FHA has recently clarified the Required Dates On FHA Amendatory Clause /Real Estate Certification Disclosure. Up until this clarification FHA Amendatory Clause Forms were signed by the Borrower(s) at the time of the Mortgage Applications. The form was then forwarded to the Borrower's Realtor for his or her signature, and then forwarded to the Listing Agent and Seller(s) to sign. This will not be the process going forward.
The new FHA Handbook 4000.1 states the Amendatory Clause Form must be executed and signed on or before the date of the Purchase & Sales (P&S). This means:
- One more document Realtors/Agents are going to have the Buyer(s) sign with the P&S, or
- Amened the P&S later with a new date, or
- The Loan Originator is going to have to commit fraud by having the Borrower(s) back date the FHA Amendatory Clause /Real Estate Certification Disclosure to the date the P&S was signed by the Borrower.
I would say option #3 will not be an option Loan Originators will be willing to do. So Realtors/Agents will need to make sure they have the Borrower & Seller sign this form at the time the Purchase and Sales Contract is executed.
I case anyone is not familiar with the FHA Amendatory Clause /Real Estate Certification Disclosure, it looks like the above form and contains two clauses both Buyers and Sellers have to sign.
1. FHA Amendatory Clause:
"It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise, unless the purchaser has been given in accordance with HUD/FHA or VA requirements, a written statement by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $ _____________. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value or the condition of the property. The purchaser should satisfy himself/herself that the price and condition of the property are acceptable."
2. Real Estate Certification:
"We, the borrower, seller, and the selling real estate agent or broker involved in the sales transaction certify by our signatures below that the terms and conditions of the sales contract are true to the best of our knowledge and belief, and that any other agreement entered into by any of these parties in connection with this real estate transaction is part of, or attached to, the sales agreement."
The Real Estate Certification in addition to being signed by the Buyers and Sellers, also needs to be signed by both the Listing and Selling Realtor/Agent.
Falsifying this form is a Federal Crime punishable by fine, imprisonment or both to knowingly make any false statements concerning any of the above facts as applicable under the provision of Title 18, United States Code, Section 1012 and 1014.
Realtors/Agents should request their Loan Originators to provide them with a blank FHA Amendatory Clause Form, so they can submit with every offer they make which will require FHA financing. For my Realtors I plan on both providing a blank FHA Amendatory Clause Form, as well as include one already filled with every FHA Pre-Qualification Letter I provide them with.
This new FHA clarification on the Required Dates On FHA Amendatory Clause /Real Estate Certification Disclosure is another example of how ridiculous some of the guideline in the Lending Industry are. I fail to understand the logic for requiring this form to be signed on or before the Sales & Purchase Contract is executed. The requirement should be for the FHA Amendatory Clause Disclosure to be signed at the time of the Mortgage Application, and leave the Required Dates On FHA Amendatory Clause /Real Estate Certification Disclosure as it has always been in the past.
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