In Desperate Need of Advice

[RSW]

health and saftey of occupants (sanitary/safety)
structural soundness of improvements
items that may impair the customary use and enjoyment of the proerty

I would reply but I don't want to hijack this thread. This is a topic for another thread.

 

[missthang]

*Update*~~~~The appraisal came back fine....we close on wednesday....Thanks to everyone for their input!

 

[tfd52]

I have a similar situation as the OP (missthang).

I am located in the Mid-Atlantic (Baltimore-Washington area) and I have located a REO property that has been vandalized, according to the listing agent, by the evicted previous owner. The kitchen has no cabinets, no counter-tops, no appliances and 85% of the electric fixtures throughout the house have been removed. Most of the plumbing fixtures in the master bathroom are gone. The back yard is severely overgrown and there is a pool which has been standing unmaintained since Novermber 2007.

I've gotten a repair estimate from a general contractor in the range of $75,000.

My questions are:

1. Should I hire my own appraisal rather than relying the lender's appraisal? Is there any advantage ?

2. The lender, who also now ownes the property, would prefer that I go with a conventional mortgage, with the repair amount held in escrow. As a buyer, of an "as-is" property, is it inheritantly safer to go with FHA financing? Is the appraisal and u/w process more strict with FHA?

3. Typically how long will conventional lenders allow for repairs to be made? What happens if you don't meet their deadline?

 

[timd354]

I have a similar situation as the OP (missthang).

I am located in the Mid-Atlantic (Baltimore-Washington area) and I have located a REO property that has been vandalized, according to the listing agent, by the evicted previous owner. The kitchen has no cabinets, no counter-tops, no appliances and 85% of the electric fixtures throughout the house have been removed. Most of the plumbing fixtures in the master bathroom are gone. The back yard is severely overgrown and there is a pool which has been standing unmaintained since Novermber 2007.

I've gotten a repair estimate from a general contractor in the range of $75,000.

My questions are:

1. Should I hire my own appraisal rather than relying the lender's appraisal? Is there any advantage ?
Let me ask you one question....do you think that an appraiser hired and paid by the lender is going is more or less likely to give an honest opinion of value than an appraiser who is hired by you? Keep in mind, the lender does not make money on a deal unless it closes and many lenders pressure their appraisers to make delas work.

2. The lender, who also now ownes the property, would prefer that I go with a conventional mortgage, with the repair amount held in escrow. As a buyer, of an "as-is" property, is it inheritantly safer to go with FHA financing? Is the appraisal and u/w process more strict with FHA?
The lender who owns the property knows that this property, with the needed repairs, is not eligible for a typical FHA loan.

3. Typically how long will conventional lenders allow for repairs to be made? What happens if you don't meet their deadline?

The answers to these questions depend on the terms or the mortgage and the note you sign with the lender......one thing is for certain, though, if you don't meet the deadline, you are likely in default of the terms of the mortgage and the note and the lender can foreclose on the property.

However, there is very little chance that a property in this condition (needing $75,000 worth of repairs) will qualify for a typical FHA or conventional mortgage without fraud being involved. No lender that I know of is going to legitimately allow a $75,000 repair escrow. This property likely would qualify for the FHA 203(K) rehab program and may qualify for some purchase/rehab loans offered by some convietional lenders. In my opinion, you need to find a new lender who will give you honest answers about the FHA 203(k) progam and any other available programs for this situation. Many lenders don't do FHA 203(k) loans or other rehab loans, so will have to look around until you find one that does.

 

[tfd52]

Dear Tim,

Thank you for your reply.

From your responses, it appears that I should hire my own appraiser. How much should I expect to pay for this property? What's reasonable?

You state that the lender knows that the property, with all of it's problems, will not be eligibile for a typical FHA loan. Could you explain that further? The lender has offer a purchase/rehab loan, but your response to Question #3 has me worried. Knowing that often construction deadlines are, in fact, missed, where does this leave someone who is dependent upon contractors?

You state that a property needing $75,000 will not qualify for typical FHA or conventional financing without fraud being involved. Could you explain that further? Fraud on whose part?

I have brought up th possibility of a FHA 203(k) loan, but the lender appears to be reluctant to go down this avenue.

Finally, I have the ability to self-finance the purchase by activating lines-of-credit, but I'm loathesome to take this approach. Do you have any advice in this regard?

Thanks in advance for all of your advice.

 

[Lost Cause]

I have a similar situation as the OP (missthang).
My questions are:

1. Should I hire my own appraisal rather than relying the lender's appraisal? Is there any advantage ?

2. The lender, who also now ownes the property, would prefer that I go with a conventional mortgage, with the repair amount held in escrow. As a buyer, of an "as-is" property, is it inheritantly safer to go with FHA financing? Is the appraisal and u/w process more strict with FHA?

3. Typically how long will conventional lenders allow for repairs to be made? What happens if you don't meet their deadline?

tfd:
On question number one: It's generally a good idea for homebuyers to order their own appraisals. You should know, however, that banking regulations require the lender to obtain an independent appraisal. The regs are specific to the point that they also prohibit a "borrower-selected appraiser". This means that a lender will not be able to use any appraisal (or appraiser) that you hired in connection with their mortgage loan.

Good luck with your purchase!