Saturday, January 28, 2012

When a Good Guy Wins

Last year at this time we were deep in negotiations to purchase our current home. HSBC bank had foreclosed more than six months earlier on the previous owner, and based on their behavior with us, we could see why the previous owners lost the house. Not only did the bank not budge an inch on anything, but they used what seemed to us to be deceptive ploys to bring in what would be small amounts of money for the bank but large amounts for us. For example, because we were using a VA loan and the VA almost always requires some repairs prior to approving a loan, the bank asked us to increase our offer by $5K. We did. Then the loan officer inspected and required $2600 in repairs, including removing some molding beneath the deck. The bank's contractor said it would cost $2600 to make the repairs, and the bank told us that before we could close, we would have to pay the bank's contractor to do the repairs. When we pointed out that we neither owned the home nor had any legal documentation that would require the bank to sell the house to us, we would be paying for repairs on someone else's home with no guarantee of having that home become ours. The bank refused to budge and said that if we did not pay, it would rescind its acceptance of our offer and put the house back on the market and keep our escrow.

We contacted a lawyer who said the requirement was likely subterfuge for the bank to wiggle out of an offer that it no longer liked because the market had significantly improved during the time that we had been negotiated and our house had increased in value by $65K. Sure enough, he was right. While we were still discussing the deck and under-deck repairs, the bank re-listed the property without identifying the address or location. However, they picture they used of the driveway had a small white car trucked parked on the street on the google map that they had used to download and post the picture. Donnie called up our house-to-be on google maps, and sure enough there was the little white truck! The lawyer dictated a letter in which we demanded our escrow back if the bank was unwilling to do the repairs.

At that point, Jack, the loan officer for VA, called and asked if we wanted the house if the deck issue could be worked out. When we affirmed, he offered to split the cost of the $2600 between himself and the bank's real estate agent. (Our biggest mistake was to call the real estate agent listed on the for-sale sign; she worked for the bank.) His suggestion took away the danger of losing the house while paying for repairs unless the bank wanted to financially harm its own real estate agent. We agreed, which I am sure put the dishonest real estate agent in a difficult position. The bank wanted the property back, but if she paid the repairs, it would not be able to take it back. Of course, both Jack and she made decent commissions on the house, but in each case it was $1300 less than they would otherwise have earned.

Jack was a gentleman, but the real estate agent took one final swipe at us. The bank's contractor had disassembled the affected part of the deck and removed the mold but had not replace any of the bad wood when the day came for closing. The real estate agent looked at us triumphantly as we looked forlornly at the gaping hole in our deck and said that we had two choices: close "as is" at that moment or wait for the contractor to finish the deck, in which case our offer would be turned down and the house put back on the market and our escrow retained. (Same old story; same old subterfuge.) It was well planned. The closing was on a Sunday, and there was no way to contact our lawyer to see if the bank could get away with that. A handyman friend who planned to paint the house and do other minor repairs had come with us, and he said his brother could finish the deck for $300 and that we should take the house as is because its value was higher than we were paying. So, we did.

We have always been grateful to Jack for coming up with this out-of-the-box solution and for his kindness in paying in our stead. There was no way in which to repay this kindness except with words (and, of course, references). Recently, however, we have been bombarded with all kinds of loan companies wanting to refinance our house for a significantly lower interest rate. Apparently, VA rates have dropped. So, of course, we thought about Jack, sent him copies of the offers, and asked for his advice. He said that most of these really low rates are come-ons with impossible strings attached, with the result being that most people will not qualify for the lowest rate but a higher one. Given that rates are dropping, he did a calculation on what we could realistically do and determined that we could refinance for a somewhat lower rate and save $200 a month. Over thirty years, that would be a significant savings. So, we authorized him to proceed.

In doing a good deed last year, Jack lost $1300. This year, he will probably make ten times that much on the refinancing. Somehow, that tickles me!

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