It seems everybody in the marketplace was happy to hear that FHA has waived it's 90 day waiting period for the resale of properties. They did didn't they?
Well they did grant a waiver if you meet certain conditions, what did you expect.
First and foremost;
It must be an ARMS length transaction, with no identity of interest between the buyer and the seller.
Also, it must satisfy the
20% Rule
The 20% rule essentially says that if the new sales price exceeds the seller's acquisition cost by over 20 % the lender must satisfy certain conditions.
Either;
the lender has supporting documentation and/or a second appraisal which substantiates that the seller has done work which justifies the increase or the appraiser supplies a satisfactory explanation for the increase in value.
You didn't think this would be easy did you?
Or:
the lender orders a property inspection and provides it to the buyer before closing.
five items MUST be covered. The following is directly from the reg.
i the property structure including the foundation, ceiling, walls and roof
ii the exterior including sliding doors, windows, appurtenant structures such as decks and balconies, walkaways, and driveways
iii the roofing, plumbing systems, electrical systems,heating and air conditioning systems
iv all interiors
v all insulation and ventilation systems, as well as fireplaces and solid fuel burning appliances
Now here comes the fun part. I don't see where the reg specifically states that the inspection must be satisfactory to the buyer and/or the lender, only that it must be provided. Someone correct me here if I've read this wrong.
Underwriters are not used to seeing home inspection reports, which often have a negative flavor to them. I wonder how the lenders and investors will react to these documents.
What a wonderful opportunity for some layering here, don't you think.
For those not familar with the term layering, it essentially means that the lender/investors will add their own guidelines on top of the FHA regs, so there's a lot of room here for interpretation and inconsistency. We truly won't know the total effect of the home inspection till we actually see how underwriters deal with them and how far they will go in accepting a mediocre inspection.
Well we all, or most of us, wanted to see this change, and there is that old adage, "be careful what you wish for."
The FHA waived the requirement but it sure did come with some interesting conditions.
This is going to be fun, isn't it?
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