Interesting Times?
Hello All,
I am going through an interesting situation right now and would appreciate comments and insights from the TCI community.
I am in the process of closing on a HUD Foreclosed home in the next few days. Before I signed the purchase contract, I told my Realtor and Mortgage Broker that I would be out of the country for about three weeks sometime before we closed and asked if there would be a problem with this. The realtor stated this would not be a problem as long as I signed a "request for extension" and left a money order for $375. He assured me that I would get the $375 back at closing as long as we closed within the allotted extension period. The broker also said there would be no problem.
Before I left, I continuously checked with both parties to ensure that everything was okay and that they each had everything they needed. I was told that everything was fine and to enjoy my vacation.
I got back last week to find that we couldn't close during the extension period because the broker needed a few more documents from me and had not been able to send the final numbers to the Title co. 10 biz days before closing. Also, my realtor informed me that he was mistaken and I was not going to get the $375 extension fee back (even if I had closed on time) because I was an investor and not an owner occupied.
Now, I need to pay another $375 extension fee for a second extension (which makes $750 down the drain). My questions are as follows:
* Am I within my rights to ask that the Broker and the Realtor pay for this second extension fee from their own proceeds?
* Has anyone heard of such requirements with HUD owned properties and their different treatment of Investors and Owner Occupied?
* Is there any way to avoid paying the second extension fee? The final numbers are ready, just not in time for the 10 day rule.
*My realtor makes the argument that even if he were not mistaken about the fee, I wouldn't get it back anyway because I'm not going to close within the allotted time period. Is his argument sound?
Thanks in advance for any help.
JS.
I can't answer your questions...but I can offer some insight that may be helpful. First, hud does have different rules for owner-occupied vs. investor purchased. This is because their goal is to offer the homes to owner-occupied...they make it easy to them and not to investors. The whole purpose for this government program is to allow low-moderate income folks the opportunity of home-ownership.
As far as the extension fee...this sounds right to me. What you are basically doing is saying you will buy it now and later asking them to 'hold' it for you. This holding period costs money. The fee they are charging is to cover the interest during this 'hold' period.
Now, if you broker told you that this $375 was refundable...that is a different story. Sounds to me like the broker made a big mistake.
I purchased a hud house years ago (as an owner occupied). My bank was not able to close as soon as they said they would and I ended up paying an extension fee...I was not upset because it was basically the same amount I would have paid in interest had I closed sooner. The only downfall was that I was not able to get into the house as soon.
Thanks jspaeth. Did the bank offer to pay for your extension fee or not?
Any other comments out there?
JS
I had to pay the fee; but I did not press the issue with them either. For me, it was a mute point since I saved the same amount in interest and since I had a place to stay until the new closing date, it was not a problem.
Your situation seems different with the broker telling you that the fee was refundable. Seems like negligence to me. Comments from others?