Problems with FHA financing?
I have one week to close the loan. My bid was excepted on a HUD home. HUD listed this home for $79,500.00, based on the FHA HUD appraisal. This house is worth more than that, but I guess their appraisal is why they listed at 79,500. So we bid $135,000.00. Our bid was excepted. My bank ordered the appraisal, it came back at 135,000, which was good, but now our banker is saying we can't go FHA on this home because the underwriter is going off of the HUD list appraisal of 79,5000. So she is trying to get that appraisal overturned through HUD. Which I believe by reading on the internet HUD will not overturn the appraisal. So she said we may have to work backwards, whatever that means. She is wanting to go conventional with 10% down. Well our down payment money was cash that we have saved, "matress money", so we had to deposit $8000 a month ago and said that the $8000 was a gift. So at this point if we go conventional can the down payment be a gift?
My first step would also to try to get the sales price lowered. If you are buying it from Hud and it is their value which is destroying the deal they should in theory lower the price. Even conventional you may have the same issue because if a Mortgage insurance company gets wind of the value potentially being lower then the sales price , then you deal will die once more. I would have my agent write an addendum that states something to the extent of "purchase price to be lowered to $79,500 as per Hud list appraisal." It is potentially worth a shot but you have to be willing to lose the house. In CA with "gift funds" conventionally 5% has to be the borrowers own money so.. that could be a problem
Rather than try to get the appraisal overturned, you should work on getting the sale price to $79,500. What do the recent comparable sales say? Not the current list prices.
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