October 8, 2009

Buyer Beware ... This Bank's Foreclosures Come With Additional Strings Attached

If you come across a foreclosure owned by the one of the largest banks in the country and you decide to make an offer, be prepared to jump through some new hoops. This particular bank requires the buyer to be pre-approved by one of their mortgage bankers. This means you will have to fill out a new loan application, provide income documents and allow them to run your credit. It doesn’t matter that you have already done this with your own mortgage person and been pre-approved. This bank wants you to go through the approval process all over again with them and … wait a minute … its going to cost you $50 bucks too! All of this just to have the privilege of “making an offer” on one of their foreclosures. The chance of your offer getting accepted isn’t any better. My borrowers are saying NO THANK YOU!

Here’s what really bugs me. My personal business practice includes a borrower paying a small charge for their credit report during the pre-approval process. On July 31, 2009, along comes a new Truth in Lending Act by the federal government preventing mortgage brokers from charging a borrower anything other than a credit report fee during the pre-approval process. I have no problem with that. However, a bank like the one mentioned above doesn’t play by the same TILA rules. They can AND do charge hundreds of $$$ for loan application fees or loan approval fees. So who is being taken advantage of who?