Interesting seller situation

[jbu723]

I just wanted to share a new development in our homebuying process. My husband and I are in the process of closing on our first home using FHA. We cleared underwriting last week and were waiting for our lender to get the title back so the appraisal could be ordered. Closing date was set for 9/11/17 and we were told that it looks like everything is working out to get us to closing. Well, today I get a call from my lender that the title came back yesterday afternoon and the person that signed the purchase agreement is not on the title. Long story short the person selling the house has invested a lot of money in her friend's house. She has some sort of contract with the actual owner and has lived in the house for quite some time. She moved in to the house to help her friend essentially. Well, she never had the title changed to her name even though she has lived there for all this time and I guess figured she could do it last minute. Only thing is...FHA has a 90 day flip rule and if she puts the title in her name now then we can't buy the house but she wants to protect her interest in the property as well. To complicate things, the "seller" used to work with my husband and now lives in Florida. (We are in Georgia) She has assured us that she will be here at her lawyers office tomorrow to sort this out since she has power of attorney so we can go through with the deal. The only other option is for us to do a conventional loan which we can't do due to a significant increase in down payment. The lender told me today she has never had this happen in 20 years in the business.
I know this is long and confusing! It has been a confusing day for us as well! I didn't know if someone has ever experienced this before or if maybe this would provide some insight on what can happen during the process to first time home buyers like us.

[StartingOver10]

Where is the seller that is actually on title? I have seen, occasionally, someone try to pass themselves off as the seller. It usually becomes apparent when the public records are checked early in the process. You need an attorney to review the PGA to make sure it is valid. What is pretty strange is that this other person never mentioned it at the on tract signing. The POA signs the agreement differently than the seller would sign. It sounds fishy to me. It is good you have a real estate attorney working on this.

[StartingOver10]

*contract signing

[VALoanMaster]

If the "tenant" wants to protect herself/investment she can file a lien against title which will have to be paid off at closing.

FYI - there are conventional loans that only require a 3-5% down payment. The options that only require 3% actually can be better than FHA.

[jbu723]

I honestly know next to nothing about the seller that is actually on title. My husband was informed by the "tenant" that that the seller didn't need to be present at closing since she had POA. I've also learned that she has been in the house for at least 2 years so it just behooves me that she didn't get this taken care of before listing the home. I think the tenant is going to file a lien. After speaking to our lender again she has assured us that the attorney will make sure that everything is in order to protect us as well. Unfortunately, due to our fico scores we were told we would have to put down a lot more so conventional is out for us. It has just been incredibly frustrating. I had anticipate that we would have bumps in underwriting or inspection...never anticipated this happening! Will update when I hear more tomorrow.

[jbu723]

Also wanted to add...they offered for us to move in and "rent" for 90 days until we could close with FHA. No thank you!

[NC_Mtg_Loaner]

I would think the listing agent (if you had one) would be the one that failed in their tasks right from the start.

[StartingOver10]

^^Agree. The listing has to be signed by the seller or some one with a proper POA. There are people that have POA's that are not properly written and would create a real problem conveying the property. Get your own real estate attorney if you want to stay in the deal.