PREVIOUS BLOG:

Ok, it may sound like I've had my head in the sand for the past few years, but I guess it's taken me this long to fully understand what the Finance Meltdown has done to our industry?

The Buy/Sell contract has a loan commitment deadline. We sign that contract. The bank is not part of the contract, so they have no responsibility to keep that deadline. They can add loan conditions the day of closing. So how can we protect our clients Earnest Money?

MY RESPONSE; Buyers need to understand that having a competent loan officer that has a strong relationship with their underwriters/lenders is a key point when using financing to purchase. However, the loan commitment deadline stated in the financing addendum does not mean that the seller can claim the EM. If as the agent, you have negotiated a fair amount of time for the commitment to take place, and the loan officer can't meet that, the chances are good that they will not meet the closing deadline either. Cancel or amend for a longer timeline and find a better lender. loan commitment and loan approval are two very different things and if at the 11th hour, the underwriter requires something in order to approve the loan which the buyer cannot reasonably obtain, then loan denial does not mean that seller gets to keep the EM because you are past the commitment date. You still have the financing contingency in place should the loan be denied. You can have a timely commitment w/o the guarantee of full loan approval. So the financing contingency should protect your buyers EM as long as they have not breached any other area of the contract.

I believe it is "our job" to protect our clients interest which includes their EM. Our job does not end once a deal is made. Buyers have put their faith in their agent to assist, protect, and negotiate for them as we are the professionals. You are representing your buyers so it is not just up to them if you are providing all the information for the buyer to make their decision. Most buyers do not know how long it should take their loan officer to complete a commitment, or how long an FHA loan should take. They don't realize that working with the "big" banks take much longer due to their strict guidelines and u/w scrutiny that is required for fannie mae loans now. As agents we need to be aware of these time tables and make sure that we incorporate the appropriate deadlines into our contracts to protect our clients from EM issues and breaches out of their hands as they are responsible for them regardless.