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Loan underwriting requrements ~ Does any body know the rules?

We have a home in escrow, it is a bank owned home, in pretty good condition but requires some small items. The buyer purchased the home with a Conventional loan through Countrywide (to become Bank of America home loans tomorrow), the loan goes through underwriting and comes back with a list of required repairs in order to be underwritten. The repairs were minor, replace socket covers, exposed wiring where ceiling fans have been removed, missing dishwasher to be replaced and so on, when i spoke to the LO about it he said that CW was now underwriting CONVENTIONAL loans using FHA guidelines.

Has anybody else heard of this?, is it becoming commonplace or was my deal the lucky one

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Posted by Andrew Monaghan CRS, GRI, EPro Associate Broker on 04/26/2009 11:13 AM

Comments (3)

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3 Comments on Loan underwriting requrements ~ Does any body know the rules?

APR

No, but I think it's a good idea for the banks to start paying attention to the condition of their properties.

Seems as if the guidlines continue to change almost daily.. It is hard to keep up.

APR

Not sure about what CW/BofA is doing, but conventional loans are not being underwritten using FHA guidelines. FHA rules have always been a little more strict in regards to the condition of the home, for example, the appraiser has to check that the oven works, which wouldn't be done in a conventional appraisal. With all these short sales and bank owned properties the old FHA 203k rehabilitation loans are becoming popular again. They allow the buyer to essentially do an escrow holdback for the improvements, up to $50K for the streamline version which is easier and doesn't require design plans, etc. Above $50K just falls under the regular 203k. The 203k also allows those do-it-yourselfers to complete some of the repairs themselves if they are licensed contractors.

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