Zakia, Home Buyer in Philadelphia County,...

FHA 203k question

Asked by Zakia, Philadelphia County, PA Thu Aug 13, 2009

Hello, I closed on my first home on July 24th 2009. It's a fixer upper that I financed with FHA 203k financing. Before we went to closing my lender told me it would be about 10 days after closing before I recieved my initial disbursement. So I waited 10 days and contacted my lender, she then told me the loan had to be sold before I could get the initial disbursement and selling the loan typically takes 15 days. So I spoke with her manager because this was not what was disclosed to me at closing. Her manager then told me my loan was being sold that day and IO should have a check within 10 days. I called the bank who purchased the loan and they said I may not appear in their system for up to 3 weeks. Am I expected to pay interest on money that is not available to me as my first mortgage payment will be due on Sept. 1? Are there any legal remedies for the loss I have experienced (contractors not starting, cert of occupancy expiring etc.)?

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Zakia...I am sorry you had to go through all of that.....As a result of going through the same process from the other side of the coin as a loan officer with my previous employer, I discovered that is exactly what happens when a lender or broker that doesn't service the loan makes a 203k loan. After doing a couple of loans that way and watching the uncacceptable results and getting the frantic phone calls from my customer, I decided to find a lender/employer that services these loans. As a result, I ended up going to work with an affiliate of Wells Fargo Home Mortgage. 203k loan volume has actualy doubled this year over last year, so there are challenges everywhere with this program in processing these loans as well as the post closing process. The one important thing I will tell you about Wells though is that they have a dedicated draw dept and you can actually talk to a live person after you close to help you through the after closing and draw process. I have followed up with my customers after closing and can tell you this is true. Wells is by far the best out there in the post closing process. Of course you know I am biased now, since I work there.
1 vote Thank Flag Link Sat Oct 31, 2009
Zakia...I cannot speak to the legal remedies, but I can tell you form experience that if you close a 203k loan with a lender that does not service the loan itself, it can take as long as 30-45 days from the date of closing for the loan to get set up in the servicing lender's draw dept. It is too late for you to know that now, but perhaps it might help others that are just now starting the process of looking for a 203k lender. I wish you luck with your project. At least the mortgage interest you will be paying soon is tax deductible!
1 vote Thank Flag Link Thu Aug 13, 2009
Here's the short and skinny, if the loan is being sold to Bank of America then expect to wait 45 days MINIMUM for your initial streamline 203K draw. Nearly EVERY mortgage broker and small regional lender sells to BofA. Don't take my word for it, do the research. ALWAYS ask your lender who is disbursing the funds, If the answer is BofA, then choose another lender.

Wells Fargo services their on loans. You'll get your 1st draw 5-7 business days after close.
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0 votes Thank Flag Link Mon Jan 18, 2010
It's funny because I have a friend who got her 203k through Wells Fargo and she couldn't believe what I was going through she said her initial and Final draw went as expected. Thumbs up to Wells in the 203k department.
My loan was sold to Bank of America aka Skank of America and when you call their number it's just a prerecorded message saying "we are experiencing extremely high call volume if you are calling about your initial draw request, please allow up to 60 days". I nearly fell over when I heard this. My contact person never answered her phone but after every 10 email messages and 5-10 nasty voicemail she would respond via email with "we are working on it, thanks for your patience". Then I heard that BOA just started servicing another set of loans which was causing the back log. This may just be an extremely busy time but I would think that's when "management" steps in and hires more people, but they're paid millions of dollars and so much smarter than me so what do I know? Just kidding.
Needless to say I have a bad taste in my mouth after the experience and if I had it to do all over again I would definitely go with Wells Fargo. You live and you learn right.
0 votes Thank Flag Link Sat Oct 31, 2009
Thanks for the advice. My house is complete and I just recieved the final disbursement. My advice for anyone thinking about getting a 203K is to find out who will be servicing your loan and STAY ON TOP OF THE BANK! Otherwise you will become a number in the system and good luck with getting a disbursement, this may only be my experience because the loan was sold (which is quite common).
It took about 3 months of constant emails and phone calls to actually get all of the money. From reading the posts I am actually lucky because others have gone more than 6 months. Again Stay on top of the bank, if you end up in the same situation.
During the construction phase I was pulling my hair out and on the verge of tears but to see the final product and have the dream house with everything I wanted, I wouldn't change a thing! Plus I have about 50k in equity. Not too shabby. Good Luck with your 203K.
0 votes Thank Flag Link Sat Oct 31, 2009
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