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Our house has been under contract for a little over 4 weeks and we have 2 weeks left until closing. The loan objection deadline was 9/12/13 and at 10:00 p.m. that night the Buyer's agent sent an amend to extend - they need to move the loan objection deadline to 9/20. The Buyer's agent said it was because the Buyer found a lender that could offer them a better deal. We signed the amend to extend because if we didn't the contract would terminate (they also sent a termination form in the event we didn't sign).
They are doing an FHA, already had the appraisal done, and as I mentioned we are only 2 weeks from closing. Is it common for Buyer's to change lenders this close to closing? Should we be concerned?
Yes, you should be concerned. It's unlikely that a lender can get a mortgage from start to finish in two weeks. Essentially your buyer has gone back to square one in his application process.
The appraisal should not be a great problem as FHA appraisals are 100% portable for six months. That means any lender can use the same appraisal in its original form. However, it also means that lender one has to release it to lender 2 and lender 2 has to ask to have it released, which takes the right paperwork on the part of both.
Unfortunately, I don't think you're going to be able to close on time. But who knows,perhaps the buyer has been pre-approved by more than one lender and already has all his financials and other paperwork on file with lender 2. Then they might just be able to do it.
Lenders are doing much better with underwriting and meeting their closing deadlines. I'm a mortgage broker in Florida and I have seen improvement. It sure frees me up.
We've been able to get loans done in 2 weeks without any issues, especially if the case number is being assigned. I would have recommended asking for evidence of a better quote. The markets have been fluctuating dramatically, so it's entirely possible the buyer is getting a better rate, and quite possibly, a lender credit to assist with costs.
But it's equally likely, the underwriter didn't like a particular calculation and the buyers withdrew instead of facing a decline. Has your agent contacted the first loan officer? You know, the one that provided a letter that accompanied their offer? It's amazing what can be conveyed in just a tone of voice, without actually saying anything.
Your agent could have negotiated many things with the extension, proof of better quote, new letter from new lender, the ability to put it in contingent status with a kick out, an increased earnest money deposit. Maybe the two addendums with different options were done in hopes of having your agent forget all the available options.
I bet there's more to it than allegedly getting a better deal. FHA rates are much closer, lender-to-lender, than Conventional rates. I bet something happened with the other lender's guidelines. Cross your fingers.
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You never know....
