professionals which does not require a down payment faculty). The problem is that my lender states that in order for the contract to get approved the 3% down payment must be removed.
The REO bank is saying that in order for the loan to get processed in their system that it has to have a down payment. What I don't understand is why do they require this down payment? I mean, why did they even accept our offer (knowing that we were not putting $$ down), just to change it after we signed THEIR paperwork? If anyone is taking a risk, it would be my lender. My lender has already agreed to give us the loan, so why is the REO bank having a problem?? Our real estate agent has spoken to the bank's listing agent multiple times and he was also confused as to why the bank is requiring a down payment.
We have already been preapproved for the 100% financing loan; it is really only subject to the house appraisal. In fact, we also got prequalified (with no problems) from the REO bank too, so they know we are solid. To make it more interesting, when I called the mortgage loan person at the REO bank and asked told them about loan programs with 3% down (hey, I figure since they put it in the new contract, they must have some special program), she told me that the minimum down payment is 5% and it is strange that they put in a 3% down payment since they don't even offer that. BTW,The price of the house is outside of the FHA loan amounts in this area, and I don't even know of any lenders that offer 3% down. Normally my credit union requires 10% down payment, but due to my job I can get the loan with $0 down payment.
So now we are at a standstill, and we are asking the REO bank to remove the 3% down payment since my lender is stating that they cannot give us the 100% financing loan if the contract states we have to put down a down payment. To make it even worse, apparently the contract is not "officially executed" yet since the REO bank made changes to the down payment option, and we have not signed off on it (mainly due to the fact that our lender said that they could not get the loan approved due to the changes of the REO bank made).
We really want the house, but it does need some work and we want to keep as much $$ liquid as possible so we can make the repairs. If we do put down 5% down payment, then our repair $$ will be gone. Plus, when I run the numbers, our best option is to do the no $$ down since the breakeven point for loans with the 5% down is 8 - 12years (and we are thinking we will stay in this house for about 5-6 years).
Sorry for this long post. If anyone has any advice on how to handle this situation, it would be appreciated. Has anyone heard of a situation like this....?
We don't want to lose the house. But unless the REO bank removes the down payment contingency, I doubt we will go through with it.
considering what you have gone through so far I would just walk away. Seems like someone does not know what their doing.
I agree. Let the house go and wait for a better deal. I've never heard of a seller (even though they are a lender in this scenario) giving two cents about a down payment since they will get 100% of the funds at closing.
If it doesn't go through we would have no choice, but to walk away.
However, we are in love with the deal (and really like the house and location). The house is priced really well and there are never any foreclosure property in this area (but who knows...maybe in a couple of months more will begin to pop up).
The entry level house in this area is about $50 -$80K more , so buying this house would actually enable us to house get into the neighborhood we want...at the price we want. Of course, we will have to put in $$ to bring it up to the comps...but we can do this over time.
Everyone I spoke to said they have never heard of this situation with the seller caring about the down payment...but I did get a good suggestion from someone to have the $$ written in as earnest $$ deposit instead of a downpayment. If my lender and the seller agrees, this seems as if it may be a good option.
I don't want to lose the house on a technicality...
We did 10% as earnest money. I would check into what they really want the 3% for. I bet its just earnest money and someone has the terminology messed up.
Good luck, let us know how it goes!
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If anyone is taking a risk, it would be my lender. My lender has already agreed to give us the loan, so why is the REO bank having a problem?? Our real estate agent has spoken to the bank's listing agent multiple times and he was also confused as to why the bank is requiring a down payment. 
BTW,The price of the house is outside of the FHA loan amounts in this area, and I don't even know of any lenders that offer 3% down. Normally my credit union requires 10% down payment, but due to my job I can get the loan with $0 down payment. 
