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Bad News Rapidly Turning Into A Nightmare
Sorry for the downer post that is about to follow, but I want to make sure all first time home buyers are prepared for anything...
So, in my previous post I bemoaned my loan officer and was upset about the possibility of closing after the 1st and having to move out of our apartment and putting our stuff into storage while we couch surf for the weekend (new tenants moving into our apartment ).Turns out they can't close until Monday so that's exactly what we're doing. If only I could go back to THAT disappointment....
DH just came into tell me that we somehow JUST found out that the sellers took out a home equity loan of 50k in addition to their mortgage and DIDN'T KNOW that they need to pay this off at closing, too. Unless they can come up with the money somehow, or get the bank to free the home equity loan from the house, the deal is off. Now my DH, my kitty cat, and I are all potentially homeless for more than a weekend...Any thoughts on how we could have avoided this mess?
Re: Bad News Rapidly Turning Into A Nightmare
1. A title search should have caught this. You need a new mortgage company.
2. The bank isn't going to forgive the seller's $50k (why should they). I'd say this deal is dead in the water. Unless, as you said, the sellers can cough up $50k.
3. Due to 1 and 2, you can walk away from this deal. I'd assume that you are under no legal binding agreement at this point since the terms of the home have changed with this new info coming to light.
4. Regarding your living situation...this deal is pretty much dead (unless they find $50k). I'd plan on finding a more long-term apartment for 3-6 months.
Oh gosh, I am so sorry. This is a sucktastic situation. Your title search should have been done shortly after you went under contract, and you would have known of this issue weeks ago. And your REA could have looked at the land records and identified this issue too. Unfortunately you were failed on both ends.
Unless you love this house and would give up your first born to have it, it's time to walk away. I can't imagine any sellers having that much money to bring to the table, especially consideing that these sellers are either totally clueless or wilfully duped you for this long. And no bank is going to walk away from money owed to them. The sellers will have to work through the short sale process, and they may not even qualify for a short sale.
Go find a new rental where you can go month to month or sign a short-term lease. You can hang in with this deal if you really want to, but I'd give it up and start house hunting again with a new REA and a new loan company. There will be another house that you love, and there is a deal out there that is right for you.