Update to the post Citibank Screws Buyer:

We left off in April, when a bank refused to comply with the terms of the contract they signed – and held a buyer’s earnest money without reason.

At the end of July, we received a check for $1,000 made out to our buyer. It was a bit strange. We had to look at the check a few times to figure out what it was – there was neither a call nor a written explanation.

True to his word, the buyer had cleared up the complications with his loan – and two days after receiving his refund, re-submitted his offer. The terms of his offer included his intention to finance via an FHA insured loan. The listing stated clearly that FHA was an acceptable form of finance for this property.

When the offer was submitted, the bank replied saying they did not like FHA loans, and would not accept the offer. (FHA loans require a stringent appraisal process to ensure the property condition meets FHA standards.)

Our agent, having anticipated such a response, included as part of the offer the buyer’s intention to pay for a pre-inspection to identify what would need to be repaired to pass an FHA appraisal. The offer also stated that the buyer would be willing to make all necessary repairs prior to the FHA appraisal, at the buyer’s expense, without expectation of reimbursement in the event the sale didn’t close – for any reason.

A generous offer. A risky offer.

The bank agreed that if the buyer took all the risk, they would accept the FHA financing and the deal. We waited for them to return the signed purchase agreement documents.

After getting bumped from the Asset Manager to upper management at the bank to another layer of management, and then another layer of management for approval, the docs arrived two weeks later – with one change: the bank reserved the right of first refusal, meaning that if another offer for the property came in before closing they could accept it and bump our guy from the property.

After long discussion, the buyer decided to accept the changed contract and proceeded to pay for the pre-inspection. He then made the repairs, which came at a cost of approximately $1,000 and included:

Replaced two windows
Cleaned mold in the home and applied mold-retardant paint
Adjusted the grading around the home with new dirt to alleviate future water intrusion
Scraped all peeling paint, primed and re-painted
Replaced rotted window sills
Installed handrails where required
Repaired plumbing leaks and replaced plumbing where necessary

The property passed FHA appraisal and the closing date was set for September 17.

On the day, the buyer and our agent arrived at the title company for closing. No listing agent. No bank representative. No call. No show.

The closing agent (who charges a fee, who the bank required the buyer use) informed us, among other things, that their client the bank failed to send the deed. There was no closing.

Without warning, the deed showed up the next day – so we scheduled another closing for the following day. Were we naive to think the second time would be the charm?

Yep – the bank neglected to sign the HUD-1 settlement statement, a required document. Instead of walking away angry - again – the buyer proceeded with a dry closing (no money changed hands/most documents were signed).

A bit of irony: the new loan was already purchased by… wait for it… CitiMortgage.

As it turned out, the wire with the funds from the new lender expired at 6:00 PM on a day within a week, at which time the buyer had given notice that he was walking away to leave the bank to conduct their business badly with some other sucker. The necessary document showed up at 5:45 that day.

The deal is done and we hope our buyer enjoys owning the property. We hope the banks who own a lot of property they don’t want will become honorable business partners for the buyers we hope continue to be willing to ride the ups and downs of acquiring foreclosed property.