I've probably sold my last home on an FHA 203K Streamline loan. They seemed pretty cool, and last year I sold 3 homes with them.
But yesterday's call changed all that. "Sally, I haven't been paid on the second half yet", said the contractor. "9,350 bucks worth".
We had been told the last draw, which is half of the contractor's bid, would take about 4 months from the completion, so had not worried. The bill had been submitted to the client, and they had their final inspection with B of A. It had only been 9 weeks.
I called B of A just to check. "Hmmm. You'll have to talk to the homeowner. We closed out this loan, and the money has been applied to their principal reduction. You'll have to get it from the homeowner."
"WWHHHAAAAATTTTTTT!!!!! They don't have any money! If they did, they wouldn't have needed your frikken loan!!!" I think I threw in some four letter words, as well. 3 to be exact.
Seems like after the final inspection by B of A, the homeowner needed to submit the final bill and a statement of completion to the bank. They didn't do it. So the bank waited 30 days, then gave the homeowner back the money in a principal reduction. Never told the contractor.
Since the contractor is out of the loop, there is no way in Hell he could have protected himself. B of A didn't notify him he wouldn't get paid, either.
How can they screw the contractor like that? I am seeing fireworks over this. I've called the originated lender, and they said they will get it straightened out, but this just happened Friday at 3:30. So far, no word. I'll give it til Monday, then all Hell will break loose. I'm prepping the Kraken right now.
I'll update you as this progresses.
Have you had this happen?