Lately, it's been puzzling and stressful in getting loans processed, especially for properties that are considered fixers.
Here's what's confusing to me: supposedly, both loans are approved, but there are conditions per the underwriters.
"HOLD BACK "ON Property 1 is in bad shape, with cracked plaster, peeling paint and wallpaper, and a part of the house that slopes slightly. The appraiser valued it at $10K less than accepted offer price, but we managed to get the seller to agree to the price reduction.
Then the underwriter wanted to hold back $50k in escrow while some repairs are done that include getting the foundation repaired to cure the slope. Fortunately, we have a buyer and a seller who are cooperative.
The buyer even offered to pay interest on the monies held back until the repairs are complete and the rest of the funds transferred to the Seller.
HEALTH AND SAFETY ISSUES ON Property 2 is in worse shape than the first. The appraiser flagged the badly water-damaged ceiling and wall in one bedroom, and also an add-on structure that is in severe disrepair. The underwriter rejected the loan because in his words, "There are obvious health and safety issues and the home could not be considered habitable. The cost and time involved to cure the issues would be prohibitive. So, I have to decline this loan at this time."
The buyer and the seller are working out a plan by having the seller credit the buyer, while the buyer performs the needed repairs. During this time, the Seller will sign a Notice of Non-Responsibiity towards the repairs, etc. that are done before the close of escrow.
Are there any special tips or strategies to get loans approved for fixers?
Who else has run into similar challenges, and what kinds of solutions were offered to overcome the underwriter's objections and reverse the decision to decline the loans?
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