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Realtor, home seller baffled when bank rejects its own offer

VANCOUVER, Wash. – Stacy Baker fought for two years to sell her father’s house and to keep it from being auctioned off, but lost the fight even after her real estate agent said an offer was made to the bank that met its own conditions.

Baker’s father was 61 when he succumbed to complications from a heart transplant, and she said her father probably realized “it was the wrong decision after he bought it.”

Baker’s real estate agent, Aaron Signor, first tried to sell the house for about what was owed, but at $179,000 it didn’t sell. Over the following months, they lowered the price and got an offer at $134,000.

But Flagstar Bank, which services the mortgage on the house, rejected the offer, saying the house was worth $150,000.

Signor said several more buyers made higher short sale offers but they too fell through.

“We procured an offer of 165 (thousand) at one point, which the buyer found out, that with the condition of the house, it wouldn’t qualify for their loan. They walked,” he said.

Signor said the buyers were going for FHA loans, which only require low down payments. FHA is government-backed money but it comes with a lot of strings attached. For instance, the home has to be in good condition.

The home inspection for Baker’s house, however, found the roof in bad shape, plumbing and electrical problems, lack of insulation and the deck in need of replacing.

Signor said none of his buyers could meet that $150,000 Flagstar Bank threshold because mortgage brokers determined the house didn’t qualify for FHA money due to its condition, meaning in the eyes of the FHA the house wasn’t worth $150,000.

But then just days before the Baker house was set to be auctioned off, Signore said he brought Flagstar a viable $150,000 non-FHA offer, which is just what Flagstar asked for.

“Even the processor at the lender – Flagstar Bank – she thought, ‘Hey, you got an offer full price, we’ll get the foreclosure stopped; we’ll make it go away; we’ll have a sale.’ She calls me back and says, ‘sorry.’”

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