Need mortgage help

So I am about a week away from closing... (Assuming the seller is still alive (you can see my previous post). The seller is in poor health and not anticipated to live long.


Ive been in contract since April, its been a long road, with many bumps...I am buying a condo and everything on my end has been approved from the bank. But the bank did not approve the condo as they don't have adequeate insurance coverage to satisfy the underwriting guidelines. I'm waiting to hear back today to see if the board president is willing to increase the coverage.

So I'm on the verge of having my loan denied... I'm assuming I would get my deposit back. I guess I could call other banks but I hate to lose my lock rate.

Can anyone help me!?! This process has beaten down.

Re: Need mortgage help

Any one have any input?

Re: Need mortgage help

How did they give you a close date ifeverything at the bank wasnnt approved and ready to go?

Need mortgage help

When did you lock in? I remember you were part of that post where a bunch of us (including myself) were talking about how rates went up and we needed to lock in. Since that day rates went up alot and now they are back at that level again.

You could call another bank and start the application process but that would be another inquiry into your credit. And who's to say that bank will approve of the insurance?

Also, what does your lawyer say about the owner's health situation and the house?

Message edited 7/17/2013 11:12:29 PM.

Re: Need mortgage help

I was given an anticipated date of next week as no one expected there to be a problem with the condos insurance policy. They were also trying to rush everything because of the seller is in really poor health and not expected to live more than a few days.

My attorney said if the seller dies, the contract is still valid. However things will likely get delayed "maybe a month or 2". As the condo becomes property of his estate and his will needs to be executed etc etc

I ended up locking at 4.5. Much different than the 3.25 I was pre approved for.

Need mortgage help

Why would you want to close on a condo that one bank already said has lousy financials?

Take this as a sign and walk.

Re: Need mortgage help

Is there a lot of turnover at this condo development? Presumably, other buyers have bought units and have needed to obtain mortgages. Unless the insurance policy recently changed/was reduced, I am thinking maybe your lender has extra strict criteria beyond most lenders?

If you need to change lenders, I would speak to the condo property management about lenders they have dealt with in the past. It would probably be in your best interest to use a lender that is familiar with the condo property and has recently given loans to purchasers buying there.

In my experience, rates don't vary that much from bank to bank. If a lender is offering a rate far below what other lenders are offering, I would question whether you are paying for it elsewhere (e.g., closing costs, fees/points, etc.). Banks are for-profit institutions after all, and want to make their money somewhere.

Message edited 7/18/2013 9:12:44 AM.

Re: Need mortgage help

Thank you for your input. To clarify:

The condo doesn't have lousy financials. They are missing "fidelity bond insurance" which to my understanding protects unit owners from fraud if the condo association embezzles your maintaince fees. According to my mortgage broker at Wells Fargo this is a standard underwriting requirement for all major banks that follow Fannie Mae/Freddie Mac guidelines. It's required for any condo with over 20 units. This place has 23. The condo president supplied the bank with "what she usually to satisfy this requirement". Apparently she manages many buildings and the corporation for which she works has a policy on her, but it doesn't cover this building. So it sounds like she has gotton by just by substituting this picu and no one has noticed that it doesn't in fact cover this condo.

My locked in rate expired 8/18. It was suggested I call some smaller banks who may not be as strict. But u don't want any unnecessary credit inquires until I'm sure I need to go this route. I locked at 4.5. I think rates now are slightly higher (4.75). I know it doesn't seem like a big deal. But it's a lot higher than the 3.25 rate to which I was pre approved for and submitted my offer on. (It's approx $250/month more... I'm really at the upper end of my budget even before the rate increase.

Re: Need mortgage help

Right now my lawyer reached out to her to see if she could obtain such a policy. And her reply was pretty short saying "it's nothing that would happen quickly"

She asked Wells to waive this requirement, which I know they won't.