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Lender required repairs on a foreclosure?

I am trying to buy a house from Freddie Mac and the appraisal can back with a few lender required repairs.  The toilet needs to be fixed, two of the baseboard heaters need to be removed and the big whammy... the septic pump is broken.  After getting estimates it should be about 1200 dollars in repairs.  What is the likely hood of the bank approving the repairs?  And if they don't elect to repair the house, what happens to the house? Will they put it up for a cash sale?  My close date is set for July 5th and that is after an extention has been filed because it took them 3 weeks to get paperwork back to my people.  They are very, very slow.  What do I do?
  • June 19 2011 - US
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Answers (5)

I had a short sale listing quite a few years ago that went nowhere. At some point the pipes froze which split open several radiators. Plus the boiler was at least 50 years old.

After Wells took the house back in foreclosure, they paid to replace radiators and replace boiler before selling. Wells (or their insurer) took a huge beating on that house. But I imagine if you don't ask, their answer is always going to be no.
  • June 20 2011
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Freddie may make the repairs.

I like all this roll over and play dead nonsense on an "as is" contract. Fannie and Freddie have made the repairs in each case where my client has needed them.

Submit the list of repairs to Freddie Mac.
  • June 20 2011
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Most foreclosures are sold as is therefore don't expect them to do any repairs. Your home inspector should have told you about the problems.
At this point you are not getting a regular mortgage with a broken septic pump. Yoiu can get a 203K FHA mortgage that will take care of the repairs, besides the purchase.
  • June 20 2011
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Odds are they won't do it... Freddie, Fannie, Et. Al., just want to sell the places AS-IS, period.  The quandary comes when you can't get a loan BECAUSE of a few minor items.

Not enough wrong with the place to warrant a renovation loan, but can't get the loan approval without those small items fixed.


SOLUTION:  Repair Escrow.  Find a lender that will allow you to escrow for these minor items to be fixed AFTER settlement, then the appraiser will note the deficiencies, but the Underwriter KNOWS they will be fixed in the repairs.  Easy Breezy.

If your lender doesn't do these, just look up my contact info in my profile, as I lend in ALL 50 States. :)  I would be delighted to help.

Best of luck,
b
  • June 19 2011
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You can ask them if they will pay for a portion or all of the repairs, but keep in mind bank owned properties are always sold 'as is' with the presumption that the price reflects any repairs that may be needed.

Would your lender allow you to escrow the funds for repairs and then make the repairs after closing? If they agree to fund repairs, I wouldn't wait for them to complete the work. Rather I would escrow and do the work after closing.

  • June 19 2011
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