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We made an offer on an REO property that was accepted by the bank--but only if we use them for our mortgage.
If we want to use our own lender, they won't allow the 3% closing cost credit that was written into the contract.
Our agent is not happy at all. The price that we offered is too high if the 3% credit gets taken away, and so our only options seem to be:
1. Let the REO bank force us to use them for our loan
-or-
2. Rewrite the offer without the closing cost credit, and lower the price.
We don't know what to do. So far, we haven't been very impressed with the employees at the bank, and depending on them for our loan seems risky. How can we know for sure that we are getting a fair deal if we have to use them?
On the other hand, we are worried that if we rewrite the offer and refuse to use them for the loan, we will lose the house, because there are other offers on the property.
We really like the house and don't want to lose the house just because we're being stubborn. Is there a real danger in not having a choice of who to use for our loan?
It doesn't really sound like you are forced into using them as your lender, more like they will give you 3% in closing costs if you do. I would assume it would be illegal for them to force you to use them.
If it's a house you really want, either bite that 3% or try to get with another lender who can do fast approvals/close. But if there are other offers on the property, it really depends on how bad you want the house. Just my 2 cents. Good luck either way!
They aren't forcing you, they are giving you a choice. The bank is a business and they are making a business decision. They can make up the 3% loss to you in interest and other fees. If you use someone else they can't do that.
I see enticements to use the REO lender, and I would expect to see more of this as time goes on.
But isn't it still in negotiation then? If your offer includes "3% towards closing costs" in the contract (without the stipulation of having to use them) and they come back with "3% only if you use us". Can't you just counter with a 3% lower offer?
I wonder why your agent didn't know in advance that the closing 'discount' only applied if you used them. Or was that something you asked for and they agreed only if you use them?
Our agent didn't know in advance, and that is part of the problem. We would've lowered our offer price instead of asking for closing costs, if we had known earlier about that stipulation.
And I also wonder if we had made a lesser offer without asking for the closing costs, if they might've offered them anyway as an incentive to use their lending department.
It doesn't help our decision that this mortgage company has a terrible reputation.
Ok, I get it now. You wrote up an offer and asked for them to pay your closing costs. They said they'll pay them if you use their funding, otherwise, no. So, it wasn't a discount offered in advance, it was just you asking for a seller concession. Hmm, I never heard of a bank doing that.
Quote:
Wouldn't this be a HUD violation?
I think so, although I'm not sure. It sounds like it's going through a asset management company and they are trying to steal the loan? I dunno. Sounds a little snakey to me. I wonder if one of the mortgage people on here will chime in.
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