Second Opinion Success Story!

February 17, 2010
I too had a dream.
My name is Charlotte. I am a 55 year old, first-ever home buyer hopeful. Renting for many years and losing leases twice after well over a decade each, through no fault of my own, it finally became clear that the only way to avoid being coerced into paying higher rent or getting uprooted by landlords is to own my home. The recent housing market collapse made owning a home possible for me for the very first time—the only time in my life.
My husband (who is disabled and has no income to speak of) and I (who work at San Diego State University) have been looking at houses and making offers since late 2008. My credit has been rated upwards of 750, but even though our offers were consistently and substantially higher than the list prices of houses we made offers on, the sellers—always banks involved in short sales, seemingly preferred to sell to investors, even at much lower prices, than to us, who offered a higher price, but who were trying to purchase with an FHA loan and a minimum down payment.
After more than a year of all this frustrating and disheartening activity and while it became more and more apparent that we are swiftly being shoved out of the market with our price range, in late November 2009, we were finally in escrow for a house located on 2468 Morningside Street in San Diego.
On Tuesday, 1/26/10, while waiting for the moving truck and helpers and standing in a chaos of moving boxes, packed suitcases, a storage container in front of the house and a garage full of belongings moved from the upstairs bedrooms, we were informed that all our efforts, the long escrow, the appraisal, the house inspection, the termite inspection and the necessary FHA repairs and purchases we already invested in and finished on the house and the long, long waiting, were all for naught.
It appears as though the Keller Williams Realties listing agent and HSBC Bank, the 1st position lien holder, miscommunicated, whereby HSBC thought we were not going to proceed with the purchase: This property, with a deed from (current owner) was being sold to us through a short sale transaction by HSBC Bank. Wells Fargo was the lender, the loan funded on 1/25/2010, and was set to record on 1/26/2010—however, the recording never happened.
HSBC, instead, sold the property at a trustee sale on 1/19/2010 to the current owner for $168,100.00. We were unaware of the trustee sale since we had a short sale approval letter from the 1st position lien holder, HSBC, expiring on 1/31/2010 and the short sale approval letter from the 2nd lien holder, CITI, expiring on 1/29/2010. Since we had funded our loan before the expiring dates, we had no idea the property was sold via trustee sale until we were trying to record our new deed on 1/26/2010.
My agent was able to strike up a deal with the current owner and they had agreed to sell the same property back to me for $220K. This was $10K above our previous offer, but even that deal could not go further—the two banks we applied at, explaining the circumstances, would not fund us, after it became apparent that the ownership structure of the investors (husband and wife) did not allow an FHA funded loan, even though since 2/1/10 we no longer had to content with the 90 day rule whereby FHA buyers cannot purchase a property from a seller if it was in their hands less than 90 days.
The financing of my own house is very much dependent on the $8000 tax credit, which had expired in November, but has been extended to 4/30/10. Having wasted ten weeks and lived through this very upsetting house purchase disaster, I am now facing a market with much higher house prices, an inventory dwindling fast within my price range, ever more aggressive investors, who flip houses by implementing superficial “renovations” only to put those houses back on the market at vastly inflated prices, and the real prospect of not only losing out on the tax credit, but losing out on owning a house all together in my life time.
I am looking again at houses and my agent has submitted a number of new offers.—Offers for houses that are listed at higher prices and often out of my range than last November, but are much smaller, often without a garage, generally in much poorer condition, often in need of extensive renovation to make them livable (and therefore only open to cash buyers*) and are located in less desirable areas of San Diego. I am hoping, hoping intensely, that one of them will be accepted very, very soon, so that we can finish escrow before 4/30/10.
Thanks for reading my letter.
Charlotte

*FHA 203 rehab loans exist, but are not taken seriously by banks from buyers who want to buy a house with a minimum down payment.