FHA guidelines when flipped house is involved

wendlan · ‎06-17-2015

I am already on a extension and closing was suppose to be Friday 6/19, today I was suppose to hear cleared to close INSTEAD I hear we need another appraisal! WHAT !! They say FHA guidelines because the house was flipped and price is more than 100% more than they paid before they fixed it up. They tell me this now? We already went though a 60 day contract and 5 day extension.NO ONE THOUGHT OF THIS SOONER? Closing is not happening Friday. I have been submitting forms since February and am at final review and now I have lost my mind.

Anonymous · ‎06-18-2015

@wendlan wrote:
I am already on a extension and closing was suppose to be Friday 6/19, today I was suppose to hear cleared to close INSTEAD I hear we need another appraisal! WHAT !! They say FHA guidelines because the house was flipped and price is more than 100% more than they paid before they fixed it up. They tell me this now? We already went though a 60 day contract and 5 day extension.NO ONE THOUGHT OF THIS SOONER? Closing is not happening Friday. I have been submitting forms since February and am at final review and now I have lost my mind.

Like any other business, some lending institutions simply do not have their act together. This is perfect example of abysmal loan processing/underwriting.

I'm really sorry your lender performed this poorly; it should not have happened. I'd be going out of my mind, too.

You must be livid.

StartingOver10 · ‎06-18-2015

Agree with Marlena. The flipping fules are well known by FHA lenders - sounds like someone dropped the ball. I hope you get an extension from your seller. Hopefully your seller has already provided the lender a list of improvements and the asssociated costs too - that is one of the requirements on a flip with over 100% markup over original price (could be a lender overlay, but I don't think so).

The short term waiver for flips less than 90 days ended Dec 2014. Your flip sounds like the current sellers have owned it between 91 and 180 days - that is when this 2nd appraisal requirment kicks in for the buyer. I will look for the guidelines for you

StartingOver10 · ‎06-18-2015

Didn't find the section in HUD.gov yet - but here is a good summary. This summary is supposed to be for the new guidelines in the new handbook starting Sept 2015 - but they are the same guidelines from the existing handbook These are a shortened, easier to read version.http://www.homebuyinginstitute.com/news/hud-issues-fha-flipping-rules-626/

Here is the HUD.gov version: http://www.ecfr.gov/cgi-bin/text-idx?rgn=div8&node=24:2.1.1.2.4.1.88.39

wendlan · ‎06-18-2015

thanks, I am just done, I am not calling anyone or asking progress, I am just done

StartingOver10 · ‎06-18-2015

@wendlan wrote:
thanks, I am just done, I am not calling anyone or asking progress, I am just done

I don't know if you can relax a bit with a beer, but this would be a good time to try one! I'm sorry you are having to go through this additional stress, but in the end, it really is worth it.

ezdriver · ‎06-18-2015

@wendlan wrote:
thanks, I am just done, I am not calling anyone or asking progress, I am just done

Who really loses if you walk away from the purchase transaction?

Anonymous · ‎06-18-2015

I hear you. I *still* haven't posted my horrible story about buying our house because it's too fresh, but one day I will get around to it. What was meant to be a quick 30 day close turned into a 62 day process for me. Crazy enough, my lender and agent were AWESOME. It was the sellers and their lies and shenanegans (flippers too) that caused all the delays. In fact, it ended with the sellers giving us a check for 15k as a penalty for the lies about work completed that never was. We also had to pay for an extention on our rate - more than once! In fact, we missed four closing dates and finally actually had the paperwork go through on the 5th date. And then it took another week to get our keys (so, I guess that makes it a 69 day process - thanks Cailfornia).

All of that said, I was so stressed and frustrated that I actually began to hate and resent the house. Everytime my husband would bring it up I would say "oh, you mean the hell hole I'm contractually obligated to or lose 20k to walk from?" and things like that. I mean, I also was so DONE. And when I say done, I mean DONE. I was feeling myself become angry and every muscle in my body was tense 24/7. I begrungingly signed the papers at the end and also spent all but 6 hours of 48 hours moving from one place to another (since we got the keys 2 days before we had to be out of the other place). I was even angry and frustrated on our first night there! Fast forward a month and now I am *so happy* I suffered through and stuck it out. We LOVE our house and the neighborhood and I'm finally back to remembering why we put the offer in to begin with. We have the 1926 house with all the charm, but 100% new on the inside.

I tell you all of the above because I know *exactly* how you feel. EXACTLY. Please reconsider and spend just a little more time on it, if it's at all possible. If I had walked away I would have regretted it so much. I know that now, but wouldn't have believed it when I was going through it. I'm here if you need someone to PM to.

Good luck, OP!

frugalQ · ‎06-18-2015

OP, I am sorry this is happening to you. You have to try and get past the frustrations and look at what you stand to gain when it's all done.

Like Classynfun, I too went through a horrendous loan process..and it took me a couple of weeks after we moved in to actually feel true excitement. there was so much tension in our home before we closed...it was horrible.

you just have to dig deep emotionally. Step away from the process for a day or so...find something to take your mind off of what's happening. wine (and things a little stronger) helped me through.

wendlan · ‎06-18-2015

Thanks for the encouragement, my husband had to take over for a bit, the second appraiser went out today and has 3 days to get his report in. My husband talked to the realtor and I am off today,went out for awhile and took a long nap. Our realtor has been great through all of this,we are extended another week. And I am not packing a damn thing!