Tuesday, July 15, 2014

My experience with government idiocy

About a year ago my life had come to a crossroads of sorts. My business had taken off to a point where I could no longer stay at home full time and take care of my two little girls, and provide good service to my clients who were coming out of the woodwork to do business with me. Although I enjoyed my time as a work at home Dad, I saw a chance that if I were to play my cards right, that my wife and I could fulfill our goal of getting her home full time. So a plan was set into motion. We would hire a full time Nanny, while I ramped up my business enough to replace my wife's income.

So we hired a Nanny. She is great with the girls, helps out a little on the cleaning up after them, does activities with them, and keeps them busy during the days. I went full bore back into residential real estate, and as I expected my income rose almost 35% in 2013. WOO HOO!! Yes! the plan was working and replacing my wife's income would have occurred about June of this if the growth rate continued. Then taxes time 2013 came, and after paying for the Nanny's salary, which I considered a business expense, I learned that in addition to NOT being able to write of her income as an expense, I also had to treat her as a Full-time employee, and owed the government Social Security and Medicare taxes. So that was 30K worth of salary that I had to pay income taxes on, then another 12.5% (I didn't surprise the Nanny with Hey, By the way, you owe the government 6% taxes on your wages) which was about 4K, so all in all I did all that work, was away from my family for about 10K. I was distraught. Didn't I do all of this so that we could eventually have a better life with my wife as full-time Mommy like she wants? Didn't I work every single day except Christmas Day with no days off, no weekends, so that we could make this happen? So I had to do something different, because this plain sucked. So I came up with another plan.

I drive a lot in my car. About 4-8 hours a day, so i have a lot of time to think to myself. In April of this year I had a singular mission: Get my wife out of a job that was going south for her, and into the job that she wants, and that I want for her. But how could I make it happen. As I mentioned I am a Real Estate Agent, so I know a little about buying and selling houses. I also know that moving sucks, so I had better come up with a plan that was so good that my wife would agree to go through that. So I thought and thought, and finally one day I came up with what I thought was a solid plan. I would sell our house, use the equity in it, and we would buy a farm. My wife had always talked about having horses and llamas, and I wanted a place that was big enough to grow some food, shoot some guns, and raise some livestock. We would become better prepared, more self -sufficient, and have less debt, enabling my wife to leave her job. i was already paying the Nanny 30K, so really I just needed to come up with another 25K of income or cut 25K in expenses. Not wanting to put this out to my wife, until I really had something to show her worthwhile, I searched for over a month for the perfect property. I found a few, but one finally met the needs, and had a cute house on it that was big enough and in perfect condition, for a model home in 1993. It was so dated, but obviously lived in by a cleanly grandma or something. Perfect condition, and I figured we could overlook the mauve carpet and shower. So finally I had my house that I could pitch, I had all the numbers down, and I made my pitch to my wife. She agreed to go look at the house, and it was a hit with her. 5 acres, and a cute well maintained house. She said yes, lets do it. Being the good Real Estate agent I wanted to get qualified for a mortgage before we put in the offer. The plan was to buy new house, move, then fix up current house a little and sell. Not sure if you've ever tried selling a house, but you need to keep it spotless, neat and organized. Spotless, neat and organized are not words I would use to describe a house with a 2 and a 3 year old.

So we finally got or pre-qualification letter, and I am about to make an offer on the grandma model home on 5 acres and I realize that it is under contract. Are you friggin kidding me?!?! That house was on the market for over 120 days and then suddenly when I have all my ducks in a row, it goes under contract. UGH! Ok. On to Plan B. I had found another farm, and this one had 12 acres, a barn, a stable, a second house, and a main house that needed some carpet and paint but overall was pretty good. Now to take the wife to Plan B. Well she loved it. Especially the barn and the stable. Horses here we come!! But this one is a short sale, which are always shaky. We made an offer, negotiated and got it under contract. Woo hoo! YES! So we waited and waited for the bank to either accept the offer (in a short sale the bank is taking less than what is owed on the property, and usually sends back a price that they will accept) or counter with what they will accept. We waited, and waited until finally the bank simply rejected our offer. Now I've been involved in at least 15 short sales transaction, and I had never seen a bank not counter, even if the counter is ridiculous, but alas, no counter. So we upped our offer price by 10K. Still rejected, no counter, and finally we offered the max that we were willing to go. At this point the bank tells us that we were high enough the first offer, but there was a second mortgage that would not accept a lesser payout. So we negotiated again, that the second we would pay cash to, and the first mortgage would accept our first offer. Then the second decided it would only release their lien if they were paid in full. All of this took over a month, and finally the first mortgage bank decided, OH YEAH? little second mortgage? We will just foreclose and you will get nothing. And so Plan B was dead, because it can take up to 2 years before a foreclosed house gets put on the market. It may have been sooner, but we had no time to wait around to see, because... while all this was going on, I was still searching for a backup to the backup, and had found another great farm.

Onto Plan C. Now this was a great deal, and it was a GOVERNMENT (this is important as you will see the stupidity of government in a moment) owned foreclosure. It was a great deal. A main house, a second house, a red barn with a loft, and a storage shed also with a loft, all on 4 acres, for less than 150K. Not sure what part of the country or world that you live in, but here that is a great deal. But there was something else that made it an even better deal... Freddie Mac had prices it as 4 acres, but it was actually deeded as 8 acres. Oh Happy friggin days!!!! So we offer something ludicrously low to get the ball rolling, it was countered, and we countered that. Long story short we went under contract at 132500, which is a great bargain. So there we have it. Our financing is set up, the house is in pretty good condition, but we would update and upgrade a few things, it was a foreclosure instead of a short sale, so the seller would want to sell, and all is great with the world. Until our home inspection, when we found out that some assclowns had gone into the attic and stolen the copper electrical wires. BOOM! Now our regular loan will not be possible. Conventional loans apparently do not exist on houses without electricity or plumbing, no matter how much we put down. So our ONLY option was to get a government loan. Now all of you who follow me understand my distaste for the government. As a matter of fact and record one could call me a hater of government. But what could I do?

So I agreed to do a Fannie Mae, FHA 203K Loan which allows for the repair and renovation of the house. Well since the electrical was going to cost about 4600 dollars, and we already had to get this type of loan, we figured we might as well renovated the entire 2 houses. New paint inside and out, new bamboo flooring, new ikea kitchen, new light fixtures, new plumbing fixtures, tile in the baths, new shower in the "Man House" (I dont have a basement for a man cave so I made the executive decision that the extra house was all mine. That seemed fair. ) New everything basically. Total cost for this was about 35K which would be included in the loan, which we were not going to have for very long anyway, because as soon as our current primary house sold we would drop that equity into that loan and refinance out of the GOVERNMENT MANDATED PMI. So being the (I'm trying to keep this clean, but I swear i wanna curse so bad. errr) Real Estate professional that I am, I searched for comparable houses to Farm C, and found the value as is to be about 160K We ordered the appraisal, and we held our breathe, because appraisal and appraisers are tricky. Due to DODD-FRANK, mortgage lenders no longer are able to just call up and order an appraisal. Instead they have to order the appraisal from a "warehouse" and then that warehouse just assigns the appraisal to whomever is up in their little appraiser cue. This is such a bad frigging idea, because it is best to have an appraiser that is at least moderately familiar with the area in which they will do the appraisals. This is rarely the case now, and I started worrying when I learned that the appraiser was coming from over 60 miles away, in a close in suburb of Atlanta, to appraise a rural property on 8 acres, with a second house. Appraisals usually take about 2-3 days to complete. 2 weeks after the appraisal was ordered I get a call from my loan officer telling me that the appraiser can not find any comparable houses, and cant complete the appraisal. Could I send her some comps to help him out. Now under Dodd-Frank, the appraiser is not supposed to even talk to the loan officer, and cant talk to me the agent or me the customer. So I knew when he was contacting her we were in trouble. No problem! I spent an hour finding 15 comps for this guy and sent them on in. YAY! Then he comes back three days later and says he needs comps that have a second house. BOO! As you can imagine finding houses that have a second house in a suburban or even urban area is a little difficult. Finding them in a rural area? Sigh. But never fear, me being the consummate Real Estate Pro I can find the comps, and I spent 4 hours pouring through mls data to find 4 comps in the area that had second houses. I sent them in and waited for 2 more days. Meanwhile, our contract was about to expire, and I needed to get an extension from Freddie Mac. They agree to an extension till June 20th, but every day longer than that, we had to pay them 50 dollars penalty. being that everything but this appraisal was already done, and we had about 2 weeks, I agree to that. then the appraiser called me directly to ask me how I found those additional comps. he had looked for carriage houses, guest houses, garage apartments, and found nothing. I explained that I searched for a second kitchen and then had to go through each listing to see which w=ones were in a basement, and which ones were not. Anyway...

So we finally get the appraisal in. It is good. The comps (he used almost exclusively ones that I sent him) were as good as they can be for a rural property, and the value was low (appraisers will always bring in the value right above where you need it, this way they cant be blamed if it gets foreclosed on and it sells for much less) but enough. 159K WITH the renovations. I put it at 160K as is, but whatever. It was enough to cover the loan, which is what mattered. So almost done! Just send all of this to the underwriter to get approval and we will be closing on time or even early. Until we ran into more GOVERNMENT and worse still, an IDIOT who is about as logical as a teacher that suspends a kid for eating a pop tart into the shape of a gun. That stupid.

I call this underwriter Apu, because I dont know his name but I do know he is an Indian (dot not feathers). So we need the file back from underwriting by the 16th in order to clear whatever stipulations he puts on closing, usually updated bank statements and paycheck stubs, nothing major, but because we are buying from the GOVERNMENT in Freddie Mac, they need 72 hours to approve the Settlement Statement, before they will release the property to close. The 16th came and went, as did the 17th and 18th, and not a fucking peep from Apu. I knew IF we got the approval by the 19th, there was a slight chance we could squeak the closing in, and even if not, no biggie 50 bucks, okay. Well the 20th came and went so we needed another extension, and we extended the closing to July 7th, because it wont take that long, but at least we have it in case we need it. On the 24th, we finally hear from Apu. The stips were as such: 1) A letter of intent to occupy the house. 2) Change a few things on the bid to be fixed. That was it. No problem. I wrote a letter of intent explaining how this proeprty would be an hour closer to my parents, would be a better commute for my wife, and since I grew up in the area would put me in a position to do business with my "natural market". We changed the little thing on the bid and sent everything back in in about an hour. We were ready to go live our dreams on the farm!!!

Caution: the rest of this will NOT be safe for reading aloud to your children.

Then Apu called me a fucking liar. I heard the voicemail that he left for my loan officer, which is why I know he is an Indian. " I do not believe that they are going to move here. they have another rental property that is free and clear and I believe they are lying about moving from the suburbs to this house in the country. I believe they will be using it as an investment property." You motherfucker!! This is my fucking dream and this cocksucker is calling me a fucking liar? Why would anyone want to move from the suburbs to the country? To BE FREE YOU FUCKING IDIOT!!! So my loan officer asked me if I could lease out my current house, get a lease on it so that Apu would be convinced that we were really going to move. At first I thought, sure, no problem. I have a ton of friends that will do a fake lease for me. Even send in a check for me to hold as my *wink wink* deposit. Then I rethought this. I would not let this cocksucker make me into a dishonest person because he thinks I'm a dishonest person. It took all my willpower but I told my loan officer that if this motherfucker thinks that I'm a liar than he can keep his fucking money. I sent an email to the loan officer where I had resigned from my HOA's Board of Directors telling them back in April that we were moving. Unless I really knew that some stupid ass douchenozzle would have questioned whether or not we were truly going to move back in April, I figured that was pretty convincing but apparently not to the absolute dumbest person on the planet. She asked me if I would list our house for sale. This way he could see that we were serious. So I thought, Ok. I was going to list it anyway, and if this convinces this assclown that I am not lying then so be it. So I listed my house which was NOT ready to show in any way. It is dirty. It is disheveled. It has boxes that are getting packed everywhere. But I will list it. I listed it for 25K more than I thought we would sell it for. I even put in the comments that only agents can see, "Do not want to show house. Putting it on the market to appease an idiot underwriter." Take that Apu! But this would not appease Apu. Then it was suggested that if I had it under contract perhaps THAT would convince Apu. Then Apu gives us another reason he wont approve the loan. He just doesn't "like" the appraisal. I ask my loan officer if I actually got the house under contract if she thought Apu would like the appraisal, since he was convinced that this rural property on acreage is a dream investment rental home? She said it probably would. So my house is a total wreck, but I said Ok. I'll sell the damned thing.

Meanwhile Apu decides that he just really doesn't like the appraisal. It doesn't fit FANNIE MAE guidelines because it only has 2 comps that have second houses, and one of those is 16 months old instead of the 12 month GOVERNMENT regulation for FHA appraisals.

Now I could send you 15 comps that have sold in the last 6 months, within a 3 mile radius of houses that are the same size and condition as JUST the main house, that have sold for over 150K, which is what we needed Apu to agree that the value was. But Apu thinks that having the second house on the property makes it "unique" and harder to sell. So what Apu believes is that the second house, which is a 950sf 2 bedroom 1 bath house with a kitchen and living room,  which is actually attached to the first house by a breezeway, makes the property less valuable, and less desirable, because that is what the FHA guidelines say.
Did you get all of that? Yesterday i put a candy bar in my left hand. I put 2 candy bars in my right hand. I asked my 3 year old daughter, 'Which is more? She pointed to the one with 2 candy bars. I asked which one do you want? She pointed to the hand with 2 candy bars. Now if a 3 year old can understand this, why cant a 20 something year old man? Like I said. Apu is the dumbest human on earth.

So I was planning on going to Florida with my family for the entire first week of July, but I sent them without me, so that I could make the house look more presentable. I packed boxes like a madman. Cleaned everything so that I could actually show the house. Took out the Dont want to show the house bit, and really marketed the house to sell. This was on a Friday. I sold the house on Monday. NOW!!!! Apu had to know we were serious and were truthfully moving. But this was not enough convincing for Apu. Now he relied on the old, I dont like the appraisal, because it doesn't have enough comps that have the second house. AHHHHHHHHHH!!!! FUCK YOU APU!!!! So my loan officer appealed to someone greater than Apu. Some sort of loan committee. We were awaiting the decision as to our fate from them until today.

Yesterday, I saw that the Farm B was on the market. I called and asked how quickly we could close on it. Pretty much decided to tell Freddie Mac, Fannie Mae and Apu to go fuck themselves. I'd buy from a bank and use a regular bank loan. I took my brother who is a contractor over to Farm B to make sure all was okay and it just needed cosmetics. It was all good. So I am thinking, no problem, we go back to Farm B, and we close in a month. Then my loan officer called and said apparently the committee had seen how stupid Apu was and agreed to do the loan for Farm A, BUT we have to close on our primary house first.

So now we have to find a place to stay while the renovations are done on Farm A, BUT Freddie Mac wants their 1500 bucks in late fees, and supposedly will not extend the contract farther than the 23rd. I dont believe we can close on our primary by the 23rd, so we may be out of time anyway. So I may not be able to buy a GOVERNMENT owned house, because I cant get a GOVERNMENT loan, because the stupidest human on earth wants to follow GOVERNMENT regulations even if they are quite impossible. I'll know tomorrow which way and which farm we will be getting. If Freddie Mac extends, then we will go with Farm C, rent a camper and stay on the property while the renovations are done. If Freddie Mac will not extend, we will go with Farm B and not have to deal with the government either with buying or financing. I;m sort of hoping Freddie is dumb enough to say no to the extension.

So government caused the problem, government fails in fixing the problem, and I'm left without a farm for the time being. Oh and for anyone thinking USDA LOAN MAN!!! Well that would be the perfect loan for this type of house. USDA loans are for rural properties on acreage, with second houses, barns and such. But in order to qualify for USDA loans one cant make over a certain amount of money. It is really low, and I believe it is 30K or so. Now how can someone qualify for a house with an income of 30K? that's government at work.

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