Short Sale Lender Asking for $3000 Buyer Contribution

Help Needed:

 

My fiancée and I put an offer in on a (FHA approved) short sale property in Southern California very recently and received a quick response from the listing agent and then a very quick response from the bank. Here's part of the email out agent sent us:

 

"Good news. Agent received very quick response to your offer from lender.

Lender is requiring a $3,000 cash contribution to be paid at close of escrow by cashier's check.

They are basically looking for more cash in addition to your 3.5% down payment.

Agent recommended changing purchase price to 189k(including 2,000 of your costs) with 3.5% down and writing addendum for $3,000 cash contribution. This way you are still paying 192k and lender gets their $3,000 cash contribution."

 

I don't know why, but this strikes me as fishy, maybe it's because our extra $3K wouldn't go to our principle, for all I know it'd be palmed by the listing agent.

 

Any helpful tips/insights would be great.

 

Thanks!

 

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Replies to This Discussion

Permalink Reply by Bryant Tutas on January 5, 2011 at 1:10am
Interesting. The cash contribution is usually something the lender wants from the seller. The seller may just be wanting to pass the contribution through to you. Do you have an agent? If so they need to ask for a complete copy of the request from the lender. There's nothing wrong with you making the contribution you just need to be clear on what the request really is.
Permalink Reply by Jeff Payne on January 5, 2011 at 7:04am
Have you asked for the FHA approval letter?  That would clear things up.
Permalink Reply by Jason Samarin on January 5, 2011 at 7:25am

I was researching a bit and did notice the lender asking for a Seller Contribution, but I hadn't seen anything that asked for a buyer contribution, so I thought it was weird too.

Yes, we are FHA approved...

Thanks for the help, I'll be sure to ask our agent for a copy of the request from the lender, hopefully that will clear things up.

Permalink Reply by Jason Samarin on January 5, 2011 at 1:26pm

After going around a bit with our lender and Realtor here's the bottom line:

 

"FHA will not allow a $3,000 cash contribution to be paid by the borrower.  It is not allowed by ANY lender under any circumstances using FHA financing."


Permalink Reply by Thom Colby CA Brkr 888-391-5245 on January 9, 2011 at 7:39pm
I suspect the lender wants $3,000 from the seller, but since the seller has no money they are asking you to bring it.  As others have said, it is unlikley you can contribute with FHA financing (but I am not a lender) Whatever the decision, make sure EVERYTHING is on the HUD.

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