Posted by Brian (UT) on November 14, 2005 at 13:42:57:
John
Forget it, this poster has concrete for brains and is unable to grasp the concept. He also seems to lack the integrity of anyone I would want to do business with, or help in any way, and maybe it would be better for this seller if he did take a hike. Or maybe he will be unlucky enough to find he did a deal with a seller like me, and the judge can explain it to him.
Brian
Mortgage clause contingency - Posted by anony
Posted by anony on November 10, 2005 at 24:53:56:
Does the financing contingency automatically cover all the mortgage clauses disclosed by the lender’s mortgage service and application disclosure? For example, if the mortgage application disclosure contains a clause of prepayment penalty that is different from my application, can I legally back out of the contract? How can I word the mortgage clause contingency that allows me back out of the contract if I do not accept or agree a mortgage clause disclosed by the mortgage disclosure after an approval of the home loan? Thank you for your answer.
Re: Mortgage clause contingency - Posted by DoubleJ
Posted by DoubleJ on November 17, 2005 at 09:06:21:
You can make extra payments on the mortgage for as long as you like, and not have a problem with the PPP.
The only problem with a PPP is if you refinance, or sell.
As a matter of fact, sometimes it can be a “soft” PPP, and that ONLY effects you when you refinance. In other words it doesent effect you if you sell, or make additional payments.
It sounds like you have a very easy PPP to handle. And it also sounds like you intend to hold the property for a while and make additional payments to principal.
If thats the case I wouldnt worry about it. I would take the loan, buy the house, and pay in whatever fashion you like.
Find out if its a soft PPP, or not though.
Whatever you do, dont ask advice unless you are willing to listen to it.
Good luck!
Re: Mortgage clause contingency - Posted by MikeO
Posted by MikeO on November 14, 2005 at 12:43:53:
Well I for one learned alot from all of this. Thanks all.
Mike
(A not yet “in it” newbie)
Re: Mortgage clause contingency - Posted by River City
Posted by River City on November 10, 2005 at 11:05:44:
Generally when one obtains a mortgage and there is a prepayment penalty involved, it could be for two reasons. Bond money may carry a prepayment penalty (1st time homebuyers) because of the lower interest rate. Subprime loans may also carry a prepayment penalty. Subprime loans are usually made to people with poor credit histories. Did your purchase agreement stipulate the type of financing you were attempting to obtain?
Your mortgage application might also indicate that a prepayment penaly “may” apply. What kind of loan did you apply for? If it was an FHA loan, it is not a true prepayment penalty like other loans. It is a penalty if you do not give 30 days notice of prepaying the balance in full. The penalty involved in these loans is paying 30 days of interest on the loan.
If your contract does not state the type of financing you are to obtain, you might be stuck, or at least lose your earnest money deposit.
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 17, 2005 at 14:27:58:
The management has issued a letter to remove the PPP after I complained to them.
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 10, 2005 at 14:22:14:
I am the first time house buyer. The loan is conventional. The contract has the financing contingency by default. It is worded This Agreement is conditioned upon Buyer?s ability to obtain a loan to be paid in consecutive monthly payments with terms described below, a. Loan Amount, b. Term, c. Interest rate, d. Loan type and e. Rate type. When I apply for the loan, the loan officer clearly told me there is no prepayment penalty, meaning the extra payments can be paid towards to the principal at any time and any amounts. The loan can be paid off early without prepayment penalty. The application disclosure, however, disclosed it contains the prepayment penalty. Thus, I would like to walk away although the loan has already been approved. On the other hand, I may not find the lower rate listed in the contract because it has already been increased in the nationwide. The Seller has already known I got the loan approved.
The question is whether the financing contingency automatically covers all the mortgage clauses or only the Buyer?s ability to obtain the loan. Assuming I cannot find the better rate listed in the contract, can I legally back out of the contract if I do not agree one of the mortgage clauses disclosed by the lender? More generally, how to word the contingency that can cover all the mortgage clauses? Thank you for your answer.
Re: Mortgage clause contingency - Posted by DoubleJ
Posted by DoubleJ on November 17, 2005 at 16:27:20:
Even better.
Good job, and good luck.
Re: Mortgage clause contingency - Posted by John
Posted by John on November 10, 2005 at 22:25:51:
Most loans I have seen lately have a prepayment penalty for the first 24 months, some are 36 months although rare.
Were you planning to pay off in less time than that? Then the penalty is often 2% of loan amount. Making aditional princpil payments will not cause the penalty. Only a sale or refi or pay off during that period would trigger it. Read you loan documents to see what terms the penalty has.
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 10, 2005 at 22:48:53:
I do not know why you cannot answer my question directly but try to persuade me to accept the prepayment penalty clause. I have already told you I do not agree with this mortgage clause that is different from my application. The prepayment clause states 90 days advance interest will be charged on the amount prepaid in any twelve month period which exceeds 20% of the original amount of said indebtedness. Why should I pay the interest if I have ability to pay off the mortgage early? Now I want to walk away from this lender. Can I legally back out of the contract because of the mortgage clause issue? If you know it, please post your answer. If I can?t, can you explain how to word the subject-to-mortgage clause contingency? Thanks.
Re: Mortgage clause contingency - Posted by Brian (UT)
Posted by Brian (UT) on November 11, 2005 at 11:48:54:
Answer is simple, the loan you got apparently complies with the terms in your purchase contract so it is not sufficient reason to cancel your purchase agreement. You are trying to add a contdition that is not in the contract with the seller.
If the prepayment penalty is that big of issue with you then put it in the financing contingency clause of the purchase agreement next time,and if the lender won’t do it then you have an out with the seller, but you don’t have that out this time.
Why is it a big deal, you plan on selling it soon and paying it off? That is the main reason for prepayment penalties. Planning on a refi, I think for the next several years you will see a trend in interest rates going up and if you want to pull money out the lender may forgive the prepayment penalty if you refi with them because of a possible higher interest rate. Or is the real reason you just want out of the deal with the seller. Or try another lender if the PP is really the issue, you may have time.
Brian
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 11, 2005 at 13:15:32:
Yes, I intend to pay off the mortgage early. I plan to pay extra payment $200 to $300 every month. When I apply for the loan, I was told there would have no prepayment penalty. I also indicate in the application form ?No prepayment penalty loan only?. The lender actually tricks me. So I will walk away. I will first try to add the new contingency as the amendment; the purchase is continent upon the Buyer?s review and approval of the mortgage disclosure or mortgage clause. If it does not work, I will ask the lender to provide a letter stating the borrower does not agree with the disclosed mortgage clause. So the loan is rejected. Then I will tell the seller I cannot find the rate listed in the contract and the original lender is fraudulent processing of my loan application. So I have to back out of the contract.
Re: Mortgage clause contingency - Posted by Brian (UT)
Posted by Brian (UT) on November 11, 2005 at 21:37:59:
Be glad I’m not the seller because your reasoning is total crap. I don’t know what state your in but the ones I’ve done business in paying extra each month would not trigger the PP clause, and if you want to pay down the loan at an accellerated rate then go for a larger monthly payment, a shorter loan, and probably a lower interest rate.
Plus give me a break and a crying towel, poor baby didn’t get a clause in his loan documents that wasn’t important enough to him to put it in the purchase agreement, so I’ll lie to the seller about my loan. Have you convinced the lender to lie too, because I would want verification from the lenders that you applied for the loans and were denied , and only applying at one lender would not satify me but I suppose this is the only lender in the state that you could apply to for a loan. I’m sure the seller will understand, it’s not your fault you made a deal, took his property off the market, and are now jerking him around with lies.
Brian
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 11, 2005 at 22:22:31:
If paying extra PP each month would not trigger the PP, then I will definitely stick with the lender. But the disclosed clause does state the prepayment penalty. As for why one prefers paying the extra payments to the higher monthly mortgage payment, it is totally a personal choice, for example, flexible. You may not understand it because you are not smart enough. In this case the lender disclosed something that a borrower never know or not agree after the approval of the loan, why can?t the borrower walk away? When the borrower no longer can find the rate listed in the contract or he does not want to go with the higher rate, why should he keeps seeking the loan. Should the people try any loan programs regardless of they like or not. Maybe you always advise your client to look for the loan in this way. But that is not my choice. Anyway, I have learned something from it. This world has some special professionals who conduct the business in a very special way. A very good experience for me. I will be very careful next time.
Re: Mortgage clause contingency - Posted by Natalie-VA
Posted by Natalie-VA on November 12, 2005 at 13:50:18:
Anony,
Brian knows quite a bit more about real estate transactions than most, so I wouldn’t brush off his advice.
The point here is that your lender is screwing you over. That doesn’t give you the right to screw your seller over. Maybe you can try escalating the issue to the loan officer’s manager for resolution. If you can’t get resolution, you need to close on that loan or find another lender. I hope you can work it out.
–Natalie
Re: Mortgage clause contingency - Posted by Brian (UT)
Posted by Brian (UT) on November 12, 2005 at 11:20:26:
I know I’m not very smart, after all I was dumb enough to respond to your post. What part of your deal is with the seller and you got a loan that complied with the terms of your purchase contract don’t you understand? Your side wrote the contract didn’t it?
Your battle with the lender shows your very new at this, and I don’t care about a misleading loan officer, welcome to the real world. Have you applied elsewhere yet and tried to find a loan without a PPP?
I know I’m not at the level of great expertise your at, but If I was as smart as you are I would be smart enough to try the financing forum here for more info.
But now that your so knowledgeable about real estate and all, and know the word flexible (I’ll look it up later so I can expand my education and be as smart as you are) you can start working on your character and realize the person you have the purchase contract with is not screwing you and apparently is honoring their side of the deal.
Brian (real name, not anoyn)
Re: what a great arguement - Posted by liz ( SC)
Posted by liz ( SC) on December 21, 2005 at 20:31:30:
dear brian,
in South carolina. if it is owner occupant, and the loan amount is less than $150K, it is profibited to have PPP. But if you are more than 150K, the state government thought you are Financial smart enough to read all the mortgage papers and lender can do whatever they want to. I agree with you that the buyer should find another lender and close the deal ASAP.
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 12, 2005 at 22:50:18:
The problem is not I am new in the real estate world but I trusted some professional such as the loan officer too much. It is not me misleading the loan officer but the loan officer told me a lie. It is a fraud. When I was told there would have no prepayment penalty, I think it is just such crystal clear. You asked me whether I have tried anywhere. Yes, I have ever shopped around. This lender has the lowest rate and said there would have no prepayment penalty. That?s why I chose this lender. But, actually they tricked me to go with them and then try to insert something I never know or cannot agree with. It has taken a couple of weeks to have the loan processed. Now the rate has increased widely. Why should I go with the other high rate that I never consider it. The problem is due to the lender?s fraud. The financing contingency is in default in my contract. I think it not only covers the rate, year and loan amount but also other mortgage clauses supporting the basic elements.
I said the extra payment is more flexible than a fixed large mortgage payment. I do not know whether you understand it or not. Maybe you just know how much money you have, then how much you should pay the mortgage payment. But I prefer the flexible payment. So my mortgage plan must have the extra payment. Maybe you never thought about it.
Natalie has suggested me to talk to the loan officer’s manager for the resolution. Yes, I will complain to the management about the service. I have not signed the Truth-In-Lending Disclosure and related disclosure documents yet. But, I just cannot agree with you that the buyer cannot back out of the contract if the loan is rejected due to the loan officer?s fraud. Neither can I agree with you that the buyer must exhaust all the mortgage programs in the market regardless of the buyer likes or not. As for your name, it is just a symbol. You can call yourself whatever you like. Who care.
Re: Mortgage clause contingency - Posted by Brian (UT)
Posted by Brian (UT) on November 13, 2005 at 11:31:02:
One final last time! My responses to your responses.
I am not new in real estate- Yes you are, if you had done a number of transactions you would have a better base of knowledge then your showing.
I trusted the loan officer- spend some time on the financing forum here and you will hear case afer case of loan people saying they can deliver something they can’t. If you were an active investor or experienced, you or someone you know would have had this type of experience, or something like it, and you would be fully alert to the possibility of it happening.
It’s not me misleading the loan officer- where did I say you did? I used the term a misleading loan officer, same as saying a dishonest used car dealer, it labels the ‘pro’ not the customer.
I shopped around- I didn’t ask if you shopped around, I asked if you applied anywhere else, big difference to me, big difference to a judge if you were backing out due to the financing contingency not being met, but in this case it was met.
The contract’s financing contingency is in default- yes by you, if you can stop being in a kid’s mindset for a few moments and place yourself in the seller’s shoes for a minute. This guy offers to buy your house, takes it off the market, has terms in the contract that are met but now wants to add terms that don’t exist in the contract, that his side wrote up, what would you do, say oh I’m sorry, I didn’t know you wanted more than you presented me with, can you please forgive me for being so stupid as to think the contract you gave to me to consider and we agreed to is not the one you really wanted to give me to consider and its ok for you to ignore what’s in writing between us and change whatever you want because you want to, or think you need to, sure it’s ok for you to change anything you think should be changed. I’m sure that as a seller that would be how your mind would work. Truth is you would be posting here whining “do you know what this buyer is trying to do to me”.
The clause supports the basic elements related to the loan. This is the same to me as saying I’m buyint the house and the garage, so the seller’s car is in the garage so I want it too. Well that’s possible, but only if you put it in the contract, and apparently you did not put it in the contract, there is no law that automatically adds these conditions to the contract if you fail to put them in, and you didn’t! However if you had wrote this purchase is contingent upon buyer getting a $100,000 loan you might have an out because most courts I’m familiar with would rule that unconstitutionaly vague thus unenforcable, but your clause is specific enough.
I said the extra payment is more flexible- maybe you never thought about it- It’s a concept I was familiar with before you were born. I don’t know your age but if you were one of my kids I would smack you aside the head and tell you to grow up. Either you posting to this site to hear the experience of others and grow, or your just here to whine and hope for support for your position, so far it appears to be the latter.
Brian
Re: Mortgage clause contingency - Posted by anony
Posted by anony on November 13, 2005 at 20:52:57:
You clarified something that I have already said so. Good. The only issues are 1) whether a buyer can back out of the contract because the loan cannot be approved or is rejected due to the loan officer?s fraud and disclosed something that a borrower never know and cannot agree with; 2) When the loan cannot be approved or is rejected because the borrower cannot agree with the hidden mortgage clause, should the borrower exhaust all the other mortgage programs in the market that are not correspondence with the financing contingency listed in the contract? My 20 years education and training tells me Yes to the question 1 and No, don?t have to (Question 2). You may have different answer because you may conduct the business in the same way. But, I cannot agree with you. You may want to go home play yo-yo with your little ones. Enjoy!