Thursday, February 23, 2012

FHA Loans: A Warning And Reminder On Short Sale Purchases

Robyn Seymour - Short Sales Specialist
In an FHA deal, the seller must agree that the buyer will not be obligated to close and will not lose their deposit unless the property appraises at purchase price.   In other words, regardless of what contingencies exist in the RPA, and whether they have been removed, the buyer does not have to close escrow if the property doesn’t appraise.  The FHA gives the buyer a second appraisal contingency that lasts until closing. 

Next, the FHA will not insure a loan unless any items or systems identified by them are repaired.  Of course, the RPA specifically says that the seller doesn’t have to pay for those repairs.   However, if they are not made, then the buyer has a right to get out of the deal.  Further, unlike normal repairs, the buyer cannot waive them.  The FHA will not insure the loan unless the identified items are fixed.

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