Need Assistance with FHA vs USDA Loan - Selling 2nd Flip

Need Assistance with FHA vs USDA Loan - Selling 2nd Flip

Myrtle Beach, SC · Member since 2014 · 12 posts · 0 votes

Calling all loan officers:

I am not sure if anybody can assist me, but I am going to take a shot. We completed our 2nd flip in March and received a full price offer within 5 days. Originally, the buyer was doing a VA loan, but the day after the loan was supposed to close, we were told she did not fit VA guidelines (The reason was not given but we were told it had nothing to do with her credit.) Her loan officer then changed it to an FHA loan and we signed a 30 day extension. I immediately asked if 2 appraisals would be required because the contract was signed in less then 180 days and we are selling it for more then 100% profit. We were told only 1 was going to be required. We were supposed to close tomorrow and now we are being told a 2nd appraisal is required. The loan officer now wants us to sign a new contract on Tuesday because the 180 days is up. In this case, she said a new FHA case number will be assigned. My questions are: 1) Does this make sense that a new case number will be assigned? My understanding is the case number follows the property. 2) Couldn't the lender still require a 2nd appraisal since they can obviously see what the loan officer is trying to do? (It is taking 3 - 4 weeks to get appraisals in Fayetteville NC right now. 3) Can the same appraisal be used with a new FHA case number? 4) If they change to a USDA loan, can the appraisal be used and if so, how long is USDA taking right now to review their loans? This has been a nightmare and we really do not want to relist the property since we are so far into the game, but may need to wash our hands of the deal and take our chances with a new buyer \ contract. Obviously, we want and need to close asap. Any suggestions?????? Thank you in advance for your assistance.
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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
10y

@Account Closed -

You can call BS and escalate to management all you want, it's not going to trump FHA guidelines that this loan officer did not know particularly well.

@Everyone and the lurkers -

For your flips, save your selves a headache and only accept FHA/VA/USDA offers if the loan officer you speak to gives you absolute confidence that she or he knows their FHA/VA/USDA stuff well. If you don't have that confidence, take the lower offer that is conventional and at least 5% down. After you're done paying your hard money interest rate, and missing out on other opportunities because your capital is tied up in this property you wanted to have sold 2 months ago, the 'lower' offer could very well net you more money by keeping you out of the situation Melinda is in.

Melinda actually did the right thing by making the loan officer aware of everything up front. I've got a deal right now with a seller super motivated by speed, by contrast, that hid things from me and it wasted three weeks. As soon as it became obvious that she knew more about flipping and the accompanying rules than the loan officer, that was the time to back out or at least get a commitment from the LO to triple check guidelines and get back to her before signing the contract.

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  • Investor · Upstate NY · Member since 2015 · 29 posts · 10 votes
    10y

    @Account Closed

    Which person specifically said that only one appraisal was required?  If it is the loan officer, I'd recommend calling bullshyt on her since she is the one who said the first one is okay.  

    As the seller, you can definitely throw a contingency to the buyer that if they don't get their documents squared away by ##/## date, you are going with the next best offer.  You'd be surprised how quickly folks comply once they have a deadline set in front of them.  

  • Myrtle Beach, SC · Member since 2014 · 12 posts · 0 votes
    10y

    @Christine Wong  Thank you for responding.

    It was the loan officer who said we did not need 2 appraisals.  The buyer has complied and been ready to close for over 30 days.  It is the loan officer who does not know her A#$ from a hole in the ground.  This is why I am not sure what to do.

    Can I write a new contract stating I will let the buyer proceed to ##/## date, but if we are not closing, then I can accept another offer and put the property back on the market now?  This way, whatever happens, I am able to see what other offers come in?  This is only my 2nd flip, so learning the real estate\contract side of things.

  • Investor · Upstate NY · Member since 2015 · 29 posts · 10 votes
    10y

    I recommend responding to the loan officer through the email where she wrote that 2 appraisals would not be needed.  That is her responsibility to own what she said to you.  If she gives you push-back, escalate to a manager.  

    We had to escalate our first loan officer who was NOT working well for us.  We're now one week in with a new loan officer (with the same company), and days away from receiving our closing date.  Yet it took 1+ month to schedule and complete an appraisal with the first one.  Having the right person really helps.

    Are you doing this through a broker by chance?  Our broker has been handling the communications on our behalf.  What was the latest expiration on the contract?  

    It doesn't sound like the buyer is the one giving the issues, but rather, the lender.  I'd recommend performing the escalation to the loan officer's manager, ask for someone who knows what they're doing, and see where that takes you.  

    Feel free to PM me, happy to keep going through this with you. 

  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    @Account Closed -

    You can call BS and escalate to management all you want, it's not going to trump FHA guidelines that this loan officer did not know particularly well.

    @Everyone and the lurkers -

    For your flips, save your selves a headache and only accept FHA/VA/USDA offers if the loan officer you speak to gives you absolute confidence that she or he knows their FHA/VA/USDA stuff well. If you don't have that confidence, take the lower offer that is conventional and at least 5% down. After you're done paying your hard money interest rate, and missing out on other opportunities because your capital is tied up in this property you wanted to have sold 2 months ago, the 'lower' offer could very well net you more money by keeping you out of the situation Melinda is in.

    Melinda actually did the right thing by making the loan officer aware of everything up front. I've got a deal right now with a seller super motivated by speed, by contrast, that hid things from me and it wasted three weeks. As soon as it became obvious that she knew more about flipping and the accompanying rules than the loan officer, that was the time to back out or at least get a commitment from the LO to triple check guidelines and get back to her before signing the contract.

  • Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    10y

    @melinda brennan

    I would also add that you might be able to add per diem rate per day.  This will really speed up the process if the buyer is getting charged 10, 15 or whatever per day.

  • Myrtle Beach, SC · Member since 2014 · 12 posts · 0 votes
    10y
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Account Closed:

    @Chris Mason    The loan company not only has offered to pay for the 2nd appraisal but also the additional money to Rush the process.  

    @Shaun Weekes

     We're actually required to eat the cost of the 2nd appraisal in these situations. :P

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