FHA STREAMLINE 203K LOAN CLOSING

THE POPE OF REALTY!

Just closed on an FHA 203K streamline loan.  I had the listing side.  This requires a lot of patience.  First,

 it helps to make sure thast there is a 100% good match between buyer and seller.  If the seller is expecting the buyer to get through the red tape and extra steps now required for this type of loan in a hurry, well better that they do not go this way.  In our case we had a converted cottage that was functioning as a year round home.  At inspection the septic was noted to be in failed.  So an older septic design from 10 years prior was reworked and submitted and bounced back a couple of times from the State of NH until it got acceptance.  In the meantime the buyers were getting an FHA appriaser certifed in 203K appraisals to give recommendations as to what the house needed to be FHA compliant, that is, to bring the house into better condition to make it worthy of a loan (i.e. to cover the lender’s fanny).  Items were: 01)New roof- because the roof did not clearly have 2 or more years in it from the advisor’s perspective even though the roof had never leaked and the shingles wre flat (not upturned).  02) New septic – a dug well which had been servicing the property with nice clean fresh water for decades was deemed in adequate- FHA has a probem with dug wells apparently 03) new septic- OK we agree with that 04) pea stone and dig out dirt under the house (which was on piers) to creat an 18 inch clearance all around and where not possible then to lay pea stone over a moisture barrier.  All of this came to just over $30,000 and second estimates had to be obtained as bids.  Then approvals of every nature imaginable had to be obtained.  A 1991 credit report item came up for a lien on the buyer for a bill that had already been paid.  Amazingly, the buyer retained a copy of the check.  The State which the credit report pointed to had nothing in their database.  On and on it went, 3 postponements of the closing…the point is that the marriage of buyer and seller is CRITICAL for success.  The ability of underwriting departments to go over and over the same items, to ask for documents to be resubmitted three times…  I am left exhausted.  But I have a very satisfied client that will give me referrals for the pain I endured.  My belief is that the pendulum has swung too far in lending regulation.  I am not suggesting back to the old days, but I am thinking that some of the regulations are absurd and not particularly helpful.

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