We were supposed to close on the sale of The Horsey House several weeks ago (May 9, to be specific), but unfortunately, there has been a tremendous number of last-minute underwriting issues that have held things up, and could ultimately keep us from closing at all…
It’s rare that we get held up in underwriting issues these days — our mortgage broker is representing our buyer and he is very good at ensuring the package is complete before it gets submitted for review and approval — but this one has been a good bit tougher than most previous loans our buyers have faced. To ensure privacy for the buyer, I don’t want to go into too much detail, but suffice-it-to-say, the underwriter is asking for a lot of financial and personal documentation about past issues the buyer faced.
While all of the requests are reasonable, the buyer works nights and sleeps during the day, so gathering documentation from the courthouse and his employer has been a bit tougher than usual, which has slowed things down. In addition, some very detailed documentation is required from the IRS, but the IRS claims that there is no way to provide the information in a format that would be suitable for the underwriter. So, while everything seems to be in order, and while the buyer has been working diligently to provide all the requested information, there are just some pieces of information that can’t be provided.
From the underwriter’s point of view, this is an FHA loan, so ultimately, it will be sold to the government, who will require all documentation to be in order — so, the lender is just doing his job to ensure that the loan can be sold to FHA once it’s funded.
At this point, we’re just hoping that the underwriter decides that there is enough documentation to support the buyer’s situation, and that he allows the loan to close. I expect that we’ll get a final answer in the next day or two, and if the underwriter clears the loan, we should hopefully close this week. If the underwriter doesn’t clear the loan, our options are to either try another lender (my broker thinks this is possible, but far from certain) or to look for another buyer.
I’ll have an update in the next couple days…
FWIW, I went through the same drama with House #6 for about two months only for the loan to be declined. Just like what you mentioned, the underwriter started digging into the tax returns and found some issues with a previous property the buyer had owned and had not disclosed all the details properly.
I ended up keeping the earnest money but in the end that did not make up for the lost marketing time. I am sure you are already prepared for this not closing…but just make sure you keep advertising the house and accept any back up offers that you might get. I would even suggest to set the house as Active/Back on Market on the MLS…
Hey Luis –
In our case, our mortgage broker is confident he’ll be able to get it done…and given he has never not gotten a loan done that he’s started for us (literally, 100% success rate over 2 years), we’re going to trust him and let this thing play out…
Hopefully it will work out, but at this point, we don’t feel like re-staging or re-marketing the property…