Underwriting And Title Issues
I am currently under contract to sell a rehabbed property I have owned since April 2003.
My last buyer fell through, 2 days prior to closing due to the fact that the underwriters couldn't justify the price increase from $130K to $195k. The buyer was using an FHA loan.
I have since been educated that FHA has a new policy regarding 'flipped' properties that basically doesn't allow it to happen.
Now I am a week away from my closing with my new buyer and the lender is basically facing similar issues with the price increase vs. time on title.
I have already offered receipts/invoices to justify the increase, but they didn't want them (yet.)
Is this the wave of the future???
Both times the property appraised to full value.
Any ideas??? How can I make sure this goes through???
Help
Joe
For my rehabbed properties I have been able to have my appraisers do the appraisal. They do a really good job and include plenty of internal pictures in the appraisal.
On one property the lender wanted to see additional comparable properties, eventhough 5 were included with the original appraisal. They also required a paid receipt from my contractor that detailed the repairs completed i.e. instead of listing "new kitchen" they wanted to see greater detail.
Although these issues caused some delay, I haven't lost a deal because of this.
I haven't dealt with an FHA buyer, but if they can qualify for FHA, they can qualify for a conventional loan. Find a mortgage broker that can get loans approved for a variety of buyers and is experienced in dealing with rehabbers.
Good luck!
Jamie
for fha mortgages they require 90 days of seasoning of title. usually by the time you rehab and by the time you find a buyer the 90 days are up...
Hi TANISGroupLLC,
Get a meeting with a good local Mortgage Broker and have her go over other loan options that are available to your buyers. There are a host of other loan programs that will be just as good or better for your buyers, with the same low down payments as they are looking for, but without the FHA restirctions.
Regarding the appraiser, I get a call from the appraiser on almost every short sale. They want to know why there is such a large difference between the price that I bought it for and what I am selling it for. Some of the Short Sales are in such good condition that they need zero, or very little work. So what I have always told them is that "I bought this property out of foreclosure, and the previous lender discounted the loan to me so that they could get out from under it". They appraiser then place this verbage in there appraisal, and this gets all of them through, when it comes to the price differential! I hope this helps and Best of Success!
BAMZ