10-12-2009 01:54 PM
My wife and I are supposed to close this Friday (Oct 16th) on a house for which we have an FHA loan. The loan has been approved by our lender, but just last Friday (Oct 9th) the lender sent us a document called the "FHA Amendatory Clause." According to my online research, this clause is standard for any purchases backed by an FHA loan, and according to FHA rules it should be signed as part of the initial P&S agreement. Obviously this can't happen in our case since the P&S was signed over a month before the lender sent us the amendatory clause. The clause basically gives the buyers a way out if the appraised value of the house is not equal or greater than the contract price. Luckily, the house we're buying was appraised for a bit more than the contract price, so I'm hoping this is a no-harm, no-foul situation. However, the lender is asking that all parties back-date the amendatory clause to the date of the P&S, which our lawyer has told is is a terrible, illegal idea. Has anyone had a similar situation or suggestions for what we can do to resolve this?
10-13-2009 01:15 PM
If you want the house, you are going to have to sign (and back date) the paper.
Lawyer's are looking out for your legal interests. The Lawyer is correct, but you will not close on that house if it is not signed.
The Clause is meant to protect you (and the FHA) against rapidly falling home prices... does not sound like the drop in price applies here...
10-13-2009 01:18 PM
10-13-2009 01:37 PM
We would certainly have signed this clause up front if we had been presented with it at the time (by our agent, our lender, seller's agent, my dog, anyone!). Unfortunately, we're first time home buyers without any experience. We looked to our agent and lender as intelligent, informed resources to guide us through the process. I would have expected that someone would have mentioned this detail in a timely manner, since all involved were aware that we were applying for an FHA loan. However, it's water under the bridge now, what's important is the resolution.
The issue with backdating is that's it's not legal. It's an estate sale where the sellers are also represented by a lawyer, and so it's not going to fly to back date the paper, even if this is the most practical solution to get the closing done. Frankly, I would just sign the d****ed thing and get it over with if it were up to me, but it's not an option. I imagine this isn't the only time this issue has come up, and I am looking for anyone with experience to suggest a legitimate alternative to knowingly breaking the law.
10-13-2009 10:23 PM - edited 10-13-2009 10:26 PM
read the clause carefully, the only ones that i have seen, and I work in a mortgage co. corp office, show dates that refer to the contract date. There is no date that corresponds to a need for back dating.
if your state's contract has a third party financing addendum, that is typically done at time of contract/offer and has a lot of the same language as amendatory addendum.
REAL ESTATE CERTIFICATION
I/We hereby certify all terms stated in the Sales contract by and between
dated on the property located at
are true to the best of my knowledge and
belief, and that any other agreement entered into by any of these parties in connection with this transaction is attached
to the Sales Agreement.
real estate agents typically do not deal with lender's required paper work, so they would not have had you sign the amendatory clause in its entirety.
10-16-2009 01:40 PM
From what I've heard, this is a very common situation, and really not a big deal to backdate it. Technically I think it is supposed to be dated BEFORE the P&S. Few realtors are aware of that, though, and so often lenders say (after the fact) hey wait, you were supposed to sign this!
I can't imagine why you would let this minor issue scuttle a deal that you want, and I'd be surprised if any seller - estate or otherwise - would stand in the way either.
10-16-2009 01:43 PM