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Mandyvilla
3077 Posts |
 Posted - 04/18/2008 : 5:47:56 PM
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Two separate loans:
1) Would a property and owner be ineligible for refinancing if the home was on the market for sale? Technically it's rate and term, but not really. Here goes. Current home valued at 800K, well lets say 750K. The owners go buy another home, with zero contingencies on sale of present home (just before market really turned). They took out a HELOC for the 40K deposit (and random 1K here and there). Come late fall, no one has looked at their home and the new home is now worth 100K less than their ratified contract. Builder's mortgage company has an appraisal good for 6 months - won't order new one. Legal advice tells them they are toast. Choosing to fight for the 40K could cost them 20K and if they lose (likely ending) they would have to pay builder's legal fees and still lose the 40K+. Business decision: they walked. Releases were signed, money forfeited.
Now they want to refinance, combine the two loans. LTV very conservatively (hahaha, that's what they all say) would need a 650K for an 80% LTV. Besides cash out, the subject property was in MLS for 6 months, as recent as Nov 2007. Does FHA care? Of course, all can be documented.
2) "Country" estate, 54 acres in DC suburbs. (Near Marriott and DuPont estates) jumbo conforming (besides not that great of a rate) is going to rape me on LTV. I will be bumped to a max CLTV of 70%. So, now I am turning my eyes to the savior of all we do, FHA. The only thing I can find in the guidelines is for how the appraiser should approach it (like sales, like acreage, out buildings, etc). No where can I find "no more than 20 acres." Any one know?
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cspatmon
1757 Posts |
Posted - 04/18/2008 : 6:07:25 PM
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| My guess common sense underwriting and being lender specific....It's sounds so general but the fact being most lenders are not following FHA guides to the letter. |
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nowbroker
1233 Posts |
Posted - 04/18/2008 : 6:57:19 PM
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To my knowledge FHA has no rules regarding property on the market, this is lender specific. Concerning the large parcel of land, read these sections of the manual:
4-5, A., 2.: EXCESS LAND (05/99)
Excess Land is defined as the area by which the plot exceeds the area of a readily marketable real estate entity. This occurs when the subject lot is considerably larger than typical lots in the neighborhood and the excess is capable of separate use. Generally, the defining characteristic is an excess portion that can be subdivided and marketed as an individual parcel. However, in small communities and outlying areas, appraisers must use different criteria because the market may accept a wide variance in lot sizes. This segment of the market may show wide differences in lot use.
> If the plot contains excess land, delineate and appraise separately the readily marketable real estate entity and the existing or proposed improvements. Describe the excess land but do not appraise it with the primary 1-4 family residential building that is subject to a mortgage.
The lender will require that the value of excess land be excluded from the maximum mortgage amount that will be calculated only on a reasonable amount of land and improvements.
4-16: OUTLYING LOCATIONS AND ISOLATED SITES (2/1/1990)
[This chapter/paragraph has been incorporated into Handbook 4150.2.]
Areas outside of towns and cities have shared in residential construction activity to a considerable degree. The segment of the market interested in buying in outlying locations compares the advantages and disadvantages of other outlying locations. In many localities the rather strong appeal of these outlying locations is evidenced by the activity of the market for properties so located. In most instances, the sites of outlying properties are larger than the sites of nearby town or city properties. Some dwellings in outlying locations are constructed on wooded sites or on land where the topography is such that some natural protection is afforded against encroachment by value destroying uses or influences; others are constructed on sites taken from agricultural land. The presence of normal agricultural use of land in the vicinity of an outlying site will not of itself constitute a valid reason for finding the property ineligible as mortgage security.
Many people prefer outlying locations for the purpose of raising horses or having a small hobby farm. Provided that the use of the property such as raising horses or farming does not constitute the primary income of the occupants, such locations are usually acceptable under Section 203(b) rather than 203(i). Such sites may be ten acres or more but are still considered in relation to the typical size lots in the area.
However, if the size of the site is excessive, such as 30 acres in an area where only ten acres is typical for that purpose, the excess land is not considered in the appraisal nor included in the mortgage.
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Mandyvilla
3077 Posts |
Posted - 04/18/2008 : 9:57:06 PM
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Thank you nowbroker! Normally, I am the first to go looking for the guidelines, but exhaustion is winning. (Laptop crash and offline w/ work for 1 week - get laptop back and it still needs hours of configuring and BS........lost all my email address prompts, wah, wah, wah.....) Anyway, thanks and thanks to you, we will put off the pity party for another day.....
I just can't believe I am looking at FHA for either of these deals. It's absurd...but we are here to serve, right? |
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cspatmon
1757 Posts |
Posted - 04/19/2008 : 07:12:02 AM
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| My point exactly after all the exhaustive research and not finding a lender to approve is more than a little discerning........ |
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cspatmon
1757 Posts |
Posted - 04/21/2008 : 09:22:56 AM
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| bump! Curious did you find a lender for this deal? |
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jpar994
828 Posts |
Posted - 04/21/2008 : 09:56:20 AM
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| Also keep in mind that the value of the home should not include the land excess of the 20 acres! But it should be no problem for that ! |
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djorge44
1345 Posts |
Posted - 04/21/2008 : 09:57:07 AM
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| With BOA writing down 6 billion in debt do you think they will want either of the loans now? It seems bad debt writedown follows with vanilla deals wanted only |
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Mandyvilla
3077 Posts |
Posted - 04/21/2008 : 11:13:18 AM
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On BB,so will be short. We gave been doing govvies well before i got on board little over one year ago. I suspect its just some areas did use because of low loan amounts,but there are two huge govvie processing centers - TX & FL so anyone w/ the bank can do them
The losses came in on the money - expected. Will reply later w/ accurate fugures. This keyboard way too small now i understand all the typos-all written on blackberry,right? |
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