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#419481 - 02/01/13 04:15 PM Non-Maintained Roads Lending Problems
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Beginning to see an alarming trend (for a rural area). Lenders refusing to lend on properties that are on roads that are not maintained by the city or oounty but maintained privately with the voluntary cooperation of neighbors. Where no road maintenance agreement bewtween the parties is filed with the county, some lenders are balking at underwriting.

In some instances, the properties may only be 1 of 1 or 1 of 2 properties on a dirt/gravel road. Many of these properties have large acreage.

What's the story and what can be done?

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#419485 - 02/01/13 04:40 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7520
Loc: Vermont's North-East Kingdom
That would be nothing new here. In my meager experience, underwriters have always insisted on a town maintained road, or a "formal" road maintenance agreement . . . . just in case they ever had to foreclose, it wouldn't present a problem to market and resell.

Same too with off-the-grid power, and heating systems that weren't thermostatically controlled. My mantra has been alternative energy equates to alternative financing.

It doesn't cost much to formalize a Road Maintenance Agreement.

What do your Underwriters say about places that are so far back in the woods that no Fire Department would ever be able to find them . . . . let alone arrive in time to put out a fire before the collateral was completely consumed ? Here, the answer is usually that if it can't be insured, then it can't be mortgaged. Simple.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#419500 - 02/01/13 09:02 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
You can check with a title company to see if there is an easement recorded. If the road is not deeded to the city or county, typically there will be an easement recorded (it may be on the neighboring property) The easement may spell out the maintenance agreement. Just because the bank can't find it doesn't mean its not there. The other thing is to stop calling it a private road, and tell the bank its a shared driveway, I don't know why but they seem to accept that better. My wife's family has a place with a 6 mile shared driveway, it hasn't been a problem yet, but its not a road. Almost nothing that we sell up here meets the national banks cookie cutter guidelines, so if its not a local lender I know I will spend days on the phone explaining things.

Around here we have county roads that are not maintained, and the banks don't seem to give those a hard time. Personally I don't see the difference.

As a side note how frustrating is it that a lot of rural homes don't qualify for the national rural home loan programs, because they are typical rural homes.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419514 - 02/02/13 12:35 AM Re: Non-Maintained Roads Lending Problems [Re: Vermont]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Vermont
That would be nothing new here. In my meager experience, underwriters have always insisted on a town maintained road, or a "formal" road maintenance agreement . . . . just in case they ever had to foreclose, it wouldn't present a problem to market and resell.

Same too with off-the-grid power, and heating systems that weren't thermostatically controlled. My mantra has been alternative energy equates to alternative financing.

It doesn't cost much to formalize a Road Maintenance Agreement.

What do your Underwriters say about places that are so far back in the woods that no Fire Department would ever be able to find them . . . . let alone arrive in time to put out a fire before the collateral was completely consumed ? Here, the answer is usually that if it can't be insured, then it can't be mortgaged. Simple.



It's new here. 15 years in the business and this is a first.

For many properties, neither the sheriff or emergency services could find them let alone get to them. But that has been the case here forever. Unlikely to change. That's the way people like it.

Getting whatever neighbors there MAY be to sign a road maintenance agreement post-fact is nearly impossible.

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#419515 - 02/02/13 12:42 AM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Dodger52
You can check with a title company to see if there is an easement recorded. If the road is not deeded to the city or county, typically there will be an easement recorded (it may be on the neighboring property) The easement may spell out the maintenance agreement. Just because the bank can't find it doesn't mean its not there. The other thing is to stop calling it a private road, and tell the bank its a shared driveway, I don't know why but they seem to accept that better. My wife's family has a place with a 6 mile shared driveway, it hasn't been a problem yet, but its not a road. Almost nothing that we sell up here meets the national banks cookie cutter guidelines, so if its not a local lender I know I will spend days on the phone explaining things.

Around here we have county roads that are not maintained, and the banks don't seem to give those a hard time. Personally I don't see the difference.

As a side note how frustrating is it that a lot of rural homes don't qualify for the national rural home loan programs, because they are typical rural homes.


Our rural title companies are very good about finding recorded road maintenance agreements; and an easement with a domannt tenament doesn't qualify. The lenders don't check recordation, they simply as for a road maintenance agreement. It's spotty, not every lender by any means, but a few.

Our county roads in our most rural county are nearly all "N" meaning not maintained. They have county road numbers, but that N means not maintained.

I don't see how, with a road name, that the road could be could be considered a shared driveway. I'd be real interested in how you present that to the buyers' underwriter. Please tell me!

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#419633 - 02/04/13 10:46 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana

Originally Posted By: DueDiligence
I don't see how, with a road name, that the road could be could be considered a shared driveway. I'd be real interested in how you present that to the buyers' underwriter. Please tell me!


It pretty common up here to name your drive to match your ranch name or your family name sometimes its recorded sometimes its not. You will notice exit signs along the highways that say things like XY Ranch road, but these are not public roads, they are driveways.

The two local lenders are not a problem, because they know the area. The national lenders are a big problem, I compare the situation to the city neighborhoods, in a lot of cases those homes have shared driveways and no maintenance agreements (because they are driveways). It doesn't always work, but probably half of the time it does. The issue is that the people working in the big underwriting bullpens have little or no concept of how things work outside of a city. The idea of a 3 mile driveway is foreign to them, if you can compare it to something they do understand it helps. Just keep it simple and try to explain it, if you call it a road they compare it to the street outside their office, and its not that kind of thing at all.

The underwriters job is to protect the bank by avoiding unusual situations that effect value, explain to them that this is the norm, by comparing it to something they do understand and most of the time they get it.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419636 - 02/04/13 11:54 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7520
Loc: Vermont's North-East Kingdom
Some National Underwriters just can't imagine that a road could exist that doesn't also have electricity running alongside it; or a gas main underneath it; or water and sewage. Some can't imagine that a road could exist that doesn't also have mail delivery . . . . and things like mailboxes and street signs (with names on them).

Some of our people don't believe in street signs . . . . still thinking that if you need a sign to know where you are, then clearly, you don't belong here anyway.

But now that so much lending has become non-local; many people have had to get with the program, just in order to sell when it's time to sell. We have to explain the situation at both ends; that's why they call us Brokers.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#419679 - 02/05/13 04:29 PM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Yes, naming your "road" after your place is a practice in rural areas. But, when "Diamond Ranch Road" gets to have 4-5 trailers on it when the original owner makes splits, there is a problem with underwriters. 70% of our roads are rural dirt/cinder roads. Some of them clearly marked "Primitive Road". Some can be nearly impassable until early summer, that's true. But people DO live there.

ONE neighbor may decide to bear the burden of grading and cindering while the others refuse to participate.

But, if underwriting guidelines are cookie-cutter regarding maintained roads, there's no amount of explaining, persuading, convincing that will change that. Need to change lenders.

Our MLS has a field for "maintained road" Y/N.

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#419685 - 02/05/13 07:39 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Originally Posted By: DueDiligence
Yes, naming your "road" after your place is a practice in rural areas. But, when "Diamond Ranch Road" gets to have 4-5 trailers on it when the original owner makes splits, there is a problem with underwriters. 70% of our roads are rural dirt/cinder roads. Some of them clearly marked "Primitive Road". Some can be nearly impassable until early summer, that's true. But people DO live there.

ONE neighbor may decide to bear the burden of grading and cindering while the others refuse to participate.


That's exactly the situation with the family place that I mentioned earlier, but its not a road, for large sections of it, it is little more than a cow path. Its a different mentality out here, you do your part or you don't use the road. You have to work together or you won't last the first winter. We genuinely feel that its not the county's responsibility to clear our driveway, and the county agrees.

Originally Posted By: DueDiligence

But, if underwriting guidelines are cookie-cutter regarding maintained roads, there's no amount of explaining, persuading, convincing that will change that. Need to change lenders.


You can argue your point with some success. Negotiating with the underwriter was a regular part of our business. The last ten or fifteen years we have gotten out of the practice and most of us don't try. You do have to pick your lenders, some will not budge, but you don't take contracts that involve those lenders. The national banks are reluctant to loan on anything that doesn't fit the checklist, but as rates rise and our markets settle down it will get easier.

Originally Posted By: DueDiligence
Our MLS has a field for "maintained road" Y/N.


In town not having a maintained road has a negative effect on value. Out here the only maintained roads are state and county highways, you don't want to live on one of those so its a positive.

We live and work in a different world then most people, the "rules" really don't apply to us. Our market is to small to effect underwriting guidelines, and like most other things in our little world we have to fight to make it work. My friends back east look at were I live with envy, thinking it is a simple life, but its far from simple. This is a hard place to live, and a harder place to work. It's not a matter of us adapting to the national guidelines, this is a different place and the checklists will not work here. So I get up every morning and I fight to scratch out a living. I fight for every buyer and every loan, sometimes I win, sometimes I don't. It's what we do in rural America, and I wouldn't trade it for anything.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419690 - 02/05/13 10:30 PM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Dodger52
Originally Posted By: DueDiligence
Yes, naming your "road" after your place is a practice in rural areas. But, when "Diamond Ranch Road" gets to have 4-5 trailers on it when the original owner makes splits, there is a problem with underwriters. 70% of our roads are rural dirt/cinder roads. Some of them clearly marked "Primitive Road". Some can be nearly impassable until early summer, that's true. But people DO live there.

ONE neighbor may decide to bear the burden of grading and cindering while the others refuse to participate.


That's exactly the situation with the family place that I mentioned earlier, but its not a road, for large sections of it, it is little more than a cow path. Its a different mentality out here, you do your part or you don't use the road. You have to work together or you won't last the first winter. We genuinely feel that its not the county's responsibility to clear our driveway, and the county agrees.

Originally Posted By: DueDiligence

But, if underwriting guidelines are cookie-cutter regarding maintained roads, there's no amount of explaining, persuading, convincing that will change that. Need to change lenders.


You can argue your point with some success. Negotiating with the underwriter was a regular part of our business. The last ten or fifteen years we have gotten out of the practice and most of us don't try. You do have to pick your lenders, some will not budge, but you don't take contracts that involve those lenders. The national banks are reluctant to loan on anything that doesn't fit the checklist, but as rates rise and our markets settle down it will get easier.

Originally Posted By: DueDiligence
Our MLS has a field for "maintained road" Y/N.


In town not having a maintained road has a negative effect on value. Out here the only maintained roads are state and county highways, you don't want to live on one of those so its a positive.

We live and work in a different world then most people, the "rules" really don't apply to us. Our market is to small to effect underwriting guidelines, and like most other things in our little world we have to fight to make it work. My friends back east look at were I live with envy, thinking it is a simple life, but its far from simple. This is a hard place to live, and a harder place to work. It's not a matter of us adapting to the national guidelines, this is a different place and the checklists will not work here. So I get up every morning and I fight to scratch out a living. I fight for every buyer and every loan, sometimes I win, sometimes I don't. It's what we do in rural America, and I wouldn't trade it for anything.


Things WERE easier in our rural markets prior to the housing/financial "mess". Now, we're all being treated as if we're criminals.

Who told the banks to lend on broken-down trailers with NO electricity, haul water, and 7 niles of bad road? THEY did that. I can't tell you how many short sale requests I've had for such properties. Can't be financed. Not now. Borrowers want to know WHY they were able to finance then, and I'm telling them that it'd have to be cash, now.

I no longer do BPOs, but there were many assignments whose addresses were "Country (yes, country not county) Road, East Boonies". No house number, no road name or number. Whoever ended up with the loan didn't know WHAT they had or where it was. BPO requests come across my PC and many still don't have good addresses.

Did borrowers cause that? No.

And who has the most rural, bad-road, septic on the other guy's property, no real well share properties that became REOs? HUD.

Like your area, this is a tough place to live, a tough place to earn a living-- but, at night the stars are so close and the sky so dark, you can hear the stars humming. It's worth the fight to stay here. Fight underwriters, fight the banks. Order everything online!

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#419693 - 02/06/13 12:04 AM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Originally Posted By: DueDiligence
Like your area, this is a tough place to live, a tough place to earn a living-- but, at night the stars are so close and the sky so dark, you can hear the stars humming. It's worth the fight to stay here. Fight underwriters, fight the banks. Order everything online!


Amen... the bank may not know where I live... But UPS sure does!
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419704 - 02/06/13 03:54 AM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Dodger52
Originally Posted By: DueDiligence
Like your area, this is a tough place to live, a tough place to earn a living-- but, at night the stars are so close and the sky so dark, you can hear the stars humming. It's worth the fight to stay here. Fight underwriters, fight the banks. Order everything online!


Amen... the bank may not know where I live... But UPS sure does!


LOL! Same here. Except that many times during the winter, UPS/FedEx can't make it up to the house so... they get as far up the road as they can and hang my packages in the trees. I swear! Now try that in an urban or suburban area and see what happens to your stuff.

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#419739 - 02/06/13 07:55 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Originally Posted By: DueDiligence
Originally Posted By: Dodger52
Originally Posted By: DueDiligence
Like your area, this is a tough place to live, a tough place to earn a living-- but, at night the stars are so close and the sky so dark, you can hear the stars humming. It's worth the fight to stay here. Fight underwriters, fight the banks. Order everything online!


Amen... the bank may not know where I live... But UPS sure does!


LOL! Same here. Except that many times during the winter, UPS/FedEx can't make it up to the house so... they get as far up the road as they can and hang my packages in the trees. I swear! Now try that in an urban or suburban area and see what happens to your stuff.


I would love to see that!
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419813 - 02/07/13 05:02 PM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Okay! We're expecting snow and we have at least 3 orders we're expecting to be delivered in the next 4-7 days. We'll take some pics of the UPS "fruit" in the trees.

Know what I think is frustrating on this thread? NO mortgage lending forum members have chimed in.

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#419818 - 02/07/13 06:23 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Originally Posted By: DueDiligence
Okay! We're expecting snow and we have at least 3 orders we're expecting to be delivered in the next 4-7 days. We'll take some pics of the UPS "fruit" in the trees.

Know what I think is frustrating on this thread? NO mortgage lending forum members have chimed in.


Its probably because most have not dealt with this problem, but it could be all my fight talk. The road problem is just one example of the things that come up with rural properties. If there is a better way to address these things, or if there is something we can do up front to avoid the issue all together I would like to learn about it.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#450710 - 02/22/16 03:10 AM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
MannySmith Offline
Junior Member

Registered: 02/21/16
Posts: 1
Loc: US
[quote=Dodger52][quote=DueDiligence]Okay! We're expecting snow and we have at least 3 orders we're expecting to be delivered in the next 4-7 days. We'll take some pics of the UPS "fruit" in the trees.

Know what I think is frustrating on this thread? NO mortgage lending forum members have chimed in. [/quote]

Its probably because most have not dealt with this problem, but it could be all my fight talk. The road problem is just one example of the things that come up with rural properties. If there is a better way to address these things, or if there is something we can do up front to avoid the issue all together I would like to learn about it. [/quote]

Me too, trying to sell rural properties is a whole other ballgame and there's so much hassle that comes with them.

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