Orlando Real Estate - Blog

When Kimberly and Derek Hayes went house hunting, they bumped into an unusual requirement that raised their hackles. If they wanted to bid on a bank-owned foreclosure, the bank insisted on doing its own credit check of the couple, said Kimberly, 42, a Web writer.

"This unnecessary credit pulling can potentially lower my credit score and widens the exposure of my sensitive financial information," she said. "I'm concerned about yet another set of eyes looking at my private information in a time of so much identity theft."

One bank selling a foreclosure urged them to apply for a mortgage with it, "and it was strongly implied that if we did not do it, we shouldn't even bother making an offer," she said.

The Hayeses found the requirements sufficiently infuriating that they decided not to submit offers on some properties they had been considering, and are now in contract to buy a nonforeclosed home from a traditional seller. Real estate agents say both practices - requiring fresh credit checks and steering potential buyers toward specific mortgage lenders - are increasingly common with many foreclosure sales.

"Banks are leery of any lenders other than themselves," said Janelle Boyenga, a Realtor with Intero Real Estate in Los Gatos. "They request prospective buyers to get pre-approved with specific lenders - even though that isn't necessarily the best for that buyer."

More commonly, she said, it's not the banks themselves but the listing agents selling the bank-owned properties, known as REOs for "real estate owned" by banks, who make that request.

"REO agents have to work a little bit differently," she said. "They're doing this to protect themselves; the bank gives them a ton of business and can take it all away. They're always worried about the asset manager (at the bank), and one way to have a good relationship is to have all their transactions close. They want to feel comfortable that these are bona fide buyers." complete story 

Source: SFGate.com - Carolyn Said