Lender Tips - Courtesy of Marsha Copeland

From: "Barbara Coker"
Date: May 21, 2009 6:46:14 PM CDT

Lately, I have seen contract amendments which refer to specific items on the Buyer’s Inspection, by the exact paragraph number. But that then requires me to send the entire inspection to the appraiser and underwriter. In turn, they are forced to require other repairs listed on those inspections, just to CYA. They wouldn’t want to, but they now know more than they really needed to know.

Underwriters only care about appraiser required repairs, and any listed on the contract.

It’s safest to just list the specific repairs you want to have the seller agree to, without sending that inspection.

Also, if you want to ask the sellers to pay some funds towards closing costs in lieu of repairs, just put that amount in Item 4 of the amendment. Please don’t put wording in about “in lieu of fixing this item, or that item, seller to pay buyer $$$$.” Then the underwriter had to know what is wrong with those items.

I don’t like to wave red flags in front of underwriters who are already forced to be more conservative than in the past.

However, don’t forget that the type of loan the buyer is obtaining will limit the seller to a certain maximum amount of contribution. FHA’s limit is 6%, Fannie ranges from 3%-9% depending on the down payment. Also the survey is a separate expense on the contract, but must still be included in the maximum contribution limits.
You might need to actually reduce the price of the seller concession is more than allowed by the loan type.

Also, the increased loan volumes we are seeing (purchases, refinances, first time home buyers looking for that $8,000 credit), are pushing our normal turn times out a little. If you take the normal 10 days for the option period, it might be prudent to write a 45 day contract, rather than a 30 day. The new conventional appraisal system is taking a few more days, and the VA appraiser always gets 10 days. That way you don’t need to go through the hassles of extending the closing date. Remember, it does say “on or before,” and your lenders will work to close earlier if they can.