topic Re: Really??? We can be denied because of THIS??? in Mortgage Loans

Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 17:37:13 GMT

So our file with conditions, appraisal, and title was finally sent in this morning for one last look from the underwriters....as we are sitting here hoping to get a clear to close for August 9th, we get an email from our mortgage broker saying that the seller of our house bought the house as a foreclosure and flipped it to sell for profit and we had our offer/contract signed with him only owning the house under 90 days. Evidentally the VA does not have a problem with this but our Lender may? They say that FHA does in fact have an issue with this and will deny any home loan when this happens....what do you all think? I think it's crap and is not fair!!!!! The appraisal came in way over the selling price, our home inspection was great, and the title was clear with only have had the history of 1 foreclusure on the property before but not now, not while we're buying it? Why should this matter!? Why should we be penalized because it was once a foreclosure and because the seller (at the time of contratcted offer) had it under 90 days???? Every time we get our hopes up with getting closer we always seem to get knocked back down....this will be the last house I ever buy. This is seriously getting ridiculous....HAS ANYONE EVER HAD THIS SITUATION COME UP??

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 17:53:22 GMT

It look like there is an anti-fliiping rule unless it is still waived:

http://www.bankrate.com/finance/mortgages/fha-waives-rule-against-house-flipping-1.aspx

It look like FHA extended it by the end of 2014 but your purchase price cannot be more that 20% of the flipper purchase price:

http://www.biggerpockets.com/renewsblog/2012/12/05/fha-suspends-anti-flip-2014/

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 17:57:18 GMT

Flipping is done all the time? I just don't understand some of these rules and stipulations. It just doesn't seem fair that this would be the reason why we won't get our home. My mortgage broker says this:

"The house you are buying was purchased out of foreclosure by an investor. He is turning around and selling it at a profit and has not owned it for a full 12 months. This is considered a “flip” transaction. That is why it would matter. So, we are now waiting to find out if the fact that the property is a “flip”, will there be additional items we need to do or is there any issue with this at all. I admit, I have not closed a “flip” on a VA loan any time recently and I need to hear back from the underwriter on how they handle them. It can vary lender to lender. I do not know if they will require a second appraisal or something additional. We will have to see what they say."

My question is, is what will a second appraisal be good for? I just don't get some of all of this....thanks for your reply and the helpful link...

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:02:06 GMT

Looking back on the pulblic access records...the home was purchased from a bank at $65,000.00. He's completely remodeled it and was selling it for $149,900. We offered $139,900.00 and he accepted...I'm not sure how to calculate to see if the purchase price would be that 20% above or below...would you take the price that he gave the bank and divide it by our price of $139,900.00? If so, I'm coming up with 47%...I guess that would be bad...

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:07:18 GMT

From what I red here once the appraisal is done for FHA ,it stay with the properly and it cannot be changed for 30 days (not sure if 30 days or more).

Your purchase price is more than double. That is over 100% value increase.

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:06:47 GMT

So what could that mean for us? I'm not really understanding...we are first time home buyers as well so we're completely new at any situation with home buying.

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:13:42 GMT

Then there is the fact that when we put our offer in on May 17th, it was then under 90 days. It's well over 90 days now. He still owns the house, wouldn't that come into play somewhere? We won't even close til Aug 9th, even if we get to now. The seller bought the home on March 12, 2013.

Re: Really??? We can be denied because of THIS???

pizzadude — Mon, 29 Jul 2013 18:18:43 GMT

If my math is correct then the max you could pay for the house would be 20% more than the flipper's purchase price of $65K. This would be $78K.

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:21:17 GMT

Oh wow, this is really happening....I know he won't come down on the price. I just don't understand why it wouldn't be okay if the appraisal is over the selling price as well? I guess I might as well suck it up and just know this just wasn't meant to be.

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:22:13 GMT

From the first link:

The 90-day time period might be shorter or longer than 90 calendar days due to the way the start and end dates are determined. The start date occurs when the sale is recorded. The end date occurs when the purchase contract is signed
.

I would make another purchase contract

Re: Really??? We can be denied because of THIS???

Anonymous — Mon, 29 Jul 2013 18:25:11 GMT

I'll suggest if doing another contract will help. We are so discouraged...this has been touch and go the whole time...they even made us close our 0-balanced (zero) credit card accounts as one of our conditions to getting this loan....that's how extensive it's been...I'm just about to throw in the towel...

Re: Really??? We can be denied because of THIS???

Anonymous — Tue, 30 Jul 2013 00:26:43 GMT

Two things:

1) more to your question of WHY: for the lender, the transaction is not ALL about you and your credit worthiness. Its about the property as well, hence the title search and the appraisal, etc. Flipping is illegal (when its flipping for false value - which DOES happen) and the property can be siezed by the US government if the seller is prosecuted. So thats why the lender is looking at this closely.

2) it may be possible to document the file as far as the improvements done to the property. The seller likely has tons of receipts, etc. Talk to your lender and see if any documentation will help the situation. As you mentioned, they might do a 2nd appraisal to confirm the value is legit (and that the first appraiser isnt 'working with' the seller to falsely increase the value. In short, there are always exceptions to every rule - make sure your LO is asking the right people for the exception/alternatives. Coming from someone who has processed loans and worked with different loan officers, trust me when i say that every loan officer is NOT created equal. Just as you have bad plumbers or mechanics, you have bad loan officers. In the sense that some loan officers just do not know the possibilities/exceptions they could apply for. You have the right to ask for your loan to be escalated to the loan officer's manager (or someone who will have more experience) if you feel like your officer just isnt taking the next step...

Re: Really??? We can be denied because of THIS???

Anonymous — Tue, 30 Jul 2013 04:23:43 GMT

That is good because that is what is going to drive up the cost of already over priced homes! We pay WAY to much for houses! I used to build houses I know what it cost to build one we are all getting ripped off :-(

Re: Really??? We can be denied because of THIS???

Anonymous — Tue, 30 Jul 2013 17:18:28 GMT

Okay so we got word back from our mortgage broker saying this situation didn't seem to bother them...now it's that our DTI is a lil over 41% like, only by a half a point and our mortgage broker is coming up with under 41% so they're arguing who's got their numbers right? Really? This was supposed to have already been a breeze....then they're saying our homeowner's insurance is a little too high and they seem to think we should go with a lower rate in order to help on the DTI side of things as well? They're adamant about our DTI being right on 41% or lower....this is getting ridiculous....I just don't know what to say....everything else is a go...our credit scores are good and we have no cc bills anymore...