How To Back Out Of A Fannie Mae Foreclosure
I recently contracted a Fannie Mae foreclosure deal and I would like to get out of the deal. The short story of this situation is that I will not have enough cash to close. I am willing to forfit my earnest deposit at this point to cut my losses. What can I do to legally get out of this contract? HELP!
bbb[ Edited by blahblahblah on Date 09/02/2003 ]
If you used a real estate broker to represent you, he would normaly set an exit strategy, just in case. If you still like the deal and the only concern is shortage of funds to close. Talk to him and he should be able to arrange a "Loan to Facilitate".Have him talk to Seller he might help out. Also Broker might give you a bit of commission to help you out. etc. etc.
If you did not use a broker and your experience is nil in Contract and Transaction, repeat after me.
Our Father that art in Heaven etc. etc.
Having finished this still have no way out. Go to the Escrow Officer and ask Him/Her/It for some advice as to how to sever the contract. No subject to inspection? No subject to obtaining financing acceptable to Buyer. The only other way out is to search the contract for flaws. Who drew up the Offer? Here we utilize a Realtor standard offer form. It has more outs then a high school baseball game. About eight pages of them. Covers everything but a change in the weather. Good Luck. Lucius
Thanks for the advice. I didn't use a broker for this transaction <IMG SRC="images/forum/smilies/icon_frown.gif"> This is an "as-is" sale, so there are no inspection clauses. There is a contingency in the contract on the Purchaser obtaining financing on the property within 45 days. How would I be able to exit using this out?[ Edited by blahblahblah on Date 09/02/2003 ]
the contract should indicate how much you are going to finance. ex. 100k purchase price..10k down 90k financed fixed rate for 30 yrs. ..if you cant get a loan for 90k under the terms as per the contract then thats your way out. if you can and dont have the 10k then you'd lose your contract downpayment.
Get your mortgage lender to deny the loan based on your lack of a sufficient down payment. Most financing contingencies are (overly) broad and I've never known a seller to contest a denial letter from a lender. If you haven't presented the seller with a loan commitment letter this shouldn't be an issue and you should be entitled to a refund of your earnest money.
You did put a financing contingency in the contract?!?
Yeah. I would try MDEboard's suggestion. Contact your funding inst. Tell them you don't have that much down payment. Ask them if they can feconfigure the financing. If they say, "No" then you've got your way out.
If they say, "Yes" then you buy it.
Don't forfeit your ernest money. They will do nothing but blow it on a cruise or something stupid!!!
Thanks for all of the great information, guys. In my case, the contract was definitely written to the sellers benefit, including very restrictive contingencies that only the seller could exercise, but thank God that the offer was subject to obtaining financing. (I actually got a RE lawyer to help me review the contract, albeit after the fact.)
I contacted my lender (before they issued the loan commitment letter) and let them know I could not come up with the money to close and asked for a denial letter. With this, I was able to back out gracefully due to the financing contingency with my earnest money to be returned. Thank goodness for this happy ending!!
If I have learned anything from this experience, it is to know what you are signing and ALWAYS LEAVE YOURSELF AN OUT! And if you don't know what your options are, make sure to have someone on your side who does! I was lucky this time, I really could have been in deep doo-doo.
Thanks again folks for your excellent advice and support. This forum is such an invaluable resource.
bbb[ Edited by blahblahblah on Date 09/05/2003 ]
Next time, leave yourself a couple outs.
In addition to the financing contingency, I've also heard of adding an inspection contingency.
I'm sure there are other good ones. This is just another one I heard of.
Ronnie