Buying an REO with an FHA loan (loan officer, approval, foreclosure)

[chicubs]

I understand bank owned foreclosures and I understand FHA loans, I'm trying to use both of them to find my first condo/house. Here is my dilema/question: When you purchase a foreclosure you have to put up a garauntee of a deposit of some sort along with your offer (basically saying you can't make your offer contingent upon the ability to obtain financing). The problem is it takes a while to get approved for an FHA loan (inspections or FHA spot approval etc) by the time you can put an offer down the property is long gone (atleast the good deals are). Has anyone had any experience or advice with purching an REO with an FHA loan?

[azsandshark]

I am purchasing a bank owned house right now with an FHA loan and my deal is contingent on financing

[chicubs]

I'm confused then, so what do banks require you to do when you make your offer? Is it just be preapproved for a certain amount?

[chet everett]

Once a bank takes ownership they can make the terms anything they want -- some are extending moderately liberal terms of sale (accepting some contingencies) while other lenders are treating their REO as just a bit more flexible than an auction with basically "all cash, as is" type deals.

A lot depends on the local market conditions...

[StarryEyedSurprise]

Originally Posted by azsandshark

I am purchasing a bank owned house right now with an FHA loan and my deal is contingent on financing

Ditto, though I am using an FHA 203k. In the middle of the 45-day wait at the moment.

[chicubs]

Interesting, my impression was these banks want the foreclosures off their books ASAP. Settling for a buyer who has to wait 45 days to be approved wouldn't sound like something the bank would be interested in doing. I'm looking at an aggressivley priced foreclosure in Chicago in a great location that was just listed. I don't think it will last on the market long, I'll try my luck and see if the bank will accept an offer very close to listing price but contigent on financing.

[stuffavail]

Originally Posted by chicubs

I understand bank owned foreclosures and I understand FHA loans, I'm trying to use both of them to find my first condo/house. Here is my dilema/question: When you purchase a foreclosure you have to put up a garauntee of a deposit of some sort along with your offer (basically saying you can't make your offer contingent upon the ability to obtain financing). The problem is it takes a while to get approved for an FHA loan (inspections or FHA spot approval etc) by the time you can put an offer down the property is long gone (atleast the good deals are). Has anyone had any experience or advice with purching an REO with an FHA loan?

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No matter what klind of purchase it is, you should always get pre-approved up front. It only takes a few days at the outside. Your loan officer will need pay stubs, taxes, etc.

There is nothing wrong with an FHA loan. But...

My clients keep running into REOs that want cash only. They reject our offers even if we are the highest offer.

The losing banks, and the asset managers who they get to manage the sale of their REOs, go for speed of closing rather than amount of the bid.

The amazing thing is that there is ALWAYS a cash offer around the corner. There is so much cash floating around LA at the moment, while prices are great, banks dont have to wait long for a cash offer to appear.

[stuffavail]

Originally Posted by StarryEyedSurprise

Ditto, though I am using an FHA 203k. In the middle of the 45-day wait at the moment.

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If the bank is willing to deal with you having to get a loan, you are lucky.
Congratulations in advance!