Title policy on a $150k house is $1,110. The survey could be $400 or so. Ask them to write an amendment to change the 2 checked items and then if there is still a difference, remove the excess from 12A1(c) or just relinquish the remaining of the 1%. Provided that the lender is aware prior to drawing docs, the amendment can be signed at closing, but you still have time to fax the amendment to both sides and get it in to the lender and title today.
To illustrate what could be going on (since we don't have enough information about your situation and the effect on the figures in the GFE), if the price were $100k and the loan $96.5k, then a change of $1k would alter the LTV to 97.5%, which is out of range for FHA. On the other hand if the loan were conventional and the appraised value equaled $80k, then no mortgage insurance would be necessary, unless the $1k reduction raised the LTV to 80.8% (which does require MI). So, the 1% change could completely alter the viability of the file, either knocking it out of FHA or requiring MI when none was required before.
All these comments that there is something not right may be all wet.
The appraiser should be told the sale price, although this practice is viewed as suspect since the appraiser might try to give a value equal or higher than the sale price. Is it essential that the appraiser know the sale price? No. Must the underwriter request a review of the appraisal? No, it is within her purview to consider risk to the investor without further consideration of the appraised value, once she has that value.
The time frames given for underwriter review and drawing of documents seems excessive. Normally, a lender can re-draw documents the same day (although they often charge for re-draws), and an underwriter can review a price change within an hour, provided they are not already clogged up with other files, such as at the end of the month.
The account executive or processor for the underwriter can provide guidance on the time it takes to review and re-draw. Your estimate of up to 3 days and within 48 hours are close to this, but your loan officer should be able to do better, since we're in the middle of the month. The 7 to 8 working days for everything is absurd, since the appraiser review appears unnecessary.
It may be that the loan officer does not want to be made to pay for the re-draw fee and is putting up fake obstacles to convince you to go with it as-is. Your lock can be extended by almost every lender simply by paying an extension fee, which is normally a lot lower than 1% of the sale price.
As Mary Ann said, new rules are in place and constantly changing for the mortgage industry because of the massive number of foreclosures. Okay, Texas didn't have the huge increase experienced n California, Nevada and Florida, nor was it close to the percentages in other areas, but we did see an increase in problem loans. Now, everyone is being extra careful and trying to follow complicated new rules that keep being re-written and tightened. Unfortunately, the fallout from the mortgage holocaust also fell on us and we have to follow the same rules that come from the national secondary market (FNMA, FHLMC, FHA, etc).
Try talking to the loan officer and ask for an extension of the lock if needed and tell him you'll pay the couple of hundred dollars to save the 1%. You can ask him if the underwriter is really requiring the appraisal be updated or he just thinks it will have to be. But the underwriter will have to review the price change and (if documents were already drawn) documents re-drawn.
I would check with other lenders in your area and see what they say.
Sometimes there are cost on your closing statement that can be moved over to the sellers side or split between you and the seller.
How much does the 1% add up to, see what is on your side that the seller can pay.
Did you get a survey, An Insurance Policy, The fees to the Title Company Attorney, Other title company fees.
Just move some over. No one has ever said that a seller can not offer some other perks.
We make thos kinds of changes all of the time.... appraiser can usually ammend appraisal and undwerwriter can sign off on changes within 24 hours.
As I have explained over phone, changing sales price can delay the closing by about 7-8 working days, so this is not an option at this late in the mortgage process.
Change of sale price must reflect on the appraisal report, which can take up to 3 to 4 working days after we receive executed contract with the new sale price. Then the new appraisal has to be cleared by underwriting, which can take up to 3 days. Docs will be drawn 48 hours after this.
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