Posted by River City on June 29, 2009 at 11:47:26:
That doesn’t sound right. Your broker should have had you sign a disclosure that states the conditions for a refund of your earnest money prior to your making an offer to HUD for the property. I know HUD is a stickler about returning earnest money when someone just gets buyer’s remorse, but it is not like YOU are backing out of the deal. You are having problems finding financing and your contract with HUD is dependent on that financing. Read your contract and see if it references the appraisal. Also read the part about the earnest money to see what it says about refunds. Read ALL of the contract thoroughly. Have you received your denial notice from the mortgage lender or your broker? They are required by ECOA to give you a “written” denial within 30 days of the decision to deny your application. You will need this document to get your refund.
Another suggestion, go to HUD.gov and find an 800 number to contact them and ask them about earnest money refunds for HUD Repos.
Good luck. I hate to see someone burned like this.
No loan due to FHA appraisal condition - Posted by Roy Gatling
Posted by Roy Gatling on June 28, 2009 at 16:20:28:
I submitted a bid as an investor on a HUD foreclosure and it was accepted. The house is only 3 years old. I was pre-approved/qualified for financing. I have great credit, 20% down payment and the funds to fix up the property (cosmetic–paint and flooring).
Everything was rolling along and then the mortgage broker called to say that the lenders wouldn’t fund the loan due to the condition on the FHA appraisal, which was “fair”. The deal is not going through.
The company that handles the foreclosures (not my broker) says that I am not due a return of my $1000 earnest money. Am I screwed out of this money? This doesn’t seem right!
Re: No loan due to FHA appraisal condition - Posted by rudy-austin
Posted by rudy-austin on July 03, 2009 at 05:20:16:
Go straight to the local HUD office and argue your case. If you file a lawsuit in small claims court, the property will get tied up until the case is resolved and they do not want that.
Wells Fargo saw an entry in the appraisal that said the overall condition of the house was “fair” and they refused to fund. They made it sound like “fair” was one step better than collapsing. We finally convinced them to change their mind by getting the appraiser to upgrade the condition to “good” based on his eval of a similar house on the same street.
Re: No loan due to FHA appraisal condition - Posted by Natalie-VA
Posted by Natalie-VA on June 30, 2009 at 18:58:39:
I haven’t done business with HUD in a long time, but I don’t think they allow a financing contingency. In other words, if you don’t get your financing, they can keep your money. Let us know what your contract says.
Also, the appraiser should have indicated what repairs were required in order to pass. Did he make any specific repair requests?