How We Almost Lost The House We Live In Now

Ever since the banking industry caused the massive downturn in the world’s economy five years ago, the regulations have been made slightly stricter. I say, slightly because the major causes remain unaddressed but there is a hint of accountability among banking professionals. But incompetence cannot be cured by regulation. There is a reason MacDonald’s has detailed step-by-step checklists for even the most illiterate employee so much so that if you say, without fries, they look at you funny. Only when you say, no fries do they understand you. Perhaps it is time for such checklists in the banking industry. If there was one, we would’ve had fewer sleepless nights. Let me explain.

The way our house sale and house buying went down was that we had to juggle the two and the latter obviously had to follow the former. In fact, the house buying was contingent on our house sale so much so that it was written into the contract when we made the offer. Given how much of a seller’s market it was, the sellers could’ve easily dismissed our offer had they received any competing offers. The sellers were being a little indecisive after we made the first offer but then later appeared to be amicable. However, they wanted to close on a specific date since they too were buying a new home few days later. It was no problem for us since it was just a matter of time and waiting out on our house sale in College Station. We had received an approximate number for our seller’s proceeds and were making a very small amount on our sale. But then, as always, not everything happens smoothly in our life.

It all started out with our buyer in College Station missing an important IRS form that was needed for the closing. The IRS couldn’t locate them in the records and ultimately, they had to drive up to Houston to get a copy. This delay nearly pushed back the closing date which was a Friday and which would’ve effectively pushed back our closing in Austin too. We were finally given the go-ahead for closing in College Station on Friday morning, the day of the closing and we would’ve to drive up there at 4pm. The shocker however was that we had to take money to the closing. It was a mere $800-odd but we were expecting to drive back with a check and not drive with a check! Our selling realtor failed to mention that our escrow balance and home insurance premium that we had paid in full last month would be reimbursed later. To add to that, she had never listed the Title Insurance policy which was around $1600 on our Seller’s Proceeds. This gave us an inflated estimate of our net gains. We were pissed but had no option and luckily we had spare cash lying around in another account since we had long consolidated everything else for our buying our house [1].

But we thought, the worst was behind us and although badly-judged sales proceeds and the last-minute trepidation on the house sale, we finally sold our house and that was a big relief! At least the contingency aspect of our house buying in Austin was fulfilled. We sent over the HUD-1 statement to our Austin lender and got the go-ahead from the title company to close on our house in Austin on Monday. EVerything went smoothly and even the closing costs were couple of thousand lower than we expected. We congratulated each other and even went out to celebrate that evening. There was some glitch about the loan not being funded but our lender said, it must be something technical at their end.

The following morning, we got a shocking email from our lender. Apparently, she and two other people at their bank including the underwriter had misread our HUD-1 Statement from our house sale and thought we MADE that $800-odd instead of paying it. How, in the frikkin hell could three people working at a financial institution responsible for doling out millions of dollars make such a basic error? The error was so grave that when our realtor called our lender to inform her, the lender broke down crying. There was a real possibility that our loan would not be funded due to lender error and we would lose the home we just closed on. The situation was more dire for our sellers since they were closing on their new home that day and needed the money. The lender tried to deflect some blame onto us by claiming we had used some money from a gift that we couldn’t but I had my paper trail straight and corrected her immediately. We didn’t hear back from the lender for another 3-4 hours and were freaking out but guess things were more frenetic at their end as she finally got back to us after moving some money around and got some papers signed for a piddly $200 credit we had received from our realtor. The loan was finally funded and money was disbursed to our sellers. We heaved the biggest sigh of relief of our lives.

Given how everything went down, I didn’t want to assume anything until we had the movers over and finally move into the house. Luckily, nothing else went wrong and we could finally move in without any more problems. Thanks, lenders and realtors for giving us sleepless nights in a process that is supposed to be seamless given your “years of experience” in the field.

Footnotes:
  1. After all the refunds and reimbursements, we did end up making a very negligible amount of money on our house sale. This is not counting the mortgage interest deductions we enjoyed for the past three years when we filed our taxes []

4 Comments

  1. Wow..That seems like an ordeal you guys went through. Clarify something–Why was making or giving 800$ such a big issue?? Either ways, how does that make a difference to the loan??

    • More than the amount, it was the change in the paperwork and amounts due especially after we had signed the closing documents.

      From the lender’s perspective, they had assumed based on a verbal discussion that we would make much more than that on our house sale. But due to our realtor in CS, that amount was highly overestimated. But the lender never ended up asking us how much we actually made or gave on the day of the closing let alone ask for supporting documentation.

  2. Wow! That seems like a torture. We had a few last minute hiccups ourselves but nothing of the sort you went through. Glad it ended well and you guys are settled in now!

    • I think most of the problems were due to the short interval between selling and buying. However, I’m sure that describes most of the people in the market. I remember when my in-laws bought their house, their seller was closing on both deals on the same day.

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