A couple ends up losing their house to their lender. Lender is a sizeable institution that has grown from a single bank to multiple banks in at least 20 cities over the past 25 years. The property where this house is located is crossed by a significant creek in the middle of town. The house may or may not be above BFE and is only a matter of feet from the floodway. Flood zone is AE. Zone X is at or near the street side of the tract, again, only a matter of feet from the house. Apparently, no EC has ever been made for this property. Why? I have no idea. This lender should have required one when they made their loan a few years ago.
I receive a call from a new lender who has been approached by a buyer for the property. This lender is based well over 100 miles from the property. This lender is searching for a CHEAP EC provider (None exist anywhere nearby). He explains that the real estate salesperson has assured him from personal knowledge that this house was not impacted by the BIG FLOOD in 2007. Apparently, the current owner (the original lender as described above) refuses to obtain or pay any portion of the cost of an EC.
I had a nice chat with the new lender, but, doubt seriously that I will be doing an EC for his buyer/borrower. I have too much personal knowledge about that specific property and the adjoining properties along that creek. This creek is impacted by flooding of it's own doing and can be impacted by flooding of a nearby major river. The double whammy happens when major flooding occurs on the river and significant local rain coming down the creek slam together. The locals have learned to see if the water is flowing downhill or backing uphill. The BIG FLOOD of 2007 was a river flood that exceeded BFE by two feet. It was not a creek flood. The result was that this property and others nearby experienced highwater six feet below BFE despite other properties only six to 10 blocks away being inundated like never before.
The current owner KNOWS the next buyer will need an EC. Why not make that minor investment so as to be able to be honest with the potential buyers? Doing nothing merely drags out the process of getting it sold.
Another circumstance that is ridiculous
In 1987 or thereabouts, quite a number of banks were going under. Several did so locally. They had made excessive loans based on rapidly inflating agricultural land anc crop prices and strong activity in the local oil fields. Things went bust in a hurry. Loan after loan became delinquent because the silly borrowers had followed the advice of their bankers that everything was becoming more valuable every day so you couldn't go wrong borrowing yourself rich. When the bust came, everyone wanted to sell out for a profit, but no one had the money to buy anything.
The banks that went under awarded all sorts of near-worthless properties to FDIC. FDIC moves at the pace of most bureaucracies...........slower than molasses in January. Also, FDIC would pay no bills associated with the properties, including property taxes. Anyone actually purchasing a property from FDIC inherited those liabilities upon their purchase. What also happened over and over was the loss of utility service to the property due to lack of routine minimum payments FDIC should have been making. For example, rural water districts that were partly funded by FHA all had stipulations built into their by-laws that voided user benefit rights if payments were not made for a six-month period. At that time, many local minimums were in range of $10 per month. Re-establishing user benfit rights ranged from $500 to over $3000. The prospective buyers would reduce their offers to FDIC by the amount of various reconnection costs like that for water. A mere $60 or so would have resulted in far greater offers for each property. CAN'T LET A LITTLE COMMON SENSE STAND IN THE WAY OF BUREAUCRACY.
I speak from experience. I purchased four properties from FDIC.
Another circumstance that is ridiculous
Wow. God Bless America....
... Please?
(Note: this post is not intended to be "p" or "r".)
Carry on.