The Underwriters

Well, I've spent the better part of the morning explaining what's going on with the home-buying process to people. If I keep this up, I won't get anything done the rest of the day, so here's my attempt to quell the masses.

Sparing a lot of detail on what all the paperwork means, and how many times we've signed each form, revised form et cetera, it is sufficient to say that we have bled ourselves dry scanning, faxing, notarizing, and signing documents. We have now provided sufficient proof of financial capability and signed bajillions of forms, extensions, contracts, agreements and so on to please the many parties involved (including the sellers, the realtors, the loan officers, the attorneys, the underwriters, and so on).

We're at the end of the line, and we're ready to close... we were SUPPOSED to be closing today. But after many back-and-forths we have extended the contract until next Tuesday because the underwriters are not satisfied with what they got back from the appraisers. Sadly this doesn't mean we'll definitely be closing by Tuesday. If there's anything I've learned from this process, it's that nothing is set in stone.

On another note, I recently realized that I never contemplated who the hell "the underwriters" actually were. Thinking about it a little, the name says it all: they sign the bottom line. So that would be our lender, Eastern Bank, right? Guess again. -- One thing I didn't know going into this was that Eastern Bank was going to sell our loan to Citi. They are the "underwriters." They're the ones who will foot the other 80% of the dough to buy this house, and in 30 years, we will have paid them nearly twice its value. It's pretty frustrating to realize that the most money that I've ever spent is going to go directly to a money-hungry mega-bank like Citi when I'd much rather be supporting a smaller local institution.

[ Note (from a soapbox): Some lenders will guarantee that they will not sell your loan to another institution. Keep that in mind when you decide to buy a home. You will be spending more money than you ever have in your life, but you have a choice on how to spend it. It's sad but true that, in this world, money is power, the power to show your values. Never forget that we have a choice. Every purchase made is a statement of our values as a society. Do we value quality products and services, or quantity and speed? Do we value sustainability and the environment or will we leave that to the next generation to worry about? I'm ashamed to be giving Citi bank hundreds of thousands of dollars when I know that their institution does not reflect my values in banking. Whatever your values are, don't let yourself make the same mistake. Don't forget you have a choice. ]

Off the soapbox.

So what's up with the underwriters. Well, they've gotten the appraisal of the house, which includes 6 "comps" or comparable homes. Three of the comps are a better deal than our house, two are a worse deal, and one is about the same. They've decided that they want to see one more comp before moving forward. Remember, the underwriters want to get a good deal (and so do we, admittedly) since they're investing in the house. If the 7th comp indicates that we're getting a good/fair deal on the house, then we move forward and close. However, if it indicates that we could get a better deal on the house, then they would expect us to pay less for it (revise the purchase amount). Alternately, we could try our luck with another underwriter.

We are at the mercy of the banks. "We", being Ashley, myself, and the sellers of the house, who are in an arguably even worse situation than we are since there's a chance that we could come around and say, "We love your house, but the banks think it's overvalued and they want us to pay $X less than the previously agreed price." If $X is $10,000, then they're either screwed out of $10K, or they have to go back to market with the house knowing full well that this could all happen again.

Ashley, myself, and the sellers have all spent MONTHS on this transaction. We've packed our lives up into boxes and prepared to move, and the sellers have probably moved already. So much emotional energy and money has been invested. It feels like we've been pulled back and forth by unyielding forces, and after so many compromises, commitments, phone calls and signatures, we've finally reached the end. And before us is a nameless, faceless automaton in a business suit sitting atop an impossibly tall podium with a stamp in his hand.

It's in your head
in your head
zombie, zombie, zombie