An agent in our office recently sold a bank-owned property in north Minneapolis. As the closing date approached, complications arose with the buyer’s loan. As was the buyer’s option by the terms of the Purchase Agreement contract, the buyer chose to cancel the Purchase Agreement with the hope that he could get through the loan complications and eventually buy the home.

The owner of the property is a bank, who has refused to sign the cancellation, which would have returned the earnest money to the buyer.

The owner of the property is CitiMortgage, part of Citigroup, the biggest bank in the US. Citi will cut 9,000 jobs this year, has written down nearly $17 billion in losses, and posted a first quarter loss of $5.1 billion – after a ‘07 fourth quarter loss of $10 billion. Their representation here in Minneapolis, the listing broker, had this to say:

“I know this is probably a big deal to your client, but I can assure you this is not at the top of anyone’s priority list at Citi.”

Really?

If it is truly their position that keeping $1,000 earnest money to punish our buyer is good for the market or their business, two things come to mind:

1) It’s going to take a whole lot more thousand-dollar checks to make up their losses, write-downs and plummeted stock price
2) They’re not helping the foreclosure problem: they’ve taken a motivated buyer off the street without reducing their inventory

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