8 Closing Nightmares and How to Manage Them

There are few experiences in life as exciting and stressful as buying a home. It’s a constant rollercoaster ride of thrills and fears, new experiences and cliffhangers that threaten to ruin all your dreams forever. By the time your inspections are over and your Realtor assures you there’s not much left to do but wait, you’re in desperate need of the emotional break — but sometimes that break doesn’t come because something goes terribly, terribly wrong.

Although they’re not common, closing nightmares happen to the best of us. Most of the time, your Realtor or lender won’t be able to prepare you because all indicators point to a clean transaction. However, in my nearly 10 years working in the real estate industry, I’ve seen some doozies. If you hit a bad spot in your transaction, just remember to breathe and trust that your experts are doing everything they can to help — after all, that’s really why you’re paying them.

Anybody can handle a smooth transaction, but it takes experience and fortitude to hang on through these 8 nightmare scenarios:

You’ve Just Learned Your Home is In a FEMA Flood Zone

OK, technically everybody’s house is in a FEMA Flood Zone, but when your banker, closer or Realtor calls to tell you that your home couldn’t be flood certified because it’s in a FEMA Flood Zone, they’re talking about a Special Flood Hazard Area (SFHA), also known as a 100-year flood zone. This isn’t a problem in and of itself, but there are a few programs, like USDA, that won’t loan on a property located in an SFHA.

You may be asking why no one caught this problem before you started trying to get all your loan paperwork hammered out — surely your agent or your banker should have known that you were headed for disaster. Unless either of those folks are in the habit of not getting paid (after all, their income is in part or wholly based on commissions), they believed your future home was clear of problems based on the information they had available.

Here’s where trouble starts. Every once in a while, the flood maps that Realtors and bankers have access to don’t line up with the current version of the maps FEMA is using to produce flood certificates. Usually, these properties have just a tiny, tiny bit of their lot inside the SFHA — but it’s enough that you’re considered to be “inside” a flood zone.

When this happens, don’t panic. Most loan programs will just require you buy flood insurance, which should cost about $500 per year. If you’re trying to borrow with a program that won’t loan on a property in a flood zone, your Realtor and banker can mount an appeal since the actual house isn’t affected by the flood zone. Even in the worst case scenario, you should be able to change loan programs without delaying closing too much.

Your Income to Debt Ratio Has Changed

There’s nothing that will get your lender’s panties in a twist as badly as if you change your income to debt ratio without discussing it with them first. See, when you were qualified for your loan, it was based on a lot of things — your income to debt being one of the most important. As we discussed in an earlier post, your income to debt ratio is exactly what it sound like it is: the ratio of your monthly debts to your monthly income. Simple, right?

So, we know it’s important and we know what it is — it should follow why making a change to this valuable number would cause problems. Most people understand that they shouldn’t touch their income to debt ratio while they’re trying to get a mortgage, but fewer understand what things will affect it, so let’s talk about that.

Your income to debt ratio goes up any time you borrow more money and it drops when you pay loans off. It can be tempting to open a credit card for all those purchases for your new house or to pay off existing debt, but don’t. Don’t do anything without calling your banker first. Believe it or not, every move you make right now will affect your loan underwriting.

If you do change your debt to income (for better or worse), one of two things may happen: your loan will fall through or your rate will change. Either of those things are really pretty bad, because your rate’s only going to go up — never down. A higher rate means a higher payment, which could further mess up your income to debt ratio.

Your lender checks your financial history before they initially approve you for a home loan, but they may take a peek up to two more times up to and on the day of closing. Make no changes, touch no credit, resist temptation until after you’ve signed all the paperwork at the closing table. If it’s too late to undo what you’ve done, a larger down payment or changing programs could get you back on track.

You Can’t Get Homeowner’s Insurance Coverage

Homeowner’s insurance is another one of those things that requires credit qualification, just like getting a mortgage or starting a cell phone contract. Just because you can get a mortgage doesn’t automatically mean every insurance company is going to go out of their way to offer you homeowner’s coverage, though. The credit algorithms for homeowner’s coverage are proprietary and vary widely from company to company, so even if you’re sitting pretty on your mortgage, you may be denied a homeowner’s policy.

When your insurance agent calls and tells you that you’ve been denied insurance in the weeks before closing, don’t panic. Unless you’ve personally had a lot of homeowner’s insurance claims or your house-to-be looks like it has been hit by a tornado (or actually has been hit by a tornado), you’ll be able to get coverage elsewhere. Always apply with more than one insurance company, that way you have a backup plan if necessary. A few phone calls to other agents with get your insurance bill and binder in time for closing.

Your Settlement Costs Have Changed Considerably

This is one of those last minute surprises that nobody likes. When you’re thinking about buying a home, you really need to have some savings, well and beyond what you think you’re going to need. Sometimes, things happen: taxes are higher than expected, you need extra inspections that cost extra money, your insurance is more costly than estimated — the list goes on and on.

In theory, your banker can give you a good feel for what it’s going to cost to close, but any number of things can change (and sometimes, a lot of things do at once). In the future, you’ll be able to view closing documents like your settlement statement electronically in the days before closing, but for now you’re still at the mercy of your closing agent.

At the point you find out that the settlement costs have increased, it’s going to be too late to back out of the deal and you’ll have too much money tied up to throw everything away over a few hundred dollars of miscalculated charges. As much as it pains me to advise this, all you can really do at that point is suck it up, cough up the dough and hope your friends and family will spot you some pizzas during your move.

You’d think agents and experienced buyers would be immune to this issue, but I can assure you that they’re not. I’ve had my own closings where the settlement statement wasn’t prepared until the morning before we signed on the dotted line — and although I always knew I could have to pay more than I expected, it still filled me with fear and angst when I was told to bring more than I had planned.

The Appraisal Came Back Too Low

There was a day when appraisals almost never came back low, but those days have long since passed. Today, some people do get this bad news in the week before closing and learn that their home didn’t appraise out. An appraisal isn’t a stab in the dark, it’s a very carefully determined calculation based on things like recent sales of similar homes, features of your home and the desirability of your neighborhood, so when they’re low, it’s not a joke or a suggestion. Your home simply isn’t worth the price you agreed to pay.

That might not bother you if you’re planning on living there a long time or have a major remodel in mind, but your lender is going to care a whole lot. A low appraisal can kill a deal, but once you’ve got it on paper, it can also save you money. Your Realtor will do everything they can to salvage the situation, in this case they’ll go back to the seller and ask for a price reduction with the appraisal as evidence that they’ve asked too much.

You’ll have to sign the paperwork and there may be some back and forth, but unless your seller is painfully close to not being able to sell their home for lack of funds, it’s in everybody’s best interest to see the deal to fruition. These deals usually have a way of working themselves out in the buyer’s favor.

The Sellers Can’t Actually Sell Their Home

Believe it or not, there are rare occasions when you’ll find that the house you’re trying to buy can’t be sold by the people who are trying to sell it. They may have a huge tax or mechanic’s lien, aren’t who they claim to be or don’t actually own the house. I know, it sounds like something out of a daytime drama, but these things really happen.

Liens aren’t something you can really get around — they must be satisfied before the home can be sold (they can be satisfied with proceeds from the sale, but only if there’s enough equity). If the seller won’t take care of their lien, the deal’s dead and buried. Trust my years of experience when I say these deals aren’t worth fighting for. Luckily, you’ve already got your loan documents mostly finished, so get back out there and find another house pronto.

Sellers who can’t sell their house because they can’t prove they own it or simply don’t own it, well that’s another matter. Usually, this happens when there has been a death in the family and an obvious heir like a child or sibling to a childless couple believe they have inherited the property when, in fact, it has to go through probate court first.

Being the obvious heir means that it’s likely these people will eventually inherit the property free and clear, but in the meantime, it’s in limbo — the ownership is undetermined. If you’re in no hurry to move, you can extend the contract to beyond the probate court hearing, but if you need to move sooner rather than later, you can (and should) walk away.

The seller is ultimately at fault for being unable to pass title in either of these cases, but you will lose whatever you’ve spent on inspections or appraisals. Sometimes, it’s much better to cut your losses — don’t be afraid to do so. You’re fully within your legal right in these situations. Find another house, go on your merry way and have a happy life and a stress-free closing.

The Sellers Haven’t Completed Their Agreed-Upon Repairs

As time to close draws nearer, you’re going to get antsy to see if the sellers have finished all those repairs you asked for after your home inspection. With an unoccupied home, it may be tempting to go visit and see what you can see — but really don’t, for your own sanity. When you do finally go looking around and discover that the seller hasn’t finished the repairs a few days before your walk-through, don’t panic yet — just hold tight and find a crossword puzzle to distract yourself.

Sometime things happen — contractors get busy, sellers have to go out of town suddenly because of family emergencies, or time simply gets away from them as they’re scrambling to find their own new home. Have your Realtor call their Realtor — the seller can usually escrow funds for repairs that won’t be done prior to closing. The sellers won’t get their check until the work is done, so you can be sure it will.

Your Walk-Through Was A Nightmare

Oh, boy, this one happens more than it should. I’m so, so sorry to have to be the one to say so. Walk-throughs are an opportunity to make sure that the house you’re buying is the same house you put an offer on all those weeks ago. Look around, make sure that things are reasonably close to how they should be and that everything you expected to be in the house are there. This includes stuff like appliances the seller agreed to leave, equipment for pools and fireplaces, fencing and landscape plants.

Don’t get me wrong, most of the time you’ll go into the house and everything will be exactly as it should be. But sometimes you’ll get into the house and discover problems that range from a bad dream caused by indigestion to a full-fledged night of screaming terror. I’ve been to walk-throughs where the carpets, light fixtures and everything that wasn’t nailed down had been removed and I’ve been in houses that were just the opposite — where sellers decided they were going to leave the buyer all their garbage in lots of untidy piles.

What’s a buyer to do if they’ve got a walk-through nightmare? Are you obligated to close? You’ll see how good of a Realtor you’ve got in this situation — because they’re either going to stick up for you or they’re going to try to force you to close so they can get paid. If your walk-through is a true disaster, you don’t have to close because the seller didn’t come through with their end of the bargain.

Sometimes, you’re better off to close anyway — even when things aren’t quite right. Think about how much money you’ve got in this transaction already, and compare that to what it’s going to cost to fix whatever is wrong. If you were going to replace those ugly carpets anyway or meant to repaint right away, don’t worry if the carpets are worn or the paint is banged up.

In the case that repairs remain uncompleted, you absolutely must ask the seller to escrow the funds for them. Some loan programs won’t let you close without at least having evidence of escrowed money, so stick to your guns on this one.

Bottom Line: Closings Can Be Painful, But Most of the Time You’ll Make It

I know all these scary scenarios are enough to make you never want to buy a house, but I promise they’re not common, they don’t happen often at all. If you do hit one of these absolutely worst case scenarios, there is hope on the horizon — especially if you already know what to do when the problem crops up. Just take a deep breath, be prepared for anything and trust your Realtor, lender and closing agent are doing everything they can to make sure your transaction goes as smoothly as it can.

279 responses to “8 Closing Nightmares and How to Manage Them

  1. So i have a crazy situation. Me the seller just finished closing my house yesterday. It was a normal closing met at the title company the buyer had his loan approved and was signing all the paper work needed to buy the house. I signed all my papers as well one thing i noticed was on all the paperwork it was the buyers name and his wifes name on all of it. He signed everything and his wife was never present to sign any of it. When we were done the money was wired to my account and i handed over the keys. Later in the day the title company called me claiming i had to give the money back because the wife didnt want to sign the papers. I was shock and did not understand so i called my realtor and she said the title company and the lender messed up and were waiting on the wife to sign the paperwork as an act of good faith. If that was the case why was the money wired to my account on an act of good faith these are legal documents we are dealing with. What should be my next step can i stay with the money because its not my fault the title company and lenders messed up. The title company keeps calling me threating me. Please help??

    1. Heya, Hernan. What is the title company saying to you? If they already wired the funds, there’s no way they can get them back short of the old fashioned way. The house has closed, so the person they need to be after is the wife, sounds like to me. But you’ve not given me a lot to go on here. Have the new owners moved in already? Have you told your Realtor that the title company is harassing you?


      1. Thank you for replying the title company is calling me claiming that the wife dosent want to sign the contract. They are claiming me i need to return them the money and the deal needs to be canceled. I spoke to my realtor and she called them and she asked them what was wrong according to them the wife was suppose to sign and be present but they did all the closing with just the husband in the morning and that she was going to sign the papers later in the afternoon according to them. Now my realtor asked them why would they do any closing without her present and the title company said they did everything in a act of good faith thinking she would come and sign after the husband already signed all the closing paper work and money was wired to my account due to the fact everything was already closed and done.

          1. Hmm. Stay on them and don’t give that money back just yet. Don’t do anything just yet except stay in touch with your agent. Something’s fishy here. That title company should have never disbursed funds without the deal being totally closed, it’s on them to straighten this out.

            And keep an eye on your other place. As it sits, if the people who have sort of bought it do any damage, and this thing somehow undoes itself, I’d be trying very hard to hold the title company liable. Who does that? Who half closes a deal and disburses funds and then says, “Oops?”


  2. Hello! We’ve been under contract on a property with 5 acres of pasture for 2 months. We close next week and we drove by to look at the place and we noticed that the pasture has been allowed to completely grow wild (like 3+ feet of crazy weeds and hay, etc.). It was perfectly mowed when we looked at the property, and we were expecting this to be included in the “House is left in the same condition as when the offer was made” clause.
    If it were just a house and typical yard, it would be no big deal because we would just mow it, but with the amount of land and type of growth, you need to use a tractor and we don’t have one. We weren’t too worried about after-move upkeep, thinking that it’d be freshly mowed and we’d have another couple months to save/buy the lawn equipment we’ll need or to pay a company to mow it once or twice before winter, but at this rate it will be a forest by the time we get something. Is this part of the sellers obligation as part of the “same condition” clause, especially since it is a feature of the property and requires specific maintenance equipment not just a typical front yard? Thanks!

    1. Typically it should be included. They may be waiting until closer to closing to mow it or they may have someone coming by to bail the little bit of hay it’ll produce. I’d definitely call my Realtor and bring it up, though.


  3. I have a situation. I bought land with money down and monthly payments financed by the owner. I paid the land off in Dec. 2014. I now want to put a home on the land and have been working with my loan company. They want a “satisfaction of mortgage” from the original owner. I cant locate him, his number is disconnected, I sent a certified letter…still nothing. I don’t know what to do next ?

    1. Hmm. That is a sticky wicket. Do you have anything that shows you paid the loan off in full? That’s the place to start…. there is an alternative process, but it’s slow and painful.


      1. yes, I have a copy of my Check dated 11/27/2014. and it states on the check that this is the Final Land Payment 12/01/2014. The title company will NOT move forward until I have that “satisfaction of mortgage letter”. even though the Deed is in my name.

        1. Unfortunately, some companies want to be absolutely sure there’s no potential for a lien against the land. A check in your handwriting saying that this is the last payment isn’t good enough proof, you’ll need something signed by the former landowner. Did you guys have a formal Contract for Deed or owner financing agreement recorded?

          if not, you’ll probably need to get a real estate attorney involved. There’s always a way around it, but they’ll know the specific posting and notification requirements in order to ensure that your title can’t have a claim put against it. That’s what your mortgage company is concerned about — they probably can’t get title insurance due to a cloud on the title.

          You didn’t happen to close this deal at an escrow company or in a lawyer’s office, did you? They might have more ideas for you or something already on file for when you’d paid the note off.


          1. i think legally, if the check noted with “paid in full; final land payment” and the owner cashed the check, then that transaction would satisfy the court that the owner agreed to the terms written on that check when s/he cashed it. I don’t believe ‘final payment’ may be regarded the same as ‘paid in full’ which specifically conveys you paid the entire amount due on that parcel. You can sometimes find county governments that maintain an online website where the public may check the county office for the public records which show tax information on parcels/addresses within the county, reveal the owner and owner address as well as liens, etc. You can pull up the year by year tax assessments and owner mailing address to get the current owner info – or at least a starting point for tracking the owner down.

  4. We had to postpone our closing because the seller has not repaired the roof. We are 2 days away from trying to close again and they still have not show us what the insurance company said they would replace and how much they will pay for repairs. We need this so we can deduct the amount from there proceeds at closing. But again we have nothing. We may not sign due to the fact we have no updated repair amendment or any paperwork fron their insurance company. Their agent is unresponsive to our many request for this information. Not sure what to do. To close or walk away?

    1. It’s always easier to close, but at this point I’d be threatening to walk away. They can close with this repair in escrow for most types of loans, just make sure your agent specifies that YOU get the money if the repair isn’t made in a timely manner. This is really important.

      Ask your agent to have their broker call the Seller’s broker. That tends to get things moving.


      1. The sellers broker is aware now of the situation. We were going to escrow but we were told this would trigger a red flag for underwriting and would cause issues at closing and would delay even more. We were told we would take the amount of repairs from their proceeds instead. But have no idea how much. They had my roofer on site with the insurance company and the insurance adjuster said there was hail damage, replace gutters ,fence ect. But the sellers did not sign with our roofer . They have delayed this for over a week now. Of the insurance report says they will pay for all that doesn’t the seller have to repair what insurance is paying for? As of now they just said repair or replace. Can’t get a straight answer from them.

        1. Couple of things. First, they always tell you that an escrow will trigger a red flag. It doesn’t always. It’s just a lot of extra paperwork no one wants to fill out. But yes, you certainly need an amount in order to establish one and that’s a pretty big deal.

          Are you in an area where another house is going to be easy to find? I mean, I guess that’s the main question. If they’re out of contract at this point and they’re not doing their part, the best way to handle it is to tell them that if they’ve not gotten their ducks in a row by such and such a date, you’re moving on. It could be the insurance company being the hold-up, they’re really a pain to work with sometimes. Around here, The Hartford was notorious.

          Anyway, if the house is worth waiting for, grit your teeth and bear it the best you can. I understand what you’re going through, we had a very similar problem with our home, except with a stolen air conditioning unit. It was stupid obvious what had to be done, but the official channels moved painfully slow. We ended up closing in escrow. Everything got finished, so there were no worries in the end, although I did threaten to take my down payment and go to Disney for all the trouble my Seller caused me (even at the closing table… talk about a train wreck).

          If you’re about ready to be done with this place, it won’t hurt to go look around at some other houses. Since your loan paperwork is all but done, you’ll be able to move on and close on another house relatively quickly. Ask your Realtor’s advice, too. After all, they’re the one that should have your back in this deal. They know the whole story, I’m only getting bits and pieces.


  5. Hello. I have a very odd predicament. Our closing is this Tuesday and on this past Friday we were told that our lender couldn’t give a final loan approval because they dropped the ball and no one looked at the title search when it came in May 4th to check if the property taxes came in at what they estimated. No one checked it until this past Thursday then they said once they checked it the income to debt ratio was to high because the taxes came in higher. They were going to wait until the day of our closing to see if they can get it approved from someone in corporate. Our home is sold and we will have nowhere to go after the movers come on Tuesday and our loan isn’t approved. If they don’t get it approved by closing at 1:00 can I walk from the deal? I have to figure out what to do with my stuff that will be on the moving truck. Any help is appreciated.

    1. Couple of things, I guess. First, if I were you, I’d rent a storage unit because this is going to be a real tooth grinder. And I don’t envy you one bit. At least with a storage unit rented, you’ll know for sure where your stuff is going to go on Tuesday.

      Second, if you’re worried about your inability to close because of the sellers of your new home, as long as your contract is contingent on financing, you’re safe from any consequences. Most are, but look for a piece of paper called a Financing Addendum or a Financing Clause in your contract. If you knew you were going to get a loan for the bulk of the purchase, the chances are good that you had this built in to the contract.

      If the seller isn’t looking to turn around and close on another house right away, you may be able to take “possession prior to closing,” or even arrange for a short term “lease with option to purchase” while you’re getting your paperwork sorted. The terms between quotes are the proper terms so you can ask your agent about them as potential ideas. Both may require you pay some amount of rent until you can get the loan finalized.

      Third, and I know you didn’t ask, but I’m going to give you a bit of extra. Here are some solutions for solving that debt to income problem.

      1) Bring more money to closing. This isn’t always as hard as it sounds. If you can get an extension on the closing date, you can tap a 401(K) or other retirement fund — that’s your easiest bet unless you have substantial savings. It’s not a perfect solution, but this is not a perfect world and you’re firmly wedged between a rock and a hard spot.

      2) Get a gift from a family member, even if they intend to ask you to pay it back down the road. A loan won’t help your debt to income, but a gift will. Your family member will have to sign off that it’s a gift and they’ll have to have the funds verified. It can take extra time, but it’ll work if you’re in a corner.

      3) Find a non-occupying co-borrower. Most loan types will allow a co-borrower of some sort, a parent or spouse is the best bet, but a sibling, extremely close friend, grandparent, aunt, uncle, and so forth, can be used. It’s a big thing to ask someone, so if you have to go this route and your first pick says no, don’t take it the wrong way. They may have just been burned one too many times.

      Not knowing what your debt to income ratio is now or what kind of loan you’re looking at makes it impossible for me to be able to help you further, but the above are surefire ways to correct debt to income issues in general. For more people. For most loan programs.

      If you’re right on the line and your seller is flexible on moving the closing date and you don’t mind to pay for a new appraisal, there’s always option #4. That is, get a new lender who has their act together. With all the information you have now, it should only be a few weeks to get a new loan approval. You may have to lender shop a little, but your Realtor should have someone they go to in these situations.

      If you’re well above and beyond the edge of “on the line,” make that lender make it right. No one else will be able to do it for you. They’ll have to get special approval from the bank to make an exception to their lending rules and do some financial hokey pokey to make this happen. I’ve had this happen before, too, and although it’s unpleasant, it’s also within the power of that bank to do at some level. If they start saying that it’s their policy, etc., etc., remind them that you weren’t the ones who sat on vital tax information they had for almost a full month until the Friday before closing. You may need your Realtor to go to bat for you, their broker to get involved and potentially rouse the lawyer for your Realtor’s firm, but they need to make it right. I simply can’t imagine a scenario where the taxes could affect the debt to income by more than one or two percent.

      I hope something in this diatribe helps. You still have lots of options, even though I know it doesn’t seem like it right now. Good luck!


  6. Hi Krisit. Loved the article. Im presently going through an underwriting dilemma. I have my loan processor working on it but here’s the details. My wife is half owner with her sister on their parents home. The home has been paid off over 20 years. 2 years ago, the parents did a quit claim deed to my wife and her sister. My wife and I are now buying a new house. But the underwriter is trying to gain proof that the house she owns with her sister has any mortgage on it and is lien free. How do we prove this? I thought a credit report search on my wife would prove this? And to make matters more complicated, with wife has a horrible relationship with her sister (they barely talk and when they do – arguments erupt). I was told to possibly provide home owners insurance docs that may show no lien holders… problem is, sister wont give us any docs due to the bad relationship. What can we do? Will underwriting consider this problem “minor” and just continue? or are there other options we’re not thinking of? Would a title search work? As I said, the house is free and clear… how do we prove this? Thanks.

    1. Heya, Ralphie. You’ll need a letter from the bank that her parents had the mortgage with to prove the loan is paid in full. Most likely, your title search will turn something like this up, or the underwriter can get it. But if not, her parents should still have contact information from the bank they paid off — just call them up and they’ll have you set up in a jiffy.

      Sorry for the delay,


      1. Thanks. Cant do anything with the bank because I need their express written consent to obtain docs from the bank – something they will not provide (privacy laws). However, my underwriter and mortgage broker came up with a solution that was accepted and we just closed… the title company ran a title search (not needing to bind or warrant anything) on the property, for $140, to prove there were no other lien holders. This satisfied the underwriters and we successfully closed. . Thanks again. (Family sure do make matters more stressful than they should).

  7. Question- my parents just signed a contract on a home in the Hamptons, NY and specific furniture was agreed upon to stay but when we went by this past weekend (three days after signature of contract) many things were missing. Mostly the expensive pieces that were to stay. Nearly $200,000 is already at stake and in the hands of the sellers attorney. What is the best way to prove breach of contract and get the down payment back?

    PS- The home was also rented when we stopped by which was another huge No-No but wasn’t in the contract. The realtor assured multiple times that it had never been and wouldn’t be rented out between now and the closing.

    What to do?!?!?

    1. If the furniture is in the contract and now it’s gone, there need to be questions asked. Where did it go? Maybe it was tucked away for safe keeping. As for the rental, if it wasn’t in the contract, it’s not an anything — it’s legit. The Realtor was just wrong. It could have been a weekend stay or something, but you have to ask the people who are involved with the transaction.

      So, these are questions you’ve got to ask the agent representing the seller. It may not be a breach of contract situation at all, it may be something other than what you think. Unless there’s an auction going on or a giant for rent sign in the yard, anything is still possible.


  8. Hi Kristi, we are in a mess right now. I have a condo, that is one the market and is in escrow, it is an FHA loan. I filed for BK in 2013 and did not reaffirm the loan, per attorney’s instruction. We are trying to buy a new home and when they ran an FHA title, my name was not attached. However, I presented paperwork to the lender, told them about my BK and that I did not reaffirm the loan. Well due to the lack of experience from our new agent and the incompetence of our agent recommend lender … the contract has expired. They are still trying to push the loan through. The seller will not extend the contract unless we release the earnest deposit or do an extension stating the earnest deposit is non-refundable, she has also placed the house back on the market. I am buying this house with my boyfriend. The lender is trying to push it through with me as an non-occupant, co-borrower and state that my boyfriend and I have a long history together as well as credit together, which we do. Technically as I understand from our agent’s broker, she is stuck as well because you cannot have two open escrows on a home and we have not backed out yet. I am just heartbroken this was our dream home and now we feel it is dead … We should get our earnest back back we could not get qualified, but not the appraisal or the inspection money. The broker suggested that we release some if final approval comes back from the lender .. but I am not even sure she will allow us to buy it, we no longer have a contract with the seller.

  9. Hi kristi,
    (Sorry my English) Am suported to do closing closed last friday, 24 and was cancelled,The I was told that the owner is missing a document a corporation document from Netherland. I´’m been told that the closing close must be done this friday or next monday. My lease expired this thursday. I’m 100% percent approved for the loan, then is not my fault. What can i do. I live in Florida and I dont have no body to stay.
    Can I cancelled the contract …??? Thank you for your advice

    1. I’m so sorry for the delay in replying, Daniel. I hope things are ok today.

      Typically, in these situations, we just go to the landlord (your landlord) and ask for an extension of the lease. Even a few days isn’t typically a problem. They may ask for a small amount of money for the extra time, but it’s not normally a big issue.


  10. Our realtor also happens to be part owner. What was supposed to be a dream come true has turned into a nightmare. The contractor has a lien
    on the house and once that was cleared, the house was broken into and vandalized, now she is saying that she has to wait for the insurance company to repair the damages. We signed the contract 3 months ago. Is there anything we as buyers can do?

    1. It sounds like you’re buying a new construction or a remodeled home? Unfortunately, unexpected situations do happen — and no one likes a robbery. They’re not fun and insurance companies do move very slowly. If this is the house you want, please try very hard to sit on your hands and be patient. If you’re having second thoughts, explain what you’re feeling to your agent without making accusations (she’s under enough pressure as it is) and maybe she can convince the contractor to let you out of the contract you’re in to pursue a home that’s ready to move into.


  11. We are supposed to close on a home tomorrow, but the lender just told us they were backing out of the deal. They stated that they have a policy against lending for mobile homes and they will not lend the money. The appraisal (which was done three weeks ago) clearly states that the mobile home is personal property and has no value. Shouldn’t the lender have been aware of their own policies when I first started working with them? I have paid both the inspection fee and the appraisal fee, all while they had this alleged policy in place and they let me. Can I force them to reimburse the inspection fee and the appraisal fee?

    1. Boy, Paul, that’s a question for a lawyer and not a Realtor. I’d expect they should be aware of their own policies, though, yes. If this hasn’t resolved, I’d recommend talking to someone higher up in the banking food chain — maybe a president or a VP. Or an attorney.


      1. Thanks for the reply! Update, we have talked with an attorney who says we have a solid case for small claims. However, we found a new lender who will accept the previous appraisal and inspection, so we aren’t really out anything except for escrow being pushed back 4 weeks.

  12. Hello, I live in Texas and placed my house on the market and was told the appraisal would take roughly 15 days to complete. Well it’s been almost 25 days and still no word. I don’t know what my house is going to appraise for and closing is supposed to be in 2 weeks. I haven’t packed because I don’t know if my home was placed on the market too high and the buyers are not budging on the move out date. Is there anyone I can call besides my realtor to see what’s going I and what happens if I back out of this deal?

    1. Hiya, Tonya. I’m so sorry for the delay in responding to your question. Typically, if you have a buyer, your house is in range. Once in a while it doesn’t work out that way, but those buyers are out looking at other homes in the same price range and they know what looks like a bargain or even a reasonably priced home. Does that make sense? I know it’s really stressful to be where you are now, but pack up all the non-essentials as quickly as you can (if you haven’t already) and be prepared to pack the rest in a hurry.

      I hate to say this, but the stress only gets worse as closing day gets closer. What if the HUD isn’t right and the closing’s delayed? What if the funding doesn’t come through? There are a million things to stress about, so please try very hard not to — and feel free to find me on Facebook if you need someone to talk to as the time gets closer. I know it’s a rough thing.


  13. First of all thank you for this eye opening article. We are first time homeowners in New Jersey and we just had our house inspection wherein the inspector recommended a mold and asbestos specialist go in to take further testing. We were about to schedule more specialists to come in when we had a surprise call from our agent saying that 1. Seller does not want to do any repairs whatsoever and will not reduce the price even if there was asbestos in the house; and 2. (the more bad news) our agent found out that the house is in pre-foreclosure and that seller still has 300k mortgage on it. Seller did not disclose any of these. In fact he verbally and in writing told us that there were no liens and mortgage is already paid. The appraisal also had an “as is” clause which was bewildering because we got approved for an FHA loan which says that they can’t give the loan to us without some certificate of no asbestos/hazard or something. Our agent thinks that the appraiser (who was a friend of the seller) was in on it too.

    We are honestly terrified and will be backing out of this deal. We’d like to ask for your advise if we could sue the seller and let him pay for the house inspection costs and appraisal for failure to disclose?; 2. What could have we done to avoid this nightmare? Thank you so much.

    1. As far as I know, inspections are pretty much always on the buyer — if you want them, you get them. They’re a service you order. So, you ordered them, they’re yours. It’s kind of like if you wanted your condo sprayed for roaches, even though your neighbor is the one who won’t throw away his pizza boxes and is feeding them… BUT, I’m not a lawyer, and this is certainly something your agent can ask their broker’s lawyer about. Every brokerage has one on retainer because real estate agencies get sued a lot — mostly for things they can’t actually get sued for. Real estate arouses passions. There may be some damages due if the seller was unable to perform (sell their home) due to the mortgage in question, but you could be tied up in court for a very long time.. If you’re willing to risk that, sit down with an attorney and have that chat.

      As for the second thing. How to avoid it. Not living in New Jersey, I can only give you sort of vague advice, but largely the idea is to use all your senses, but especially your sense of smell and sight. Look around, smell the air — does the place look and smell clean? Every house has mold at some level (microscopically), but houses shouldn’t smell moldy. They should smell neutral or clean. They should look clean, even if a little dusty. You shouldn’t see water spots or stains on walls or ceilings, even in basements. As for materials like asbestos — there are many circumstances under which it’s still safe. Cement fiber board tiles, for example, often contained asbestos. As long as you’re not cutting into these tiles, the asbestos stays in place and is totally harmless.

      I could literally write a book on what to look for in a healthy home, but basically, if you snag a place that someone is already occupying, that’s a good start. Someone else is living there, so it clearly can be occupied. You can drive yourself crazy worrying about indoor pollutants. They’re a thing — they’re for real — but they’re in every single home in one form or another. What matters is the level and how well they’ve been beaten back. This is why house cleaning and maintenance are so important.


    2. 1) I’m curious to know how the seller’s friend was able to appraise the home you’re buying. It is my understanding that all appraisal orders go through an Appraisal Management Company (AMC) which is set by your lender only 2) Usually the move in date is on or after settlement, or as agreed upon on the offer. Once you have signed all of the paperwork at settlement and have the keys, it’s your house. So the fact that you’re in contact with the seller to make verbal agreements with them makes me wonder if this was this a FSBO Property (For Sale By Owner)?

  14. I have a question. We havent signed the closeing papers on our new mobile home and it has been 2 months since we put our deposit down on it. Due to we purchased new land but which our broker tolf us it was water and sewer ready so we only needed to clear the land and add water lines to the main water and septic line and put up a electric post.BUT HELL COME IN. She lied and now town is telling us it will be ready end of this month due to the rain set them back. I do not want my deposit to go to waist on our new home because looking at all we need to do it is going to be after christmas by time we can move a trailer on our property.. MY QUESTION IS. CAN I GET THE COMPANY TO GIVE ME MY HIGHLY DOWN PAYMENT BACK FROM OUR TRAILER?? Since we havent signed closeings??

    1. This is going to depend a lot on what you’ve agreed to in writing. Unfortunately, mobile homes are considered personal property until they’re leashed to a permanent foundation, and that’s not something I know much about. You may want to consult an attorney.


  15. I have a question. We have not signed the papers closeing on our new mobile home and it has-been 2 months since we put our deposit down on it. Due to new land but we Purchased Which broker tolf us our water and sewer it was ready so we only needed to clear the land and add water to the main water lines and septic line and put up a Post.but electric COME IN HELL. She lied and now town is telling us it will be ready end of this month due to the rain in September them back. I do not want my deposit to go to our new home on waist Because looking at all we need to do it is going to be after christmas by time we can move a trailer on our property .. MY QUESTION IS. CAN I GET THE COMPANY TO GIVE ME BACK MY HIGHLY DOWN PAYMENT FROM OUR TRAILER ?? Since we have not signed closeings ??

  16. I have a situation…my closing is set for next Friday and the abstract company has not yet given my lender the title binder. I started packing, gave notice to my landlord, set up cancellation and set up of new utilities, home owners insurance, etc. The initial order went to my lender on June 7th….this is unacceptable.

    1. I’m sorry to hear this. Have you or your Realtor made contact with the title company to check the status of that title insurance policy? Sometimes they take a little time to issue, especially if the property is older and has had a lot of owners. The company has to verify that each and every one of the people (and heirs) has no ability to come back and claim a right to your property after you close. If by next Friday you mean 7/29, you’ve still got plenty of time, so try to relax. 🙂

      Good luck with closing and keep us posted!

      1. Update: Unfortunately the title company “dropped the ball”. The person handling my binder is on vacation and the other agents scrambled to get the binder to my lender yesterday. The lender forwarded to the underwriter and then has to go to rural development for final approval (USDA). Chances are we will be a few days behind contracted date. Not the end of the world, but makes things challenging that were already scheduled to be in place.

  17. Our home buying process has been a nightmare so far. My husband and I are trying to buy our first home in New Orleans and we have hit roadblocks with our realtor, the bank, and now our insurance agent.

    We went into this process allowing ourselves what we believed, plenty of time to close, but it seems like that won’t happen. It took our bank nearly 4 weeks to order the appraisal and the paperwork leading up to that was a nightmare. We would provide document they asked for and we’d move to the next step only to be asked for the same documents a week later. We were also asked not to date any of our documents due to compliance laws, which seems pretty illegal to me.

    Now, we’re supposed to close on July 28th and our insurance agent who set up our new homeowners and flood insurance policy informed today, after 5pm that we need a flood elevation certificate. I’m not even sure if we can have a survey done in time to close. Really disenchanted with this whole process honestly. It has been mentally, physically, and emotionally draining.

  18. The situation we are faced with, is after the sale of our home, which closed on Thursday July 28 at approx. 3:00pm. It is now Wednesday morning 8/3 (almost a week later) and we still have not received our funds. Is this common? Are there any resources to help someone in our situation? (We contacted our agent last night, and have left messages for the Escrow company – our agent told us to wait until after 9:30am 8/3.)

    1. Heya, Sally.

      Did you get your check?

      Every state and every sale is different, but I’ve never left a closing without the seller getting a check in Missouri. Certainly having to wait a week seems excessive. The only exception would be if the check was more than $10,000 — in that case there are quite a few hoops that may have to be jumped through due to the Patriot Act, but I would think that would be largely on your own bank and not on the closing company.

      Let me know how it’s going.


  19. i bought home signed all papers gave cashiers check gave earnest money.
    Then the day this was suppose to close we were told i could not move in yet because the seller’s lender had a lien on the property .so i backed out of the deal and lost so much money . But don’t i get back my cashiers check ? my agent stated that i only get the earnest money , uh ? i surly don’t loose 14 thousand dollars . who do i get that cashiers check from? please help

    1. If the closing was stopped due to an undisclosed lien, then you should get everything back except your inspection fees and the cost of your appraisal and loan application. Who did you give the cashier’s check to?

      If it was the earnest money, it’ll come back from the real estate broker, whichever is holding it according to the contract. If it was a downpayment that was being held by someone for closing, ask whoever you gave it to. Usually those are brought to closing and handed over then, not before. If it’s still in cashier check form, you can have the bank who issued it reverse the cashier’s check (essentially canceling it) if they won’t give it back to you.

      I hope that helps.

  20. We are in a contract currently where our inspection showed a chimney with no liner in bad shape to boot and had no cap. We sent the information to the sellers and they agreed to cap the chimney. We all signed. Now they had their contractor come out and say they could not in good faith cap it because it is a safety issue and would cause carbon monoxide to come into the house. (Strangely the sellers removed their hard wired carbon monoxide detectors prior to inspection stating it was a 1590 dollar system and they wanted to keep it) well the cotractor quoted them 1000 to line it first and then repair and cap the chimney. They now want us to pay for this at closing. Is this normal ? Do I have any case to have them pay all or a portion ? They have not lost a cent as of yet and the house was on the market for 3 years. We offered full list. Help.

    1. You can ask them to do the job, that’s absolutely your right if you’re still in the negotiation phase. If the system was removed prior to listing, it wasn’t part of the listing, so it isn’t included. If the chimney isn’t required for the heating system, the condition isn’t really that big of a deal since it’s more of a luxury… does that make sense?

      What I’m getting at is that if the chimney is optional, so are the repairs in most cases. You can make them, the seller can make them, and it’ll all settle out in the wash. If you don’t have to use the chimney for the heating system, you don’t risk carbon monoxide poisoning. Just don’t use the chimney until it’s fixed.

      Now, if you’re getting an FHA type loan and that chimney is vital to the heating of the home because, say, ductwork runs through it, make sure your FHA appraiser knows. This won’t guarantee the sellers will make the repair, but it’ll certainly give them incentive to do so — basically someone will be forced to make it before it can close.

      I hope that helps some. Let me know what happens.

      1. It is an FHA mortgage. The carbon monoxide system was there initially as they were still residing there. They since purchased a smaller home as they are empty nesters.
        As for the chimney, it is the sole vent for the 100,000 but gas boiler and the gas water heater. We were told that it not being lined is why they chimney is ready to fall. We are pretty much stretched as far as we could be as closing ended up being about 3500 more (one reason was fema high risk flood zone A) we wondered if it was possible to have a notarized letter statting we would pay them the cost wothin 90 days as 3 monthly payments.
        But that seems a stretch.
        We also had concerns that theit first quote was from a local handyman everyone hires. We had quotes JUST for the lining come in over 1000 from an hvac company and 2000 to repair chimney by a chimney mason. So, I of course have some fears it won’t be done right and it will be a wasted investment.. I’m lost.. so so close to closing but so far away.

        1. It is also worth mentioning the chimney by code is missing over 2 feet of height projection off of the roofline due to damage. It is my understanding that the fha appraiser didn’t say anything to the owners when they were present for that. THanks for the advice. Sometimes it helps to get a second and third opinion

          1. You’re quite welcome, Danielle. And according to what you’ve told me, if the carbon monoxide system was listed on the listing, it was included in the sale — which means you could push the issue and get it reinstalled. But that may mean lawyers and litigation if push came to shove.

            As for the chimney… instead of a liner, why can’t they use a duct run inside the chimney? That way the condition of the chimney is of no consequence, aside from the bricks coming off the outside. I’m not hugely familiar with boilers, but this is often how forced air systems are configured in older homes here in Missouri. A duct up and out is an easy solution to a chimney problem like this that saves everybody money when a chimney repair is sort of a cost that can’t be budgeted at the moment.


  21. For a month now I’ve been trying to close on a home. Was a cash deal. Title co bank has had my money for a month and will not close.??? Any suggestions.

  22. Hi Kristi,
    My wife and I are in the process of closing on a house and everything has been going fairly well after a lot of back and forth over some extensive repairs. The repairs have been made, the 2nd appraisal has been done, and I was notified by the Credit Union that all the documents on our end are in order for the mortgage and final closing expenditures will be detailed 3 days prior to closing. Our closing date has been set for over 2 months due to adjustments to the ‘Amendment to FIx’ deadlines and working with the sellers so things aren’t rushed. To be more accomodating to our lender and our agent, the closing was scheduled at a location closer to the both of them. (45 minutes away). The sellers are ‘Pre-signing’ their paperwork as they will be unavailable and their agent will be absent as well.

    We got a call today saying that since the closing is at end of month, the title company stated that they couldn’t spare anyone to travel to the location, but if we pay them $200, we can close at their facility. The Credit Union came back saying they can’t send their reps out that far as it would overlap other appointments. My wife and I both have taken vacation days that were requested well in advance for this when the parties agreed to the closing date. The Title Company stated that they really don’t have to have a representative there either. My agent stated that she has ‘never’ been to a closing where there wasn’t ‘Any’ representation for the seller available.

    I just want to know, what happens when everyone gets together at closing, and a couple documents pop up that need the seller or representative’s signature and nobody is available?

    1. I’m sorry I didn’t get back to you on this last night. I actually read your message while I was at the grocery store.

      Since the seller has already signed their documents in good faith (presuming that the deal is good and that it will close, they’re relinquishing ownership in their minds), anything that gets missed or needs to be signed later is just signed later when the seller is available. There’s a document you’ll sign at closing agreeing to come back to sign anything that gets missed or is needed in addition to the documents you sign that day.

      So, basically, there’s nothing to worry about. Just go to closing and try not to worry. If your agent hasn’t been to a closing without a seller available, I’d worry she’s a very, very green agent — this happen a lot.


      1. Thanks for the Reply, It is much appreciated. Our agent is very thorough and meticulous when it comes to documentation, it’s just that she hasn’t experienced a time when a closing didn’t have at least ‘1’ seller representative present, especially the title company. Whether it was the title company, the sellers agent, lawyer, or Aunt Mable.

        The issue has been resolved and the Title Company waived the fee to get everyone together to avoid hassles. In fact, both the sellers agent and our agent were going to split the fee out of their own pockets to accomodate all involved. It’s been a very frustrating 4 months in which the deal was almost cancelled a few times on both our sides as we hammered out an amiable solution. At this point, we’re all set. Looking over your blog, I think we are very fortunate.

        Thanks again for your personal time to answering these questions. It is very much appreciated.

  23. We have a situation that is we are running out of time. We had approve 75,000 loan for a doublewide with a home/land package in June. The land we got 5.0 acres nice country. We put a double down Payment to get things in gear. Realtor for one didn’t say to us or the mobile home place the property was a foreclosure till later last month that the deed was rejected in the county’s recorders office. Got sent back to the banks(seller) attorney to redo it. This is middle of August just found out yesterday, when their attorney sent it back the recorders office still rejected it. We don’t know what to do. We are renting a house that the lease is almost up, that has very bad issues since its been warm. The realtor of that land knew we need to be out before school starts. They all keep stalling and realtor not doing anything to get their client act straight and get the deed done right. Even the mobile home place is upset as well, causing them not have a sell

    1. Crystal, if you have some spare cash, you can request that the transaction go through a title or closing company. They prepare titles all day long and know how to make it happen. Other than that, I don’t really have any ideas. I really try to discourage people from closing with attorneys for this very reason.

      Good luck and let me know how it turns out.

  24. I am currently in the process of buying a home. The lender has pushed back the closing date 3 times. I have since closed on my house, my belongings are in the garage of the new house because the seller was generous enough to at least help out on that part, we are living with my parents and so on. The newest problem is the seller will only extend until Wednesday because he is tired of dealing with this and he has another buyer if we don’t close by Wednesday. If the lender does not come through and I lose this house do I have any legal recourse?

    1. Hiya, Lisa.

      I wish I could say that you do, but the chances are better that you don’t (these types of things vary by state, so this is a question you should also ask your Realtor and their broker). What you can do is tell your lender what the homeowner is saying and emphasize that they’re about to lose the loan. That tends to light a bigger fire than any other sort of threat. Did they say what the hold up was?


  25. Hi Kristi I need your advice. I am in the process of purchasing a foreclosed home. The process has been going very smoothly and now we are in the final stages. Well the one thing the bank that owns the foreclosed home requested was that they choose their own title company. There was a Lein on the house but the title company has cleared it, but know they will not send my mortgage company the final documents for disclosure to finish the process up. Everyone involved in this process calls the title company daily and we can either not get in touch with the person in charge or they just do not respond to us for several days at a time. We are nervous that this is an act to scare us away, like maybe the bank and the title company are working against us. If this is the case is this legal? This is just very strange to me especially since these people have a lot of my personal information. Do you have any advice on what we should do? I’ve talked to several people and no one can give me any advice.
    Thank you

    1. Heya, Reannon. Sorry for the delay. I don’t always get notifications about new messages, but I check in sometimes anyway. Glad I caught this!

      First of all, I’d not stress too much — if the bank and the title company were in cahoots, well, they’d all be in prison. The law takes that stuff pretty seriously these days. A few title companies here were raided during the recession and they all went to prison for a very long time. Instead, what you probably have is either an overworked person in the process somewhere or an incredibly incompetent one.

      Your best bet is to keep hammering away at both the bank and the title company until you figure out who the broken cog is in the machine. Then find their supervisor and report the problem. Resolution is your aim so you can close. These foreclosures can be really difficult, so there may be nothing wrong at all, Reannon, it may just be a mess that has to be cleared up all over the place.

      I hope it’s resolved quickly and to your advantage, but I’m here if you have any other questions or need clarification of that stuff up above. Best of luck to you. 🙂


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