Banker deals with challenging foreclosure situation in Hamden

Mortgage banker: Patricia Leary.

Property type: Single-family home in Hamden.

Purchase price: $205,000.

Loan amount: $194,750.

Appraised value: $210,000.

Loan type: Conventional.

Backstory: Leary often works with buyers who are purchasing bank owned properties.

Leary received a call from a couple who wanted to get prequalified to purchase a new home. They were already to contract on the sale of their current home and closing on May 1. They wanted to close on a new purchase the same day.

Leary later received a call from the buyers that they found a home and were putting in an offer on it. It was a Fannie Mae owned home where the previous owners went into foreclosure. The home was in good condition and therefore, it would qualify for a conventional loan. They came to contract with Fannie Mae and the closing date would be the May 1 so that they could close on both homes the same day.

Leary met with the buyers on April 13 to have them sign the loan application. The process went smoothly and the clear to close was issued an10d the closing document was signed on April 25.

One of the conditions of the mortgage approval is to show that Fannie Mae has ownership of the property. We found out through the buyer’s attorney after the closing document went out that Fannie Mae was not listed as the owner of the property and that the property was listed pre-maturely with the Realtor for sale.

Fannie Mae should have never signed the purchase and sales agreement because they had not taken ownership of the property yet.

The attorney then informed us as well as the buyers that Fannie Mae had requested documents form the servicer who owned the mortgage and that it might take 60 days for the transfer. There is a process that has to be followed for foreclosures, which includes a waiting period.

Leary spoke with the buyers and agreed that they should still close on their sale and not give up the buyers for their current property, they sold on May 1 and were now homeless living in a hotel with their family while most of their possessions were in a storage facility.

Leary had to cancel the loan on May 21 and then create a new loan for the same property because the rate lock extension fees were adding up. An escrow hold back was also needed for a pool repair on the new property. The new loan was put in process and the attorney received the quit claim showing Fannie Mae was the owner shortly after so the loan closed on May 3.

Leary had empathy for her clients who had been living in hotel for the month of May while going through this process. Working with Fannie Mae is not easy because they are always right. They will allow 3 percent seller paid closing costs on the properties they sell. This was on the purchase and sales agreement for these buyers.

The day of the closing the attorney found out that Fannie Mae would not allow any title charges or pre-paid taxes to be paid out of the 3 percent so therefore the buyers lost seller paid closing cost money. It clearly said on the contract pre-paids. The attorney tried all day to work this out with Fannie Mae’s attorney’s but they wouldn’t budge. The buyers had to bring more money that expected to closing on top of the hotel and storage bills.

Leary had her underwriter look into this and found out that Fannie Mae will no longer allow title charges or pre-paid real estate taxes to be paid out of the 3 percent seller paid closing cost.

Leary spends long hours working with buyers and homeowners who have unusual situations. All consultations are free.

Patricia Leary, Atlantic Home Loans, (203) 645-1037 (cell)