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Old 04-22-2011, 10:24 PM
 
Location: MID ATLANTIC
8,449 posts, read 21,841,114 times
Reputation: 10000

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There is always the possibility they put 35% down in the offer to win the contract, giving the illusion of a stronger contract and always planned to go FHA.

And, they ordered an FHA appraisal from the get-go.

In any event, I stand by my earlier statements.
1). The purchaser is required to have the FHA language (Amendatory Clause) in the contract
2). The date of inspection cannot preceed the date the case number is issued.

If they ordered a conventional appraisal, it must be flipped to an FHA appraisal. The appraiser must reinspect on a date after the case number was issued and perform the required inspections.

Quote:
My agent is telling me, that the buyer agent is telling here "they are trying to save money by getting a lower interest rate loan and they would prefer to put less down (20% vs 35%) to hang on to more of their money".
This is horse hockey, especially if the change to FHA was announced after April 18 when the mortgage insurance rates went up 25%. When did you get word of the change? But even so, let's assume they got the lower MI rate and registered the FHA case number in early April. Let's let the numbers speak for themselves.

We don't have any hints on the sales price/loan amount, so I'm going to go w/ $435,000 as a wild and crazy guess.

FHA 4.75%
LOAN AMT w/ old MI =$ 351,480 P&I + MIP = $2079

P&I + MIP w/ New MI (same loan amount) @ 4.75% = $2152

Assume 20% down on a conventional:
P&I on fixed at 5% = $1868
P&I on fixed at 5.125% = $1894

Even if the rate was the same for conventional vs. FHA, the conventional would be lower. You can increase or decrease the sales price and loan amount and the results are the same. The buyer's agent is feeding you a line of BS.

And, there's good news/bad news it's BAC. They have their own guidelines and continue to march to that drummer. The bad news (and the reason I left there), you won't know until the last minute if it's going to blow up. And example of what could blow up, realizing the case number was issued before the appraisal (see how much fun this is?) The good news, they do eventually get it worked out, but at their pace.

I'm a skeptic and think the switch was intentional from day one. Was this the only offer?
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Old 04-24-2011, 01:02 AM
 
Location: Palm Coast, Fl
2,249 posts, read 8,615,602 times
Reputation: 1008
Miakelly, they are going to have to have an addendum signed by you accepting the change. It's required by law here in Florida (I would assume other states), as you have to agree the house has to appraise at the contract price or the buyer doesn't have to go through with it. Buyer can come up with the difference of the appraisal and contract price but they don't HAVE to. I don't know why you are paying for any appraisal and if you agree to allow them to go through FHA have another addendum done saying the buyer is to pay for the appraisal. As for repairs, FHA will not loan on anything that the a/c or heat or water isn't working, won't loan on anything with termites or wood rot or roof issues. Other than that, repairs are not required to be made and if there are, the buyer can put money in escrow for the repairs. Has your agent spoken to their loan officer?
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Old 04-24-2011, 10:20 PM
 
Location: Orlando, Fl
216 posts, read 872,066 times
Reputation: 132
Quote:
Originally Posted by SmartMoney View Post
There is always the possibility they put 35% down in the offer to win the contract, giving the illusion of a stronger contract and always planned to go FHA.

And, they ordered an FHA appraisal from the get-go.

In any event, I stand by my earlier statements.
1). The purchaser is required to have the FHA language (Amendatory Clause) in the contract
2). The date of inspection cannot preceed the date the case number is issued.

If they ordered a conventional appraisal, it must be flipped to an FHA appraisal. The appraiser must reinspect on a date after the case number was issued and perform the required inspections.



This is horse hockey, especially if the change to FHA was announced after April 18 when the mortgage insurance rates went up 25%. When did you get word of the change? But even so, let's assume they got the lower MI rate and registered the FHA case number in early April. Let's let the numbers speak for themselves.

We don't have any hints on the sales price/loan amount, so I'm going to go w/ $435,000 as a wild and crazy guess.

FHA 4.75%
LOAN AMT w/ old MI =$ 351,480 P&I + MIP = $2079

P&I + MIP w/ New MI (same loan amount) @ 4.75% = $2152

Assume 20% down on a conventional:
P&I on fixed at 5% = $1868
P&I on fixed at 5.125% = $1894

Even if the rate was the same for conventional vs. FHA, the conventional would be lower. You can increase or decrease the sales price and loan amount and the results are the same. The buyer's agent is feeding you a line of BS.

And, there's good news/bad news it's BAC. They have their own guidelines and continue to march to that drummer. The bad news (and the reason I left there), you won't know until the last minute if it's going to blow up. And example of what could blow up, realizing the case number was issued before the appraisal (see how much fun this is?) The good news, they do eventually get it worked out, but at their pace.

I'm a skeptic and think the switch was intentional from day one. Was this the only offer?
I'm a skeptic also which is why I am not at all comfortable with this situation. This was not the only offer.

House was on the market for 14 days. We had at least one showing per day - seriously. I worked like crazy every day to make sure it showed in pristine condition. Everything was decluttered and immaculate.

We had 4 offers. One was a semi-lowball FHA with 3%, another was a fair offer with 20% down and FHA, another was similar to the second (fair offer, 20% down but conventional) and the final, which we went with, was because they indicated 35% down and conventional.

As a seller, I've only sold three homes in my life, but I do factor in the type of loan and percentage down in accepting an offer because those factors can aid in determining who is the most financially viable buyer.
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Old 04-24-2011, 10:21 PM
 
Location: Orlando, Fl
216 posts, read 872,066 times
Reputation: 132
Quote:
Originally Posted by nzone View Post
miakelly, you have executed a "P&S" without an attorney? Where is your attorney? You should seek his/her advice...that's what you pay him/her to do, right? Changing lender and the percent down payment would trigger a change in "P&S" agreement (wordings). The seller's attorney needs to change the p&s (add addendum or rider) and you need to agree. Then the buyer's attorney either agrees to it or requests a change. Goes back and forth until all parties agreed.

Yes, as Rjrcm stated, we are in Florida.
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Old 04-24-2011, 10:29 PM
 
Location: Orlando, Fl
216 posts, read 872,066 times
Reputation: 132
Quote:
Originally Posted by palmcoasting View Post
Miakelly, they are going to have to have an addendum signed by you accepting the change. It's required by law here in Florida (I would assume other states), as you have to agree the house has to appraise at the contract price or the buyer doesn't have to go through with it. Buyer can come up with the difference of the appraisal and contract price but they don't HAVE to. I don't know why you are paying for any appraisal and if you agree to allow them to go through FHA have another addendum done saying the buyer is to pay for the appraisal. As for repairs, FHA will not loan on anything that the a/c or heat or water isn't working, won't loan on anything with termites or wood rot or roof issues. Other than that, repairs are not required to be made and if there are, the buyer can put money in escrow for the repairs. Has your agent spoken to their loan officer?

We are not and have not paid for any appraisal. They paid for the appraisal through their original lender (with the conventional loan) and the house DID appraise at the contract price.
We already received the contingency release on the first appraisal and home inspection. Everything was signed off and we were just waiting for the bank to complete the underwriting process and get to closing.

Now, the buyers are changing to an FHA loan which means the buyers will have to pay for a new appraisal because of course FHA will not use the original appraisal.

I guess I will probably need to consult an attorney at this point, because my question is can we enforce the original terms of the contract (agreed price and not have to pay for any other repairs an FHA inspector may find) since we have already been released from these contingencies and the buyers have made a choice to change the terms of the contract by changing loan types. We haven't changed any terms, the buyers have and we don't want it to affect us financially.

I could care less where they get there money, as long as we get what was agreed to originally and we don't have to pay for any additional repairs (there is nothing to be fixed that I, or the original home inspector found) but who knows with an FHA inspector. Thanks!
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Old 04-24-2011, 10:38 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 36,559,417 times
Reputation: 2661
Quote:
Originally Posted by miakelly View Post
Yes, as Rjrcm stated, we are in Florida.
You appear to wish to make them perform to the original contract. Practically you can't. So you need to decide what you will do.

So consider your options. You might be able to get all or part of the EMD and cancel the project...but I would not bet on it.

You need to get together with your agent and plot the best course available. I suspect, though I don't know, that it will be to help them get the FHA done.

Some days you just have to lay back and enjoy it...
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Old 04-25-2011, 07:03 AM
 
Location: Orlando, Fl
216 posts, read 872,066 times
Reputation: 132
Quote:
Originally Posted by olecapt View Post
You appear to wish to make them perform to the original contract. Practically you can't. So you need to decide what you will do.

So consider your options. You might be able to get all or part of the EMD and cancel the project...but I would not bet on it.

You need to get together with your agent and plot the best course available. I suspect, though I don't know, that it will be to help them get the FHA done.

Some days you just have to lay back and enjoy it...
You're probably right

Thanks to you, and thanks to EVERYONE that responded.

I'll update this post once this is resolved (one way or another) just to let everyone know how it worked out. Thanks again, you all gave some great advice and info.
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Old 04-30-2011, 02:22 AM
 
5,698 posts, read 18,477,452 times
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I am by no means an expert on this stuff but I can tell you what happened to us. We were under contract to buy our house, everything was pretty much completed we were waiting to close. Then our mortgage company folded! It was a nightmare. It made the news and lots of people like ourselves were left in a lurch. The sellers had the option to ditch us and wanted to because from the get go they felt they got screwed on our price. We had only 48 hrs to secure financing with someone else. Lucky for us our mortgage person had been in the business a long time and started working for a new company the following monday. We got our financing and were back on track with the exception our closing date was moved back 2 weeks. The sellers agreed on that change as well but we were told, if we didn't close on that specific date, they were done with us. It was very stressful but in our case we were going FHA the whole time.

I have also been a seller and sold 2 homes FHA. There were more costs and the FHA inspections can be a hassle. I have found with just personal experience, FHA inspections do not seem as brutal as they used to be.

My thoughts are that these people did not do their homework and discovered they were getting screwed on the first deal and now want to go FHA. Everyone wants more money in their pockets. I would think you could bail but maybe not. Keep us posted.
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Old 04-30-2011, 06:34 AM
 
64 posts, read 327,191 times
Reputation: 55
Quote:
Originally Posted by fallingwater View Post
I am by no means an expert on this stuff but I can tell you what happened to us. We were under contract to buy our house, everything was pretty much completed we were waiting to close. Then our mortgage company folded! It was a nightmare. It made the news and lots of people like ourselves were left in a lurch. The sellers had the option to ditch us and wanted to because from the get go they felt they got screwed on our price. We had only 48 hrs to secure financing with someone else. Lucky for us our mortgage person had been in the business a long time and started working for a new company the following monday. We got our financing and were back on track with the exception our closing date was moved back 2 weeks. The sellers agreed on that change as well but we were told, if we didn't close on that specific date, they were done with us. It was very stressful but in our case we were going FHA the whole time.

I have also been a seller and sold 2 homes FHA. There were more costs and the FHA inspections can be a hassle. I have found with just personal experience, FHA inspections do not seem as brutal as they used to be.

My thoughts are that these people did not do their homework and discovered they were getting screwed on the first deal and now want to go FHA. Everyone wants more money in their pockets. I would think you could bail but maybe not. Keep us posted.
That happened to us years ago on a house. Different scenario, we had bought a house that was 50% complete, so we had bought the house through a construction loan with a bank, the mortgage company we were going through did not do construction loans, the bank did not do mortgages, they only did the short term construction loans. We got the house finished and then the agent we were working with lost his job and wasn't doing his job and the new agent wanted more money down then we had to put down because we had already spent it on the house to lessen the amount we had to finance and a higher interest rate that was going to make our payment more than we had planned for. It was a nerve wrecking mess, luckily the bank worked with us and extended the construction loan for another month and we found a different mortgage company and got it done.
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Old 04-30-2011, 08:42 AM
 
4,423 posts, read 6,990,973 times
Reputation: 10914
Same thing happened to us. Our buyer went from 20% down to cash (but she was short the cash and asked us to take back a small mortgage) back to 20% down and finally she closed with cash. It took 4 months to close. Our agent was useless. The buyer was a personal friend of hers and she acted like we should be happy to have any offer and whatever headaches came with it.
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