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Mortgage Question

3K views 16 replies 7 participants last post by  Boatfloating 
#1 ·
Signed docs Monday, After signing I reviewed the copies and there is a pre-funding condition that cannot be met which pretty much makes the signing pointless. The condition is to finish and get a final on a 2nd garage on the property that is 75% Complete. This was not pointed out to me prior to signing and found on my own. Come to find out the broker had been working since friday to have it removed but the Lender sent out docs anyway and nobody notified us.
Ive been told by the escrow company We are not liable for any costs other than what we have already paid which is just the appraisal.
I have until tomorrow to cancel . The broker is still trying to get the condition removed.
If I cancel, Am I liable for any costs?
If I do not cancel, Am I liable for any costs if they do not remove and cannot fund due to the fact That I cannot finsih and get a final. Also Sounds like if I don't cancel, I run the risk of them dragging this out for weeks while they are negotiating only to tell me that They aren't going to fund.
Is there any consumer right information regarding unreasonable conditions and rights in general that shows liability for the borrower.
Thanks
 
#2 ·
Location, location, location.

What state are you in, laws vary from state to state?
 
#4 ·
Purchase, or refi? If its a refi, there are not many banks that are going to lend on a property that has an unpermitted structure. That would be the risk you assumed when building it. If its a purchase, the bank can have it demo'd, and its pretty cheap. We have done this several times for unpermitted structures. Look to see what it would take to permit it. If the bones are done correctly, you may be able to permit it fairly easily. Especially if it is detached.
 
#5 · (Edited)
Guess I left that out. It has an open permit currently. Its about 75% complete but the last 25% is the most cost. Has A permitted Bathroom which causes it to be looked at as a living area. In process since 2003 and have had 3 refi's since then. Been in the home since 95. And it is detached in a Horse Keeping Area.
 
#6 · (Edited)
Sounds as though your lender should have done an FHA 203k loan as a refi. This type of a loan enables you to refi the current home and provide you with up to 20% above the appraised value for finishing your structure. Bids would have to be submitted with the loan package by contractors to show the work would and could be done to local laws within the 20%.

Escrow was correct, you are only liable for the amount of the appraisal, but I'm sure this will come in handy if you choose to a remodel/refi loan within the next 2 months.
 
#7 ·
Regulators have caused lenders to clamp down on appraisal cost to cure's. Lenders used to be able to sweep the incomplete work under the rug but that has since changed (for the better in my opinion). You will not be liable for any additional costs other than the appraisal you already paid for. If you let the lender know this information up front I would be pretty upset with them as they should know better than to proceed on a property that hasn't technically been completed/remodeled. (My perspective as a broker/lender). You will most likely not be getting past the appraisal condition as the lender will not release funds until the property is completed.
 
#8 ·
Your loan is not going to fund..... End of story.

The broker is not going to get the lender to remove the condition on a conforming loan. You can get a 203K loan as mentioned. If the loan is anything other than that program it ain't going to work.

My resume: Been in lending for 13 years.
 
#9 · (Edited)
The appraiser added building as a plus. He mentioned that it was 75% complete so that he could come up with a value. Its just an additional garage with a bathroom, 200ft from the house. They have had the appraisel since Oct 13. They let a lock expire Oct. 24 becuase they couldn't get my 2010 1040 transcripts, Had my paper file but refused to get the 2009. Relocked on Nov.1. They knew at the very latest Friday but drew the docs anyway.
From the appraisel:

It should be noted that there is a permitted detached garage and accessory unit (city of Los​
Angeles permit # XXX) at the rear of the subject property (see sketch and photos). At the time of the inspection, the accessory unit portion of the addition was only 75% complete. No health or safety concerns were noted at the time of theinspection. No additional value is given to the accessory unit portion of the addition nor does it appear to have a negative effect on the subjects marketability


Appreciate all the comments.. But would rather not start over
 
#10 ·
203k. You will have a slightly higher rate, but it can be done.

The reason the condition was not seen at the time the appraisal was sent in, is because most of the lenders now days want all the PTD conditions in before sending the file to an underwriter to be signed off. That way they can run a tighter payroll and not have the same file coming to the underwriter 30 times for single conditions.
 
#11 ·
Thanks, here I thought I was fortunate to be able to get a loan. I don't need it that bad and will find somebody that wants to fund a conventional loan. I have a new roof but they didn't notice that I never got the final there either, Guess I should get that. You would think with all the time invested and the fact that it does not affect the marketabilty of the property one bit, They would ignore. Woudnt the 203k require that the work be complete at some time after escrow. I am not looking to get a final on that building in the near future.
 
#13 ·
Yes, the 203k would require that the work be completed in the near future, but I don't know if I would consider that to be a bad thing as once completed it would make your property more valueable. The 203k loan is a very structured loan and would entail releases as work progresses of the additional funds to you at the time work has been completed on the addition. I'd have to check on the rates of 203k's presently, but assume you would be under the 5% mark at present time.

I hate to say it, but the fact that the addition is not complete, does affect the marketability as any prospective buyer must qualify for a 203k, hard money loan or purchase your home "all cash." This limits the number of prospective buyers for your property in turn affecting its marketability.
 
#12 ·
Where is the property located. I still have ties with the owners of a couple large privately owned lenders. These aren't brokers. I can tell them your issue, and if you have a copy of your condition list, they can go through it to see if its feasible prior to submitting the loan. Should have walked with the appraiser, and asked him to not mention anything that isn't permitted.
 
#14 ·
Funny I work for a wholesale lender here in CA and I got this from one of my loan officers yesterday, I wonder if it is your broker trying to save the deal and move it. Simple answer is no.... I wonder who you your broker is????



"I have a loan that is 60/75 LTV, CLTV. Great DTI, Income, rate and term refi, etc…



They have two garages on the property. One is attached and is fine. The other is detached and sits about 200 feet from the main home. There sits another garage that is permitted. However, the borrower is in the process of adding another 500 sq. ft. addition to the 2nd garage. It is 75% complete, have initial permits, but isn’t going to be completed anytime soon.



Can you do the refinance without the garage addition being finished? The appraiser has not given it any value."
 
#16 · (Edited)
LTV is acutally 55%, I told them if the investor ever had to foreclose on the home they just bought, They would have more problems than just an unfinished building as prices would be down to Pre-85 levels. Not sure if it matters but, There is no addition being done. Back in 2003 I started a Garage/Workshop with a bathroom. 45x25. There is a dividing wall, 20x25 is the workshop with Bathroom. All is fully permitted but is not complete, So not sure if calling it an Addition to the garage makes any difference.
 
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