While the FHA 203k loan program is a really good solution for many people seeking to repair their purchase or existing home. About one in a hundred is a major disaster. Sorry to admit that but they aren't all smooth as silk. The good thing is that if you start off with a nightmare 203k then you have 99 more to look forward to that will go very smoothly so don't' despair.
We are having an issue with a client right now that had us do a write up about four months ago, we finished our work and turned it in to the lender. Yikes they agent was in the process of changing companies and failed to turn the loan in timely. After 45-60 days it was admitted that he had not performed and another lender took over the file and we retyped the paperwork with the new lender's name. Their 45-60 days came and went... oops
The borrower is apparently well healed and has the money to just do the repairs on their own and that is now the game plan. They have asked for a refund. While we all feel for their position our fee has been earned.
Some people choose to not hear what you are saying. When a 203k consultation is performed it is to create the necessary paperwork for the lender to add to their 203b paperwork so the loan can close. If, during that preparation process, the borrower cancels the project, we, as I'm sure all would, would provide a partial refund if we had not finished and turned in our work product. However this isn't the case in this instance.
Once our product is "bank ready" and turned in, it is a finished product and our lender can make the loan. That means that our fee has been earned upon turning in that report and there is no refund.
Having said that there are two parts to our fees for 203k loans, this is just the first part. In the case the loan actually closes there are the draw inspection fees. Those are only paid out if we do a draw inspection and in this case hadn't and won't be happening so those fees have not yet been earned or billed. Hope this clears up any confusion for anyone else in the process.
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