Homesteps property not accepting FHA loans????

Question

I just saw a Homesteps property I would like to purchase and was surprissed by the listing agent informing me that the seller, Freddie Mack, will only entertain cash and conventional loans. I was hoping to buy via a a 203k and owner occupy. Do you think I am being jerked around so that the 15 day period could end and then the listing agent can get an investor in? What recourse do I have if any?

J Scott · Answer

Did you ask WHY you can't use FHA financing for this particular property?  Perhaps it's in very bad shape, and the seller doesn't want to allow 203k financing.  I can't figure out any other reason, but it's worth asking...

Jon Holdman · Answer

I suspect Jason's right about the condition.  FHA has very strict inspection guidelines and if anything is wrong at all, they won't approve the loan.  Honestly, if you're going to use an FHA loan (unless its the FHA rehab loan), you should not be looking at REO properties.  They're unlikely to pass the inspection and banks won't agree to any fixup.  You need to be looking at houses that have already been rehabbed.

Michael S. · Answer

I was intending on using a 203k. I wentto view the property and found that all it needed was appliances. The 203k would have gotten me into the property with out the madatory 20%. Asking price is 350k, last sale in 2004 was 614k. I just thought it  was bizzare that that they would acept a conventional loan but not a 203k.

Bill Gulley · Answer

Yep, ifit won't pass VA and FHA and you know that, why waste your time and that of prospective buyers (not to mention their money for the loan process)? If I don't thinkit will pass muster, It is listed as cash and conventional or seller financing, and I have the agent make a  note in the listing.

Victor Alfonso · Answer

I agree with the fact that it's probably due to the condition, although I wouldn't completely rule-out FHA for REOs (I closed on a property owned by Freddie Mac with an FHA loan in Feb in a competitive market).  The walls needed a bit of patch work and the garbage disposal needed to be replaced, but that was about it. Certain things are needed for it to be in a livable condition, and the realtor probably assumes that it won't qualify.

Homesteps property not accepting FHA loans????

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