The sale of our home fell through when 5 days before closing it was discovered that the Buyer already had an

Asked by Michaeline Kay, Rosemount, MN Tue Aug 26, 2008

FHA mortgage and had been approved for the one to buy our home. Apparently you can't have two FHA mortages at one time. Who's responsibility was it to check for this information? We are now out a great deal of money and can't close on our new home.

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Other/Just Looking’s answer
Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Wed Aug 27, 2008
Lending answer:

First item: There are 9 exceptions to the "one FHA loan per customer" rule.

Second item: Realtors on both sides have nothing to do with the financing side, and since Realtors cannot be licensed to originate FHA mortgages, there is no expectation that a Realtor could have known of any potential conflict.

Third item: Your post doesn't say specifically why the buyer's loan was denied. However, it is extremely unlikely that an existing FHA loan would have been overlooked by the loan originator, the underwriter AND the Federal Housing Administration. The first step in originating an FHA loan is to order a Case Number (unique to property and borrower) plus run Federal background checks. The presence of an existing FHA loan would have shown up then.

I suspect that the loan was denied for another reason... and you should carefully review the purchase agreement with your Realtor to see if you have a basis to retain a deposit.
2 votes
Dallas Texas, Agent, Dallas, TN
Wed Aug 27, 2008
It is not realtor error for the REAL ESTATE AGENT IS not doing the lending. It is mortgage broker, IF LOAN officer is not seasoned new into loan processing and etc, could have overlooked this on buyer credit report. SORRY TO HEAR about this You need to have formal authored statement from mortgage broker prior too release of earnest money. Title company will need to determine IF buyers does receive the earnest money based terms & conditions of contract.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
0 votes
Keith Sorem, Agent, Glendale, CA
Wed Aug 27, 2008
Michaeline
I agree, talk with a real estate attorney right away. I would also talk with the broker of the listing agent and see what they say. Many markets in California are not accostomed to doing FHA loans, so it may be that an honest mistake was made. But when honest mistakes are made, real estate contracts are designed to protect BOTH parties. If your buyer removed all contingencies (and it sounds from your post that they did), then the issue becomes a legal one.

Sorry to hear of your situation.
0 votes
Gail Gladsto…, Agent, 11743, NY
Wed Aug 27, 2008
Please discuss with your attorney...his lender and loan officer should have done credit checks and this would have come up on the report right from the beginning.
Web Reference:  http://GailGladstone.com
0 votes
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