Mr. Garcia - legal advice dealing with a lender - Posted by David Meek
Posted by David Meek on July 03, 2001 at 17:10:09:
Mr. Garcia and forum,
I have a situation that I am currently trying to work through with a lender here in Georgia. I am requesting a 75% LTV cash-out refinance on a single-family investment property at 7.5% and 1.125 origination & points, terms I am pleased with. The house was appraised by an appraiser of the lender’s choosing. The house was valued at $130,000 making a loan of $97,500 possible at the aforementioned 75% LTV.
All of this seems as if it should be no problem. However, the lender has become nervous about the fact that I originally paid $79,000 for the house exactly 12 months and 14 days from the time of the appraisal, or just inside the 12 month curing period. The net adjusted sales comps on the appraisal are $130,000, $136,000, and $137,000 (all almost perfect matches with little or no adjustments in square footage, etc. and in the same neighborhood) so the appraisal amount is not unreasonable.
To make matters worse, I was informed of this problem from the loan officer just 4 hours before the scheduled close. After firing off a stern email to the VP promising litigation and all-around bad-mouthing of the company the owner and loan committee have come back with an offer to make a loan of $87,500 calculated simply by lopping of $10,000 (mainly so that it may be easier to sell and look less fraudulent on the secondary market).
My position is that even if I had bought the house for $40,000 one year ago, it does not have an effect on the current value of a property. The whole idea after all is to buy low, hold, and sell much much higher in the near or even distant future. I currently own 4 investment houses and have been doing this for about two years now and have been very fortunate with the choices I have made thus far however I am still relatively a newbie.
I have counteroffered to the lender at $92,500 simply because I would like to have those additional resources available to me for other investment opportunities (You know, a bird in hand is worth two in the bush).
What are my legal options here? Can I sue for specific performance? I have a brother who is an attorney so litigation costs are not necessarily a factor and I could still bundle up the package and take it down the street. The risk involved is that the new lender may have a problem either of the same kind or a different type and may insist on a new appraisal which could end up even lower. Could I also lose my right to sue if I voluntarily walk away?
Thank you in advance,
Dave