I did an agreement of sale for a shortsale that is backed by bank of america. The sellers have a FHA loan. State is PA.
We put down $12,000 for seller assist. This is $12,000 more then the asking price. The sellers would then turn over that money to me and I would use that to pay the closing costs.
The sellers realtor is claiming the bank won't accept this because of some language that they received on a fax cover sheet.
"bank of america can not pay any buyers cost and contributions to gift programs per FHA guidelines"
What exactly does this mean?
Sellers assist they are not paying any of my costs. I have spoke to HUD FHA and B of A and even though they can't give you information both agreed that 6% should be fine as I'm the buyer with a conventional loan.
I requested proof of this documentation but it was as if I was talking in greek. Still waiting for the proof.
Any ideas? Please HELP!
You raised the price by 12K and are going to give 12 K back to the buyer? FHA will allow 1% IF the buyers are using FHA financing. How do you plan to get the house to appraise for the extra 12K?
BTW if your closing costs are 12K you need to find a new lender fast
Thanks everyone. Which I had a copy of these guidelines.
I am getting a conventional loan with 0 points.
The taxes are $5,600/year.
I dont understand why its any of FHA's business what kind of loan I have. An FHA loan would increase my payment almost $300/month. That is useless to me. FHA is a joke.
Can anyone provide the link to the FHA Shortsale guidelines 2013 ? I can't find this anywhere. thanks
Ron good point, I see agents try this often and it does not work. Raise the sales price by x amount and ask for that amount back in closing costs? in this case why in the world would the bank sell for 12K less or on the other hand how will this property appraise for 12K more?
Once you review the FHA short sale guidelines that were provided by Brian, I suggest you forward them to the listing agent and your agent. Those guidelines are the "law of the land" on FHA short sales and they clearly state how the process works. It appears the listing and buyer agents are not aware of the guidelines or they would not have allowed the contract to proceed as written. FHA short sales have a definitive process that has to be followed. If possible, rewrite your contract in compliance with FHA rules and resubmit everything asap. If the guidelines do not work for your particular situation, void your contract and move on. By that I mean, if you cannot close the deal without the closing costs you need....move on.
Also, have your agent confirm if the property is a pre-approved FHA short sale. If so, FHA has already stated in writing the conditions and price they will accept and they will not deviate from that pre-approval.
One more thing worth noting for potential buyers. If a buyer IS using FHA financing on an FHA short sale, understand FHA has already conducted an FHA appraisal on the subject property. Upon completion of the appraisal, they instruct the listing agent to list the property at that price. Therefore, you cannot add your closing costs on top of the sales price because doing so will EXCEED the appraisal that is on the home. Make sense?
I have gotten FHA short sales approved with seller paying 3% of the closing costs for the buyer every time that I have had to ask for it, which has been a lot of times. Yes, the guidelines are 1%, but they send it in for a variance which takes a week or two extra, and then it is approved. The deal does have to net the bank the amount that they require and of course as some of the others have stated, your appraisal will have to come in for that higher amount.
lender almost always approve reasonable and customary closing cost credits, usually up to 3%. In FHA cases, it's limited to 1%, and only to a buyer who is financed through FHA.