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The seller has an FHA loan. Why do you care?

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Real Estate Agent with Movoto DRE #01485322

The seller has an FHA loan.  Why do you care?

 

Recently, I listed an Aliso Viejo condo.  The seller had FHA financing.  As the listing agent, why would I care that the seller has an FHA loan on the property?  

 

There was an FHA rule in place at the time of the loan that when the property sells, the seller must pay the full month interest payment no matter what day of the month escrow closes.  In the case of my nice condo seller, the interest payment amounted to $805.91.  

 

We received an offer on the property.  A seller counter offer was written with a provision that should escrow close after the last day of the month and the delay is not the fault of the seller, the buyer agrees that the buyer shall pay the interest charge for the month.  

 

The lender said they'd easily close on time and likely close a couple of days early.  Easy, right?  Well....the lender didn't meet the timeline.  The good news was that the seller wasn't stuck paying an extra month of interest.

 

Anticipating issues that may arise is important and in this case, it saved the seller from taking an $805.91 hit.

 

 

JILL MURTY, Realtor | 949.355.5321

Contact me today to assist with your real estate needs.

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Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Thank you for sharing this interesting news on sellers FHA loan. It is certainly something to stay aware of   here in Sunny Scottsdale, Arizona

Jun 01, 2015 07:26 AM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Jeffrey Masich - I think the rule has recently been removed, but it's good to check with sellers who obtained an FHA loan while the rule was in place, as the interest would still be owed.

Have a great day in sunny Scottsdale, AZ!

Jun 01, 2015 07:31 AM
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

NIce work on saving your sellers money. I bet they sure appreciated your knowledge. 

Jun 01, 2015 08:19 AM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Thanks Debbie Laity.  Yeah, the seller was pretty happy.

Jun 01, 2015 08:24 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Great job of looking out for your Seller Jill Murty, Realtor - Serving Orange County, CA .

Jun 01, 2015 09:52 AM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

You always do a great job Jill Murty, Realtor - Serving Orange County, CA representing your clients ...I know they are very happy to have you!

Jun 01, 2015 09:58 AM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Thanks much Bob "RealMan" Timm!

Rob Thomas - Thanks.  I appreciate it and I hope so.

Jun 01, 2015 10:04 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Your counter offer, added a measure of protection for your seller, and saved hundreds of dollars for them.

Jun 01, 2015 10:36 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I thought that FHA rule was long gone.  At least that's what a local lender here told me when I was stressing about it.

Jun 01, 2015 11:16 AM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Thanks Myrl Jeffcoat - The seller seemed happy.

Chris Ann Cleland - I think the rule is gone, but if the loan was obtained during the time the rule was effect, the interest for the month would be owed.  I'd double check with the lender.  The seller in this case refinanced his FHA loan in 2010.  His original loan was in 2008.

Jun 01, 2015 11:33 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Oh....I see the distinction.  That stinks.

Jun 01, 2015 11:39 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

Yikes, smart agent who saved their agent a grand!  We don't have many FHA loans in my market because homes are not primary for most of our buyers or sellers.

Jun 01, 2015 12:59 PM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Chris Ann Cleland - Yeah, it's stinky.  Better to ask and be safe than sorry.

Thanks Tammy Lankford! 

Jun 02, 2015 06:02 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

You saw the situation very well, this racket has been going on for a long time and the public keeps getting ripped off. Great job with your client.

Jun 02, 2015 10:03 AM
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Interesting story Jill. I learned something. I have dealt with FHA a few times but learned something from you today.

Jun 02, 2015 10:36 AM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Thanks Joe Petrowsky.  A racket for sure!  A full month of interest was still paid, but at least not by the seller.

Noah Seidenberg - It's neat that this is a place where we can learn from each other.

Jun 02, 2015 02:03 PM
Sussie Sutton
David Tracy Real Estate - Houston, TX
David Tracy Real Estate for Buyers & Sellers

WOW! I mostly do new construction and have done FHA re-sales and have not run into this ruling... I will be sure to remember it. I love Active Rain you can always learn something new on this site.

Jun 07, 2015 08:52 PM
Jill Murty, Realtor - Orange County, CA
Movoto - Laguna Niguel, CA

Sussie Sutton - The full month of interest is owed  depending on when the seller obtained the loan.  

Maybe a lender will weigh in and tell us the timeframes in which this rule was in place.

Jun 08, 2015 01:12 AM
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  • Laguna Niguel, CA
  • Orange County, CA
  • Mission Viejo, CA
  • Laguna Hills, CA
  • Aliso Viejo, CA
  • Capistrano Beach, CA
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