Need Advice HUD Keeps Earnest $-no House
Here's the huge problem I have. I bought a HUD repo and had to put up 1,000 in earnest money. I paid 19,500 for the house and my appraiser says there are approx 3,700 in repairs and then it would appraise at 36,000. I was preapproved for a loan and everything. Since the appraisal had 3,700 in reapirs listed, my lender says they won't close the loan until the repairs are done. HUD tells me they won't even consider letting me do reapirs before I close. Catch 22 huh? Since neither side will budge, HUD is refusing to return my earnest money. What can I do? I am terribly upset.
hud does not have to return the earnest money. thats the purpose of e/m. if you don't close the deal they are entitled to the e/m. offer to put the 3700 for repairs in escrow to be ear marked to be used only for repairs. talk to other lenders.....ggod luck.......kenmax
You need to find a new lender quickly.
HUD sells its property "AS-IS". You were already aware that HUD will not give you permission to initiate repairs prior to settlement, so your dilemma is your own creation.
By the way, the required earnest money deposit that the selling broker must secure from the Purchaser(s) prior to bidding on their behalf is either $500 (for $50,000 or less sales price) or $1,000 (for $50,001 or more sales price). For a vacant lot, the deposit is equal to one-half the price of the lot.
Talk with your selling broker. See if you have to forfeit any amount in excess of the minimum required to be collected should you fail to settle the contract. Also talk to your selling broker about an extension of time to close so you may secure funding. There will be a daily fee for an extension.
For the purchase price, perhaps you can find an alternate funding source, such asA home equity credit line,
A family member,
A cash partner,
Another property with equity you can quickly refinance,
Stock (or anything of value) you can sell quickly,
Borrow from your stockbroker against your margin account,
Borrow from your 401(k),
Borrow from your IRA,
Borrow from the cash value of your whole life insurance policy,
Apply for an unsecured loan at your bank,
etc.