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posted: 1/21/2012 12:01 AM

On homes and real estate: Keep calm and carry on

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Q. I applied for a mortgage three months ago and still don't have a closing date. The bank made several mistakes (an employee checked the incorrect boxes), which caused the application to be denied, and now it must be resubmitted. The bank requested documents that I supplied within 24 hours. They have stated verbally many times there is no problem and that I will be approved, but they've put nothing in writing.

I put an offer in on a home, and it was accepted exactly two months ago. The seller is getting frustrated. My lawyer, my Realtor and I have contacted the bank repeatedly. The calls are usually not returned. I've spoken to loan officers, bank managers and process personnel.

I was finally given a closing date for next week, by the bank, and a letter of commitment. That is not going to happen. They've requested more information all over again. I do have a paper trail and phone records. I'm not getting much help from my lawyer, and the Realtor is doing her best.

I considered backing out of the deal, but I really like the house and have looked at least a hundred other homes before deciding on this one. I even made arrangements to move in, renting a truck and helpers. I had to cancel everything.

What are my options at this time?

A. Your best option is to relax -- keep calm and carry on. You're nearly there. You say you have no closing date and nothing written, but it would appear that you now have both.

It all sounds pretty normal for current lending procedures. Mistakes by the bank staff are inexcusable, of course. But that "application" you made a month before you found the house was probably for a pre-commitment letter -- not for the loan itself.

With closing set for just two months after you signed the purchase contract, you're doing pretty well. Many buyers allow for three or four months these days and hold off moving arrangements accordingly.

Don't be scared by that last-minute request for your qualifying information. Under today's strict guidelines, the lender is required to verify your credit and income again just before the closing.

Q. I have a Florida condo question. I am upside down $55,000 on my mortgage. My accountant suggests letting it go. Should I do a short sale or just walk away? What are the possible consequences of either scenario? At this point, I'm not worried about the hit to my credit.

A You have to understand how a short sale works. The bank agrees to take whatever you can get for the place on the open market and remove the lien so you can sell.

The important word in all that is "agrees." Unless the lender is willing, you can't just decide to do it on your own. I understand that lenders aren't fond of allowing it if you have other assets you could tap to make the payments -- that you need to be just about penniless before they'll go for it. And while some short sales must work out well, the ones I hear about take a long and frustrating time to settle.

Q. I purchased my home in 2009 and used the First-Time Homebuyer Credit. I wasn't aware the credit had to be paid back over several years on income tax; I thought that after three years, you wouldn't have to pay the amount back, but I recently discovered this is incorrect. Now I'm looking to sell and want to know what the consequences would be on this credit.

A. Here's a sentence taken word-for-word from an IRS publication: "For a home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase."

Looks like you were right the first time.

Q. We're holding the mortgage on property with a mobile home we sold. The buyer is three months behind in payments. We are considering foreclosure. Could you give us the approximate cost and length of time involved before this action could be completed?

A. I could give you the answer for my lawyer and my town, but that wouldn't help you much. To find out what's average in your area, call one or two law firms and discuss the matter.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through

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