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May 30, 2008
Mortgage on credit report?
I am in contract on a new construction condo in Clinton Hill and have put down 10%. We have great credit, good salary and are putting 30% down. No problems there according to our loan officer. But Fannie Mae won't allow our loan officer to give us financing because only 20% of our building is sold. Bottom line is we can't get a mortgage. In truth, while this upsetting and frustrating, we are OK with this because we are having doubts about the building.
What I am wondering is, does this mean we can get out of our contract? And will this mortgage rejection show up on future credit reports and negatively affect the liklihood of us getting financing on another apartment?
Comments
1. Look at your contract - did you waive the part that says you can get out if you are denied a mortgage? If you can't tell, ask your attorney.
2. Fannie Mae is not the only buyer of loans - just the ones your financer is using. There are others.
3. A mortgage rejection is a credit event - it won't show up on your credit report.
You need to educate yourself about what you are doing. There are a lot of websites about mortgages and condos with info. On your contract, your attorney is your best info.
Posted by: guest at May 30, 2008 3:17 PM
That same thing happened to me also and unfortunaltey there was a clause in the contract that said it was NOT contingent on getting a mortgage - the ass developer walked away with my 10% - major loss.
Posted by: guest at May 30, 2008 3:18 PM
3:18 this is a standard clause. You criticize the developer, but your lawyer is really at fault for not insisting upon this clause. Can't see how it's the developer's fault, did they force you to sign a contract against your will?
As to the OP's question, FNMA mortgages are so called conforming mortgages. You can get a non conforming mortgage that is not a FNMA mortgage, just call the banks to see what is offered.
If you decide not to purchase the condo the rejection will not be reflected on your credit report.
OP you need to talk to your attorney.
Posted by: guest at May 30, 2008 3:25 PM
Thanks for the comments. I spoke with my lawyer and he clarified that if I have attempted in good faith to get a mortgage and I am still rejected, then I am not responsible and I get my money back. He said some contracts do have a clause that says whether or not you can get a mortgage you are resposible and you cannot get your $ back, but that any lawyer should and could advocate for oblitering that clause.
He also explained that "in good faith" means that if we have provided all necessary information and we still can't get a mortgage (because of appraisal, poor credit, etc.) then we receive a legitimate declination letter from the bank and we can get out of the contract and get our money back. Also, we are not required to use their preferred mortgage lender.
I am relieved that a loan rejection will not be reflected on my credit report!
Posted by: Condowoes at May 30, 2008 3:46 PM
3:17, can you recommend some sites on mortgages and new construction condos that i might find helpful?
Posted by: Condowoes at May 30, 2008 3:47 PM
"But Fannie Mae won't allow our loan officer to give us financing because only 20% of our building is sold"
Maybe I'm missing something, but all that tells me is that you went to one bank, and they turned you down because they can't turn around and sell the loan to Fannie Mae. Nothing is stopping you from trying to get a mortgage from a lender that keeps your loan in its own portfolio. You might pay a higher interest rate, but that is not the same thing as concluding that you "can't" get a mortgage.
Think about that before you conclude you're getting your deposit back. The developer is not likely to give you the benefit of any doubt on this, if you've only went to one bank.
Posted by: guest at May 30, 2008 4:39 PM
Good point. I have tried two banks and have been turned down by both because the status of the building is a problem. I spoke with my lawyer and he said that as long as i present a declination letter from a bank, i am eligible to get my deposit back. he said no where in my contract does it say how many banks i must apply through or that i must use their bank.
Is the developer able to fight this if i get one or two declination letters?
Posted by: Condowoes at May 30, 2008 4:56 PM
Go to a mortgage broker. They will know what banks, if any, will underwrite loans on new construction, and will either get you pre-qualified or they won't. Then you'll know.
Your attorney doesn't.
Posted by: guest at May 30, 2008 5:09 PM
i just spoke with our lender. she said she cannot underwrite a mortgage when the developer is still in control of the condo board. she is writing up a declination letter that states as much. i asked if this will then allow us to get our money back and she said "yes it is will. i have never seen a situation where a developer requires you to go to another bank." our lawyer gave us the same info.
we shall see. the declination letter is going out today. we will send it to our atty. and see what happens.
i would still love to know those websites so i can be more thoroughly informed...
Posted by: Condowoes at May 30, 2008 5:18 PM
I'm surprised the developer hasn't lined up a source of financing for potential buyers. Sometimes the lender that underwrites the construction will underwrite apartment sales.
Posted by: denton at May 30, 2008 6:13 PM
4:39 you are WRONG and the OP's lender and attorney are RIGHT.
To fulfill the mortgage clause in a standard contract you only have to get a letter from ONE bank declining you. You do not have to go to more than one bank. If you don't know what you are talking about don't say anything.
Posted by: guest at May 30, 2008 6:40 PM
I wonder if the developer will turn around and offer to carry the note...What will you do then.
Also, arent most new developments controlled by the sponsor in the initial period? I am surprised the banks dont want to write that as it is so common.
Posted by: guest at May 30, 2008 6:42 PM
6:42 that makes no sense. The buyer would not be obligated to accept the developer's offer of a mortgage.
Posted by: guest at May 30, 2008 6:49 PM
6:49 - agree the buyer is not obligated, but from the seller's perspective wouldnt he have a stronger argument that the buyer did NOT make a good faith effort to get a mortgage if he offers similar terms.
If I were the seller, I would take this approach to at least fight you from getting your deposit back.
Posted by: guest at May 30, 2008 9:40 PM
6:40, so hostile.
You must be right. You use capital letters.
Posted by: guest at May 30, 2008 11:46 PM
OP, I would start by reading the mortgage information section on zillow.com. We found it very helpful as a jumping off point. streeteasy and propertyshark have helpful information, as well. Beyond that, just do a google search on mortgage information. There's info out there; you have to be diligent about gathering it.
We also had several conversations with our lawyer and mortgage broker to answer our questions. The mortgage officer at your bank can be of great help, too, as can your friends who've bought here. If you're a first-time buyer, you're going to have questions that the professionals you're dealing with take for granted. This is what they do every day for a living - buying a home is a huge, new event for you. The more info you gather, the more you will have questions, and that's a good thing. Asking the right questions is critical in this process. Don't be shy about asking. It doesn't mean you're stupid, it means you're new to all of this and you need some help. Our attorney actually said after I rattled off a long list of questions that she was surprised how many people don't know what they're getting into and are caught out occasionally because they simply didn't think or were bashful to ask questions. Even with the info we gathered, there were still times where it was all overwhelming. That's to be expected. Good luck.
Posted by: guest at May 31, 2008 9:14 AM
Oh, and, as luck would have it, the NYTimes has a lead article in the real estate section on-line today called "What You Need to Know About Getting a Mortgage." Helpful info, though it's enough to spoil your appetite.
Posted by: guest at May 31, 2008 9:44 AM
you are lucky you can get out of it. if the building has not even sold 20 percent it does not sounds like a good investment. Clinton Hill is the ghetto. You should buy flowers for the bank for saving you
Posted by: guest at May 31, 2008 5:28 PM
I Need Health Insurance for My Baby
I live in virginia and I was wondering if anyone knew any type of health insurance program or anything that I could get for my baby. Right now i've been paying for all of his bills out of my own pocket and I just can't do it anymore. I applied for medicaid, but they denied me. Please help.
Posted by: steaven at June 1, 2008 3:14 AM
9:44 read the article in the times today as well. IMO opinion it was excessively dire. yes, it is harder to get a mortgage these days, but it is by no means impossible, as long as you are being reasonable. I just closed on a two family this week and was able to get a 10% down, 6 1/4 fixed w/ wells fargro. on the flip side, I am selling a condo and am finding it extremely difficult to find buyers, even offering it at what I consider to be a competitive price. my verdict (and this really goes for north brooklyn)....getting a mortgage possible as long as being reasonable, selling a two family an up....surprisingly easy....selling a condo.....very difficult.....
Posted by: deepBTUz at June 1, 2008 4:25 PM
You do need health coverage, but you may also look into free clinics for well-baby care. I'm sure that would help. Most health departments offer vaccines, etc.
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Posted by: gibbswill at June 2, 2008 4:12 AM
You do need health coverage, but you may also look into free clinics for well-baby care. I'm sure that would help. Most health departments offer vaccines, etc.
[url="http://www.insuremation.com"] Affordable Health Insurance [/url]
Posted by: gibbswill at June 2, 2008 4:12 AM
I don't know who you are dealing with but with a minimum 25% down payment and a loan amount of $417,000 or less, there are no restrictions for condos as the loan will fall under the Limited Review Criteria. If your loan amount is more then $417,000, there are loan programs out there but the interest rates will be in the mid to high 7% range for a non-warrantable condo
Posted by: MrMortgageMan at June 20, 2008 2:00 PM
Sorry, forgot to address this part of your question....no, your "rejection" will not show up on your credit report. Only the fact that the parties involved ran your credit will be the only footprint on your credit report.
Posted by: MrMortgageMan at June 20, 2008 2:02 PM
can i get my deposit back on a new construction condo if the actual unit differs in dimension as promised in the offering plan? also, is there an outside date on how long a sponsor can hold your deposit even if a delivery date is not specified in your contract/offering plan?
thanks.
Posted by: guest at July 2, 2008 3:07 AM
Can someone clean off "gibbswill" and "steaven" and their dumb spam?
I think the lesson here is ... read your contract. A contract can say anything, and if it doesn't have a clause that says you can get your deposit back if your mortgage is denied, don't sign it unless you don't need a mortgage.
Posted by: amanda at July 16, 2008 9:55 AM
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