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Do we have to walk away from our dream home?

My husband and I contracted with a large builder to build our dream home.  Got an FHA approval and pre-build appraisal, but had to get an extension on the appraisal due to some other delays.  During this time, we changed lenders (the other was very unreliable).  When the previous lender got the appraisal extension and told us to commence building, they neglected to update the FHA case #.  House begins being built, we have continued problems with the old lender, so we change to a new lender (not knowing old lender had dropped the ball).  Two weeks before closing, we learn the case # had expired and a new appraisal had to be ordered.  It came in $17K below asking price of the home we built.  FHA will not honor the original appraisal (it was appealed and denied).  Just got off the phone with the builder; we offered to make up $6K of the $17K difference between asking price and appraisal, but they turned us down.

HELP.  Right now, we see our dream home slipping away.  What recourse, if any, do we have?  We do have a real estate attorney, but we're unable to reach him until morning.  Is it really unreasonable to ask the builder to make the price concession?  They claim it will cause an unfair downward spiral for other home buyers in their community...  We know this is a buyer's market, but what are our rights/options?  
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December 20 2011 - Mason
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Answers (8)

I agree with quinton.cindy ... wish folks would update threads and let us know how the story goes!
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February 26 2012
With FHA, they normally will assign a case number to the address so it would not matter which lender you're with.  However, if you wait until it expires you should be able to get a new case number and get a new appraisal.  Hope this helps 
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February 25 2012
It would be nice if folks would come back and update on these threads. People tend to search and read these threads when they have issues. Nice to know how it shook out...
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January 06 2012
This is the most common issues with owner of newly constructed custom homes and the Banks. Banks are refusing to change the construction loans into permanent loans. New custom homes are being foreclosed in record numbers. Hope your attorney could help. Good Luck.
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January 06 2012
Talk to your attorney please, she/he is familiar with your circumstances. I hope this works out well for you.
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December 21 2011
Check with your lender about non-FHA options.  There are some changes in the PMI world, and there are some conventional loans out there that might work for you.  I don't know your price range, but I get price concessions in that range from builders all the time.  It sounds like you did not use an agent?  The builder is saving some money right there.

Don't be afraid to push hard for the 17k concession- the builder does not want to be sitting on an vacant house.  Good luck!
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December 20 2011
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Did your purchase offer include an appraisal after the construction was completed?  
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December 20 2011
I don't believe that the builder is required to negotiate here. I would think that the original lender would be liable, if anyone is. I am not sure what you could get out of them besides the extra money needed to put down. Unless they agreed quickly, you would have to take them to court and who knows how long that could take.
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December 20 2011
 
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