Legal Question in Real Estate Law in California
A little over two months ago I had an offer accepted on a condo. The agreed purchase price was $120,000.00. Me and my real estate agent had a understanding that I would go with a FHA loan. My real estate agent suggested that we could offer 10% down on paper, but would actually have to come up with 3.5% down. I said "Is this legal" He said don't worry this happens sometimes. I asked why are we doing this. He said the offer would look stronger with 10% down as oppose to 3.5% down.
Five days before closing escrow (60 Days) my loan officer calls me in a meeting to inform me that the seller (bank) did not approve the condo for a FHA loan. At that time the loan officer suggested that I come up with $16,000.00 and attempted to persuade me close with a conventional loan. I mentioned to her that I could not afford to put down $16,000.00. She insisted that it would be more money towards my principal which would benefit me. I was disappointed to find out that I would not be able to close the FHA loan with the $2880.00 remaining balance. My question is why was I not informed in the beginning of escrow that the property I was trying to buy was not FHA approved. Who's responsible for dropping the ball here. Thank you
1 Answer from Attorneys
The beginning of escrow has nothing to do with it; the FHA eligibility of the property was something that should have been determined before an offer assuming FHA financing was ever made. Since the client is not assumed to know much about such things, it is probably more the responsibility (fault) of the buyer's broker or agent, who is paid to apply expertise to such matters, and to anticipate forseeable problems.
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