I am sorry to hear that you have been having such trouble with a 203k. At Flagstar, we actually have an entire 203k dept that pretty much all applicable clients go to. Because 203k loans require extensive training for the bank to certify a loan officer to do, most of the time clients are sent straight to our 203k dept so that a step is not missed and each client receives optimal service. I'm not sure how much time you have until closing or if the seller is willing to work with you on an extension, but I would be glad to help you with such a loan. I think you would be quite happy with it and it would more suit your needs.
Let me know if I can help.
Sorry you are having so much trouble with an FHA. I work with several incredible lenders in Wisconsin that specialize in 203K and one of my buyers just moved into her "new" home and is ready to refinance. The appraisal already came in higher than the anticipated amount.
Keep calling around, ask a few real estate agents for a referral. There is definitely some one in your area who does 203K. It is a great program and is helping many established neighborhoods get the royal treatment.
We decided on FHA financing so that we could minimize our down payment so that our total available liquid cash could be shared among down payment, closing costs AND necessary repairs on this home. If we went with conventional loan, we'd have to use our savings for down payment and closing and would have little to no money remaining to make any necessary repairs or purchases once we're occupying the home. At the time, we didn't realize that FHA had minimum standards or that the missing carpet and minor damage to walls might result in FHA either denying the loan or that they might require the seller to foot the bill for such repairs. Being an REO complicates it further because they are less likely to entertain an offer with contingencies, such as those that would be required by FHA lender in this case.
This home is a wonderful value, exactly what we're looking for and we are willing to put in the work and expense of repairing what is needed, but it seems our use of FHA financing is really going to hold us back during the offer stage.
I am not sure why you are going FHA. I hope you're not relying on seller funded Down Payment Assistance options, because they are about to disappear. If it is not that, check for renovation loans. They are not as competitive - but some are close. I know Bank of America has a good renovation loan - check with your local branch if you have one nearby. If you have a renovation loan, you've got a better shot at getting this house.
If it is in such disrepair - why do you like it so much? Just curious. By the way, this thing does not email me if you have questions, so email me at firstname.lastname@example.org with any other questions; I am happy to help if I can.
That is definitely a concern of ours- that the REO bank will turn down our offer. We want to present the strongest offer possible, and do not intend to include any contingencies. We will not be asking for the REO bank to make or pay for any repairs. Despite this, is it common for the REO bank to turn down offers with FHA financing just so they steer clear of responsibility for any repairs that the FHA appraiser might require? Is there any way that we can contractually preclude the REO bank from being responsible for remedying or repairing defects- or is this automatically their liability/responsibility in the eyes of the FHA lender?
Any lender can pretty much deny an FHA file what it determines to be their own interpretation of the FHA guidelines. Some lenders are strict, some are graceful. I work for a lender who I feel offers some very forgiving guidelines on repais and maintenance for FHA loans. In my opinion, it should be more of a rational decision by the underwriter as to what should fall under "health and safety" issues and address them specifically. I have seen issues come up the day of closing that took no more than $2 and five minutes to resolve but I understood the underwriter's reasons for asking they be fixed.
Based on what you described, your underwriter should be allowing you to move the file through without much headache. However, they probably have chosen to side with the lender and make the work get done. I would light a fire under your loan officer and try and get him/her get an explanation as to what the lender is looking for. If not, move on to a lender who has easier underwriting requirements for FHA repairs.
I will be glad to help you if you have any questions.
could he not see that the entire structure was falling apart? what a bozo.
so, the owner (the bank) agreed to make the $350 repair to replace the rotted boards, and we closed, about 10 days ago. my client has already replaced the entire set of steps.
sometimes things don't make any sense to me.
having said all of that - the bank (owner of reo) will likely turn down your offer, regardless of price, because they'll have the same concerns. read my blog - it might give you some insight.