Real Estate Agents - Did agent act in good faith here and what rights might I have?

Author

Did agent act in good faith here and what rights might I have?

Jay A

2008-02-10, 5:25 pm

We are in escrow on a house. Last Tuesday during the home inspection there
was some mold found and we asked that the seller have it removed.

Our agent got back to us and said that she wanted us to sign a contingency
removal statement before the seller would go ahead and pay for the mold
removal. When I received this form, I noticed that a box labeled "ALL Buyer
contingencies are removed" along with a box stating "buyer's inspection
contingency will be removed upon satisfaction on req. for repair"

I asked my agent why I was being asked to remove ALL contingencies including
the one which stipulates that our responsibility was contingent upon final
mortgage loan approval, she indicated to me that this was a standard
procedure, we would be doing this anyway even if there had been no mold
issue and we should just sign it. She also said that this was the final day
that we had for doing so and that the seller would be able to sell to
someone else tomorrow if we did not sign tonight (it was 5pm on Thursday,
the agent would only be in the office for another half hour and the bank
that the mortgage is coming from was already closed for the day).

Nervously, I asked my agent what would then happen if I later found out that
I did not indeed get final approval for the mortgage loan. She assured me
that she spoke with them herself and was told we DID have final approval.
So, I signed.

Well, the next day, I got a letter from the mortgage company telling me what
they still needed to finalize our loan. The letter also stipulated that
while the loan was progressing it had not reached final approval.

I promptly sent emails to both my and the seller's agent rescinding my
contingency removal agreement. My agent later called me, I explained my
actions claiming that I had signed due to erroneous information on her part,
and she told me that it was her assitant who had spoken with the bank and
not her...but she assured me that everything was goin well, I should not
worry and all this was part of buying a house.

Any thoughts here? Was my agent acting in good faith or did she violate her
duties? Should I be seeking legal advice and guidance at this point? If my
bank does NOT give me final loan approval, do I have a case based on
erroneous information or am I screwed (not only for my deposit but also for
money to have the mold removed ... and anything else for that matter)?

Darren

2008-02-16, 1:25 pm

Hi Jay,
Your question is a very interesting one.
But one thing you didn't mention is your relationship to your agent.
Is the agent actually "your agent"? Do you have a contract with the
agent ? Are you going to be paying the agent's commission? Is the
agent functioning as a "buyer's agent" or does the agent actually
represent the seller of the house? This would make a great deal of
difference in the outcome of this situation should you not get final
approval on your mortgage.
That said, though, here in NY there is almost always a contingency
clause in the sales contract stating that if the buyer is not able to
get a mortgage, then he can get his down payment back and walk away
from the sale.
I can't see how anything relating to the home inspection would affect
the mortgage contingency clause.
Are you using an attorney? If not, why?
Something about the agents actions smell awfully fishy to me.
Unless the agent represents you, as a buyer's agent, then then the
agent has no business relaying information to you from your mortgage
company.
Keep us posted...

Darren

Jay A

2008-02-17, 3:25 am

Thanks for the reply.

No there is no contract with this agent. She is not even the agent
representing the seller. In all honesty I think she made the statements that
she made because she just wants us to feel at ease and go ahead and close
the deal. We insisted that the seller fix the mold issue but the seller did
not want to do so unless she got some assurance that we were definitely
serious about the purchase. Actually I don't blame her.

Anyway, the mold repair has been made and we are awaiting final loan docs to
sign.

This leads me to another question...

I have been reading a lot lately about horror stories of people losing their
houses because they were not aware of a clause in the loan papers
stipulating things such as the fact that the mortgage company may change the
rate or other terms of the loan at their own descretion. Or that they may do
things like jack up the interest rate if my credit rating changes or
something. Apparently this has had a lot to do with the state of the housing
market right now.

Tell me, if I see such stipulations in the loan docs when I go to sign them,
do I have any recourse? Suppose say the mortgage bank has put in a paragraph
which states that they may change the finance charge for any reason (even
though it is a fixed 30 year loan) can I ask them to strike that paragraph
(well I guess I can ask them to do anything I want, but what recourse other
than walking away might I have if they refuse)? If I DO walk away what am I
responsible for other than the $4000 deposit which I gave the agent at the
beginning of this entire process? Am I responsible for the cost of all the
loan preparation, assessments, inspections and everything else that has been
done over the past few weeks?

By the way, I am in California if that makes any difference with regards to
any answers I may get here about these quesitons.

"Darren" <darrenli516@yahoo.com> wrote in message
news:826763d7-7f0b-40d5-b3bf-31c4853a8e37@v3g2000hsc.googlegroups.com...
> Hi Jay,
> Your question is a very interesting one.
> But one thing you didn't mention is your relationship to your agent.
> Is the agent actually "your agent"? Do you have a contract with the
> agent ? Are you going to be paying the agent's commission? Is the
> agent functioning as a "buyer's agent" or does the agent actually
> represent the seller of the house? This would make a great deal of
> difference in the outcome of this situation should you not get final
> approval on your mortgage.
> That said, though, here in NY there is almost always a contingency
> clause in the sales contract stating that if the buyer is not able to
> get a mortgage, then he can get his down payment back and walk away
> from the sale.
> I can't see how anything relating to the home inspection would affect
> the mortgage contingency clause.
> Are you using an attorney? If not, why?
> Something about the agents actions smell awfully fishy to me.
> Unless the agent represents you, as a buyer's agent, then then the
> agent has no business relaying information to you from your mortgage
> company.
> Keep us posted...
>
>
>
> Darren

Darren

2008-02-23, 5:25 pm

Jay,
If you have the slightest doubt about what the terms and conditions
are of your mortgage loan, you must call your representative at the
mortgage company immediately!!!
Have you received a phone call or a letter from them stating that you
have been approved for the loan?
You mortgage rep should have discussed what kind of loan you would
probably be able to get long before now.
Under no circumstances would I ever think that any type of
"adjustable" rate mortgage is right for anyone.
You definitely want a "fixed" rate loan. This means that your interest
rate is locked in, fixed and guaranteed for the life of your loan,
with a 30 year term being the most common.
In a true fixed rate loan, there is absolutely NO provision that
states that the bank can change the interest rate!
Do not let your mortgage rep tell you otherwise.
Of course, you may not qualify for a fixed rate loan for a variety of
reasons, depending on the bank you are using.
But, getting anything other than a fixed rate loan is very risky. With
a variable rate loan, you would probably start off with a low interest
rate. If the interest rate goes up, which it surely will at some
point, your monthly payment would go up accordingly. Remember that for
the first 20 years or so, you are paying mostly interest every month.
It is quite possible that your monthly payment could double!
This is precisely what has happened to thousands of homeowners all
over the USA recently, causing the current foreclosure/mortgage/real
estate crisis.
But my main concern is why your mortgage rep hasn't discussed all this
with you.
I hope you are using a reputable mortgage bank and not some fly-by-
night mortgage broker.
Good luck, and post your response. I'd really like to know how this is
going for you. Please feel free to ask any other questions.

Darren

LinkBot