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The Amendatory Clause was created to give the buyer the option to cancel the sale if the home does not appraise for at least the purchase price.
From HUD:
The FHA Amendatory Clause is intended to ensure that prospective home buyers with FHA-backed loans receive important information in a timely manner about the house to be purchased. In particular, the Amendatory Clause stipulates that if buyers have not received information about the appraised value of the home they intend to buy, the buyers are not obligated to purchase the home. The FHA Amendatory Clause protects buyers by stipulating that if the required appraisal information is not delivered per the terms of the clause, buyers shall not be required to forfeit earnest money they have deposited for a house if they elect not to buy the house
If a buyer is applying for an FHA loan and the lender pre approves the buyer and has them release the loan contingency, then at a later date the lender is unable to complete the loan, does the buyer lose their earnest money. Does the FHA earnest money clause protect the buyer's earnest money if the lender was at fault?
Those two topics seem unrelated to me. One is about appraisal, the other is about inability to close a loan unrelated to the appraisal.
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