Tuesday, July 13, 2010

helping a consumer deal with reality

Back in April we received a title insurance order for a vacant lot on which the buyer planned to build a new home.  It's a cash deal and it still has not closed.  Why?  Well, the seller didn't realize that he had a mortgage on this lot and now we are working through a long process of obtaining a release.

Why didn't the seller know about the mortgage?  Well, the purchase of the adjacent lot was made after he purchased the main property, the lot with his house.  He had purchased the adjacent vacant lot with cash.  What he didn't realize is that when he later refinanced, the mortgage lender - Countrywide - took both parcels as collateral.  We don't know if that was intended or simply an accident, however, it does point out how careful a property owner should be when offering collateral for a mortgage.  Don't assume you and the lender are on the same page.  ;)

Anyway, our transaction is further complicated because the seller hasn't been making mortgage payments.  We're dealing with Bank of America - the new servicer of the old Countrywide mortgage - and they in turn must deal with Fannie Mae to get approval for the release.  It's a time consuming process requiring at least one appraisal but it IS slowly moving forward.

So, yesterday I received a call from the real estate broker.  She had me on speaker phone with two agents in the conversation - all talking over each other.  The broker called me to say they love our company, have never had a problem, but she cannot understand why we haven't closed this cash deal - it's been over two months, etc. etc.

I pulled the file, reviewed the copious notes by DH and proceeded to explain the reality, basically as I have done here for you.

Yes, I understand that this is not what the buyer expected and that they had hoped to get construction started before school starts.  No, I do not know how long Fannie Mae will take to approve the release.  Can she call Fannie Mae?  Sure.  Do I know who to talk to?  No.  Will I call? No.  The release was sent to Fannie Mae by Bank of America on June 29th.  I think we are still in a reasonable processing time.  How much longer will it take?  I don't know.  Two weeks?  Perhaps.  Six months?  I doubt it.

While we were having this conversation one of the agents in the room had Fannie Mae on the phone.

[pregnant pause for effect]

I suggested to the real estate broker that the best service she could do for her buyer is to help them understand that they have a seller that simply did not know about the need for a release.  Releases take time and they need to be patient.  The mortgage lender and Fannie Mae are motivated to get money and as long as the money being offered for the release is reasonably matched to the value of the vacant lot, I see no reason why we won't come to a successful conclusion.

She did not find my advice helpful and basically wanted to push me into doing a brow beating upon Fannie Mae in her stead.  I refused and said I would certainly make a call if I thought it would help, however, in my professional opinion the best course at this point is to be patient and wait.

When I have a conversation like that with a real estate broker I realize I may be doing so at the peril of not doing business with them again.  I have found, however, that being kind and using the tough love of the truth is better in the long run.  Many will see that and appreciate it and those are the real estate agents I like to work with.  If I spend my time doing the bidding of a person who is not grounded in reality, the consumers I am assisting will not be well served and I will be miserable in my daily tasks.  I'd rather be happy.  ;)

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