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As a seller, am I obligated to sign the FHA Amendatory Clause?

I'm selling my home, and we're just a couple of days from closing. However, for reasons out of my control, the process is going slowly because the buyer's FHA loan requires the roof to be certified, which will be done the day before closing (the realtors involved are trying to get the certificate issued before the actual repair.)

Anyway, without even having the buyer's loan approved by the lender/underwriter, escrow is asking me to wire all the money for my closing costs + sign an FHA Amendatory Clause that protects the buyer's deposit in case his loan is not approved.

Am I obligated to sign this FHA Amendatory Clause? Can I refuse this and still be able to sell the home to the buyer? The reason why I'm asking is because it's already been almost 30 days since the buyer signed the purchase agreement. If his loan goes south at this point, I'll have nothing to cover my loss because I will have waited for him almost 30 days, and I'm paying double mortgage now.

Contrary to what the purchase agreement and contigency removal docs say (both signed by the buyer), this FHA Amendatory Clause fully protects the buyer's deposit. But if his loan is not approved, I'd like to request that the buyer at least pays for my mortgage this month, using part of his deposit, because I'd have waited for almost 30 days for nothing.

Thoughts? How should I approach the situation?
  • May 30 2012 - Los Angeles
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Answers (4)

This may sound simplistic but;

Just don't sign the form until you are satisfied the buyer has performed and your concerns have been alleviated.....it's not going to stop anything from happening.

In specific answer to your question YES it has to be signed....at some point.


Terry Dyer Realtor/Broker 
  • June 06 2012
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Well of course you are not required to sign anything that you don't want to sign.  However if you don't sign it the borrower cannot buy your property with an FHA loan.  You are correct that the amendatory clause only applies to the appraised value. It states (paraphrased a bit) that the buyer cannot be forced to buy the home if it doesn't appraise for the sales price and the seller cannot keep the buyer's deposit if the buyer backs out because of the low appraised value.
  • June 05 2012
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Profile picture for ca1973
After doing some research, I learned the deposit clause in the FHA amendment applies only to the appraisal. In other words, if the house appraises at the sales price, which is specified in the amendment, the buyer no longer has that particular protection regarding his/her deposit.

Luckily for me, the transaction went through.
  • June 05 2012
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I am angry no one answered you!  I am in a similar boat, as a seller.  FHA sounds nice and all, you as the seller haven't done anything but conceed and sell your home in good faith, I read that this clause does not have to be signed in certain circumstances (although I do not know what they are.  This is 2012 and the metrics used to value an FHA tranaction are not published.  I did find out there are lending capshttps://entp.hud.gov/idapp/html/hicost1.cfm  I don't understand the impact of this information.  seller are human beings trying to sell their home, all the rules have changed, and this seems abusive to me given the times.  I do not believe inflated values exsist anymore!  Not in my area!  It's more like fire sales everywhere and in addition we are asked to give up any compensation offered to us in a sale

BIG sigh and frustration!
  • June 05 2012
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