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Monday, March 30

so you wanna buy a REO

I posted here once previously about looking for a house. Back last fall. I came to terms with the fact, years ago, that I'd never be able to afford to buy in the city where I work, or in any of the immediately neighboring cities. It's a no-win situation all around unless one is bringing in six figures with their spouse or partner or roommate or whomever. Property values do not plummet enough around these parts, and property taxes are quite high.

So I looked further afield, at places accessible by public transportation, and struck gold. I settled on a small-ish city up on the north bay (SF Bay Area), found a house built in the 1950s with huge front and back yards, saw it for the beautiful blank slate it was, and made an offer. And things swiftly devolved into a comedy of errors, all around.

Because the situation never deteriorated to a point where I felt the process was completely futile and fruitless, I persisted, and managed to prevail.

Here's a laundry list of things which made the process a bigger and slower challenge than was necessary. Consider this a cautionary example of what can happen if you are in a position to take advantage of the situation and finally buy property, and go with a foreclosure (because let's face it, this is by and large what's for sale right now and the sooner these properties are bought up and lived in, the better for the communities who are not seeing those property taxes as long as the properties sit empty; more pontificating on this topic to come at a later date, possibly):

1. the property passed between three banks' hands while I was purchasing it (verily, the sellers were playing a game of hot potato with it)

2. the lenders are overworked and only a few in CA still underwrite 95% conforming, and those are apparently even more overworked; remember, when lenders go tits up, that's fewer people to underwrite and service loans

3. the listing agents who are charged with selling all of these hot potatoes can't seem to find their asses with both hands and have little idea what the properties look like inside, much less what is happening to them from the time they're slapped up on all the real estate listings to when people actually request to see their insides (e.g. "what do you mean, the windows are broken? that's not OUR responsibility"); a lot of this is related to how the banks holding the homes go about unloading them - instead of giving 10 properties to 10 different agents, it's 'here ya go, sell these 10 for us', or 'here's a list of 100 properties in your area, make 'em sell'. It's a windfall for the agents doing the selling, but makes for craptastic customer service and inefficiency.

4. the listing agent did not understand that de-winterizing is more than having the water switched on, and having PG&E come out to switch on the electrical and the gas - and I have water damage in the hallway to prove that; exacerbating this problem is my agent was herself unclear on de-winterizing and was not explicit about what needed to be done prior to the property inspection, and was so worried about pissing off the listing agent that certain things were not taken care of in the order they ought to have been

5. the loan consultant flaked initially and this hung me up for about a month on clearing the loan contingency, all told, because of the overworked loan people who are damn lucky to still have jobs (slight snark there)

6. the lender changed in the middle of the loan underwriting, and I can expect it to change again, before my mortgage payment on May 1st (they told me this, in fact - 'yeah, we are going to sell your loan before you even make your first payment, HAHAHAHAHAHA')

7. update: my loan servicer is going to be Countrywide! now why does that name sound familiar, hmmmm...

8. my agent has handled only a few REO sales, and was not as versed in this as the more senior realtors are, but... hell's bells, most of the senior realtors are learning a lot in this market, too

9. two lenders approved me before it finally went to underwriting

10. the final loan underwriter emailed my docs to an email addy at the title company which did not exist, a mistake that could have been avoided had s/he proofread or used spell-check or some kind of automatic correcting tool - which delayed my loan docs signing by a couple days

11. the ding-dong escrow company did not bother to supply me or the mortgage consultant with wire transfer information until we requested it; helllllooooo, do you guys want your farking down payment or not?

12. the ding-dong escrow company supplied us with incomplete wire transfer information, which led to another delay

13. Hells Fargo Bank, who I plan to ditch for a credit union in a few months, does not seem to train its employees in how to complete wire transfers - maybe a room full of 100 chimps w/ typewriters would have been more productive; in fact, the day before Christmas Eve, the teller at the branch I use looked like I was asking her to burp the alphabet, when I told her I needed a cashier's check payable to ____ Escrow Company, to cover my earnest deposit

(13 points. Because I finally closed escrow on Friday the 13th.)

Oh, and leading up to all of this, I had to change loan types, just to be able to purchase the damn house.

I'm relieved the process has completed itself, needless to say. Looking back at December through February (my offer was accepted in December, but you'd never guess that, huh?), it is kind of miraculous I slept at all and didn't have to up my blood pressure meds.

The plug almost got pulled at the last minute. The listing agent made ominous noises about it being pulled if we didn't cough up the funding docs ASAP, and it was just STUPID that late in the game to try to conduct business that way, but we had to take it seriously. The delays were because of all the freaking shift changes w/ the loan and the lender changing, but what really pisses me off in the end is that the seller was doing the same shit behind the scenes. It was American Home Mortgage who held the title, and then another lender, and then it was a third by the time docs were signed. And allllll of the addenda to extend the escrow date we filed were going into some black hole because the listing agent wouldn't keep anyone updated on what was going on. (This goes a ways to explain why the magical thing to ask your pushy lender to prevent/delay a foreclosure, is 'where are the fucking docs? who really holds the title?' They will not know, and it'll take quite a bit of digging for them to divine this. It was just three months for me, and if you figure one change in seller per month...)

Thanks to the moral support of many, I didn't go totally batshit crazy. Just partly. From time to time. I'm still swearing like a sailor when stressed, which is no fucking good and I need to fucking taper off with the fucking expletives. Gah.

Anyway, it's doable. Even in CA. Even on what most locals with a college edumacation consider a pittance, you can buy a house. And it's possible to cover your mortgage with part of just one paycheck, which is the ideal situation if you're doing this with a partner, should heaven forbid one of you become unemployed. Ultimately, I did this in order to be able to save way more over time because my mortgage is substantially less than rent was, and because it means I can grow my own food and live simpler. But I won't try to speak for everyone.

I'm debating on whether or not to post more about this. I know it's a touchy issue because buying one of these houses comes inevitably at someone else's expense, no matter the intentions of the buyer. It is also new territory for me, and so it is on my mind. My goal is to grow my own food, ultimately, do greywater, live entirely on solar rather than partly as I did in the apartment, raise chickens, build and use a solar oven, and be the neighborhood eccentric.

The cultural thrust has been that we all need to 'contribute' to the economy, and buying a house definitely fits that bill. But when I think about that, it becomes clear I'm going to turn that on its ear. I'll happily pay property taxes, because these mean that entitlements like emergency services and public libraries will remain in business, and rightfully so. But aside from some shopping trips for building materials I have to buy new, I'm planning to withdraw even further from the economy and do what needs to be done in order to simplify further. Interesting conundrum there.

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