House #26: It’s Not Our Fault!!!

Anyone who knows me or who reads my blog probably knows that a central tenet of my business philosophy is, “If *ANYTHING* goes wrong in my business, it’s my fault.” Sure, other people will screw up, other people will let you down, other people will lie, cheat and steal; but, there’s almost always something I could have done before, during or after the issue to have mitigated it and ensure that it didn’t negatively affect the business.

Well, today something bad happened that — no matter how hard I try — I can’t figure out how I could have mitigated it…

The Fourfecta House was scheduled to close yesterday, and while we already had underwriting approval from the lender, we were just waiting for underwriter approval from the downpayment assistance program the buyer is using (which normally only takes 2-3 days). So, we wrote a one-week extension to the contract, with the assumption that we should close in the next couple days.

But, today we got news that the primary lender has gone out of business!!! To be completely accurate, they lost their warehouse line of credit with Bank of America (this is the money small direct lenders borrow from larger banks to fund loans). Apparently, BoA shut down a whole bunch of warehouse lines in the southeast this week.

For the first time, I’m not sure there was any way to predict or mitigate this circumstance, and at this point we just need to make the best decision possible to ensure that we either can close the loan with this buyer or find another buyer. The lender is telling us that their entire staff (including their underwriters) is going to a new company, and that the loan should be easily approved with the new company within the next 2 weeks without having to deal with additional underwriting or new appraisals. This is good news…assuming it’s true.

With all the moving parts (new lender, FHA requirements, the downpayment assistance program, etc), I’m not sure how likely it is that everything can be moved to another lender and closed out in a short period of time. But, the alternatives aren’t very pretty: finding another lender who works with this downpayment assistance program, relisting the property and finding another buyers, etc. Each of these avenues could require drawing out the process many weeks or more.

Anyway, we haven’t made a final decision on what we plan to do; the lender has promised to contact us on Friday with more details about the switch-over and the process we face over the next couple weeks. If she does contact us and it sounds like things should be able to be moved over to the new lender quickly and easily, we may give them a chance and wait it out a couple weeks. If not, we’ll have to figure out a Plan B.

Stay tuned…and I’m going to keep trying to figure out how this is my fault and how I could have avoided this situation… 🙂