Post by Site Admin on Aug 6, 2006 10:02:05 GMT -5
House Buying Scam - McHenry County Illinois
It seems like a dream come true. After months of sitting in a real slow housing market, your house suddenly has buyers who are interested in putting in an offer. The only problem? Well, they have only a small down payment and want to take out a loan that is almost a 100%. But not quite. This is the only way they will be given the loan. Their real estate agent insists that he or she has checked them out and that they are pre-approved. So, all is set to go and you are happy that your house is sold. Right so far?
Well, no. Things seem like they are going alright. You find a house to buy now that yours has been sold, order a house inspection and pay over $300, get your own financing done and pay another $350 for the assessment and other application fees. The only thing you have to wait for is the people who bought your house to get their financing fully approved. This should not be a problem. They were given a date with enough time to get their paperwork in, just like you were. And, after all, they were pre-approved. So, it's just a matter of time. You look into moving trucks and storage, and start packing boxes.
Well, the date for the financing approval comes and guess what? You don't hear from the people who bought your house or their realtor. You wonder what is going on. At the last possible minute, their realtor calls and tells your realtor that they were turned down for their financing on a slight matter and need a two week extension to try to get their financing somewhere else. You wonder about that, but go ahead and grant them an extension.
Two weeks pass. The same thing happens. The date for their paperwork to be in comes up and you do not hear from them until the last minute. What do they want? An another extension. Why? Because they need to get some last minute paperwork in. Their realtor assured your realtor that everything is kosher. Just a little late. You start to worry. After all, you would not want to lose the house you bought because of all the extensions. You hope they get things together soon.
The day finally comes months and many extensions later. They have finally been approved for financing and the process of moving can move up one notch. However, your realtor is waiting for their mortgage representative to fax in their final approval letter. After that things will be done. It's almost 5pm on the last possible day the letter is due. Finally! Your realtor receives the letter in question. You are glad and make plans to move. But wait a second! It's not over yet. An hour later your realtor calls you. It seems that you won't be moving after all. The people who bought your house had their financing turned down again.
It turns out that they and their realtor have lied about having the money for a down payment to your house. They only borrowed it for a short time to put into their account for the mortgage company to give their pre-approval and then took it out again. When the mortgage company came back to check, the money was gone. They claim they needed to give the money back to their family and do not have the down payment.
Wait a second? What is the whole point in buyers and realtors lying like that? Why would they try to buy a house they do not have a down payment for and why would the realtor agree with that?
Well, that is what makes these maneuvers so scary. The people in question wanted the seller to pay for their down payment! They figured if people were desperate enough to move and already bought an another house after the offer was given, they'd cave in and pay the down payment for the buyers. The realtors are well aware of this. They encourage people who come to them without a down payment to wait and see if they can find a house where the seller will be willing to front the money. This seems to de primarily done in areas where the neighborhood is changing and people are getting desperate to move before house values fall even further. The realtors have a hard time finding buyers with the rising interest rates, so they are willing to do anything they can, even if it is immoral and verging on the illegal.
What is the result of this?
Well, the sellers in this case were not willing to pay for the down payment on the house they tried to sell, so the deal fell through. They lost over $600 in the process. It could have been worse, though. I have heard of cases where the day of closing had come, the moving van was packed, and the buyers did not have a down payment at the closing, hoping that the sellers would have so much invested in this interaction, would all be packed and have their whole house in a truck and in storage, would have spent so much money, that they would be willing to cough up the down payment just so they can move and not have the whole deal fall through, lose the house they bought, and have to go back home. That is a very scary occurrence.
How is it possible to fight this? Well, awareness is key. The other thing is to fight back. If people have this happen to them, they should sue the realtor and the buyers for lost time and money. This will also get the issues out in the open and allow more people to be aware of what is going on.
It seems like a dream come true. After months of sitting in a real slow housing market, your house suddenly has buyers who are interested in putting in an offer. The only problem? Well, they have only a small down payment and want to take out a loan that is almost a 100%. But not quite. This is the only way they will be given the loan. Their real estate agent insists that he or she has checked them out and that they are pre-approved. So, all is set to go and you are happy that your house is sold. Right so far?
Well, no. Things seem like they are going alright. You find a house to buy now that yours has been sold, order a house inspection and pay over $300, get your own financing done and pay another $350 for the assessment and other application fees. The only thing you have to wait for is the people who bought your house to get their financing fully approved. This should not be a problem. They were given a date with enough time to get their paperwork in, just like you were. And, after all, they were pre-approved. So, it's just a matter of time. You look into moving trucks and storage, and start packing boxes.
Well, the date for the financing approval comes and guess what? You don't hear from the people who bought your house or their realtor. You wonder what is going on. At the last possible minute, their realtor calls and tells your realtor that they were turned down for their financing on a slight matter and need a two week extension to try to get their financing somewhere else. You wonder about that, but go ahead and grant them an extension.
Two weeks pass. The same thing happens. The date for their paperwork to be in comes up and you do not hear from them until the last minute. What do they want? An another extension. Why? Because they need to get some last minute paperwork in. Their realtor assured your realtor that everything is kosher. Just a little late. You start to worry. After all, you would not want to lose the house you bought because of all the extensions. You hope they get things together soon.
The day finally comes months and many extensions later. They have finally been approved for financing and the process of moving can move up one notch. However, your realtor is waiting for their mortgage representative to fax in their final approval letter. After that things will be done. It's almost 5pm on the last possible day the letter is due. Finally! Your realtor receives the letter in question. You are glad and make plans to move. But wait a second! It's not over yet. An hour later your realtor calls you. It seems that you won't be moving after all. The people who bought your house had their financing turned down again.
It turns out that they and their realtor have lied about having the money for a down payment to your house. They only borrowed it for a short time to put into their account for the mortgage company to give their pre-approval and then took it out again. When the mortgage company came back to check, the money was gone. They claim they needed to give the money back to their family and do not have the down payment.
Wait a second? What is the whole point in buyers and realtors lying like that? Why would they try to buy a house they do not have a down payment for and why would the realtor agree with that?
Well, that is what makes these maneuvers so scary. The people in question wanted the seller to pay for their down payment! They figured if people were desperate enough to move and already bought an another house after the offer was given, they'd cave in and pay the down payment for the buyers. The realtors are well aware of this. They encourage people who come to them without a down payment to wait and see if they can find a house where the seller will be willing to front the money. This seems to de primarily done in areas where the neighborhood is changing and people are getting desperate to move before house values fall even further. The realtors have a hard time finding buyers with the rising interest rates, so they are willing to do anything they can, even if it is immoral and verging on the illegal.
What is the result of this?
Well, the sellers in this case were not willing to pay for the down payment on the house they tried to sell, so the deal fell through. They lost over $600 in the process. It could have been worse, though. I have heard of cases where the day of closing had come, the moving van was packed, and the buyers did not have a down payment at the closing, hoping that the sellers would have so much invested in this interaction, would all be packed and have their whole house in a truck and in storage, would have spent so much money, that they would be willing to cough up the down payment just so they can move and not have the whole deal fall through, lose the house they bought, and have to go back home. That is a very scary occurrence.
How is it possible to fight this? Well, awareness is key. The other thing is to fight back. If people have this happen to them, they should sue the realtor and the buyers for lost time and money. This will also get the issues out in the open and allow more people to be aware of what is going on.