"We don't go to the movies. We don't go out to dinner. I cook every single meal. I make every single lunch for my husband." The Rivera's put down everything they had, more than $26,000 toward what they hoped would be their new home.
"We found this great co-op, this gem we thought. 3 bedrooms, 2 bath in Bayside. Best school district for our daughter," said Iris.
But after giving the Riveras a commitment letter, the mortgage company said no. The Riveras would not be getting the mortgage. The problem was not the Rivera's credit. It turned out the co-op was built on rented land and very few lenders will give a mortgage on that kind of property. Then, the seller would not release their deposit.
"Why would he do this to two people who are living on one income with a 7 month old daughter?" said the frustrated would-be homeowner. "It would take our entire life to recoup this money."
Deposit problems are a growing trend says real esate appraiser, Jonathan Miller. "During the boom, virtually every transaction didn't have a mortgage contingency. Now, it is commonplace, virtually every sale does."
A mortgage contingency is supposed to allow the buyer to get his deposit back if the loan doesn't come through. The Rivera's had that clause in their contract, but it allowed the seller an exception. They got their money back only if they didn't get a loan commitment from the bank. Since they got one, even though it was later withdrawn, the seller says he probably can't get the same price the Rivera's offered. So he he's entitled to keep the deposit.
Real Estate attorney Mark Altschul says financial contingency clauses are more common than ever. "As a result of the decline in the real estate market, these particular clauses are now getting parsed out very carefully." But Altschul says your contingency clause should be stronger than ever to ensure you get your deposit back should your financing falls through.
So real estate attorneys are now suggesting that if you're buying, get a lawyer you trust, and add a extra rider to the contract, beyond the standard wording, that protects you if the mortgage doesn't go through.
The Riveras thought they were protected, but now find themselves in a very tough position.
"If the seller is not be cooperative, unfortunately their last choice now is going to have to be court," says the real estate attorney.
Suing to recover their downpayment is tough for the Riveras. They have no savings left. And they're worried that even if they win, the money will be eaten up by legal fees. And until the issue is resolved, the money will stay in the escrow account. It could be indefinitely.
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Story by: Tappy Phillips
Produced by: Steve Livingstone
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STORY BY: Eyewitness News reporter Tappy Phillips
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