More Bank Insanity

Banks just need to get out of their own way.  Within the last two weeks I have run into 2 separate examples of how banks jeopardize real estate transactions with their lack of common sense.  The first involves a short sale.  The short sale lender has decided in all their wisdom to require an affidavit be signed and notarized verifying that there is not a property flipping scam involved in the transaction. 

Here is an exert from the affidavit that the short sale lender (GMAC) requires to be notarized before they will consider the buyer's offer.

"BUYER represents, along with BUYER real estate agent, that I/WE are not involved in a for profit scheme to flip the property and there are no current agreements, written or otherwise, to immediately re-sell the Property at a higher price, and that no transactions of this nature will take lace within ninety (90) day of the date of closing on the short sale transaction.

I/WE represent that there are no relationships between any parties involved in the transaction, including BUYER, SELLER, FINANCING COMPANY OR INSTITUTION, or REAL ESTATE AGENT "

GMAC requires this form be notarized by the buyers, the buyer's real estate agent and the buyer's lender.  They are requiring the buyer to spend money on this before they know if their offer will be accepted and if GMAC will even do the short sale.  I understand the need to protect themselves from scams and this form should be addressed but it should be notarized by the buyer once the offer is accepted and escrow is opened.

The second issue I have is that the second paragraph essentially means I, as a real estate agent, can not represent anyone I have a relationship with.  I can not represent my mother, sister or daughter since I do have a relationship with them.  Wow, really?  I can't represent them even if they are first time, owner occupied buyers?

The final issue that stands to be the deal breaker is the most ironic.  The short sale lender (GMAC) requires this form be notarized not only by the buyer and the buyer's agent but also the buyer's lender.  The buyer is using Navy Federal Credit Union for their loan.  It is probably not surprising to you to learn that the buyer's lender will not sign and notarize such a form.  NFCU will not sign it.

So now the buyer's offer is stuck in limbo between two banks.  The first demanding a form to be signed by the second institution and the second bank refusing.  The buyer's offer will not be submitted so they will not be able to continue.  It is so sad that the ready, willing and able buyers are trapped in a pissing match between lenders and unable to purchase a property.

The second example of lenders being ridiculous and shooting themselves in the foot involves a REO (bank owned) property.  In this example the buyer's submitted an offer with a 17 day contingency period.  This is a standard time frame to do their inspections, review title, HOA reports and get the appraisal done.  The bank that owns the property reduced the time for the contingencies to a point where it would be difficult, if not impossible for an appraisal to be done. This is not because of the buyers but rather the buyer's lender can't get it done that quickly.  Once again a buyer is caught between two banks the first bank reducing the appraisal period to a point that even their own institution could not get an appraisal done in their own time frame.  To make matters worse the listing bank takes forever to return the signed contract and the buyer's lender refuses to order the appraisal until they get a copy. 

The banks need to stop the insanity.  They need to ask themselves if they would be able to do what they are requesting of other lenders.  If they would not be able to comply with their own demands, chances are other lenders will not be able to perform the tasks either.  By making unreasonable demands, they are not helping themselves but rather they are making things worse.  And unfortunately they are forcing the buyer into the middle and stopping them from buying homes.