I am purchasing my first house (a duplex) in the city of Buffalo, New York via the FHA loan, and I had initially used Bank of America to finance the home...until, that is, Bank of America couldn't get past the fact that the house, built prior to 1978, had some exterior chipped paint on the front porch. Granted, we are currently in the month of February, and the weather is not currently suitable to adequately scrape, prime, and repaint the areas of concern on the front porch. My agent, who has helped buyers buy homes via the FHA loan, has a lot of experience with this and explained to my mortgage officer that it is standard here to get an estimate for such a repair and to have the seller fund an escrow holdback, allowing me to make the repair *after* I close, once the weather is warmer. The mortgage officer (who is based in Texas) that Bank of America had assigned to me still believed that, due to the age of the house and the risk of the paint containing lead, that the chipped paint on the exterior front porch needed to be repaired prior to closing. Which would essentially mean that I'd have to delay closing until the weather got warmer (?!?!).

I then called a local Bank of America loan officer, based here in Buffalo, and got her take on it. She confirmed that she has issued FHA loans in such situations, with the repairs done after close, via the escrow holdback. I put her in touch with my loan officer. They had a discussion, but ultimately my loan officer is still convinced that the FHA program does not allow this. I then called the FHA Resource Center (their 800 number) and got on the phone with an FHA representative, who confirmed with me that a repair escrow could be done in my circumstance. Though, my Bank of America loan officer still did not believe it was possible (?!?!).

I switched lenders 3 weeks prior to close (mind you, it wasn't hard to find a local lender who well-understood that an escrow holdback was suitable for my circumstances) and they were thankfully able to "rush" the loan, and I am well positioned to close in a couple of weeks.

My lesson learned here is: If using the FHA loan to purchase a home during the wintertime (in a cold/freezing climate) for a home built before 1978, ensure that you are working with a lender who will accommodate an escrow holdback if there is exterior chipped paint which simply is not possible to adequately repair in the wintertime. I would ask this question from the very beginning vs. finding out 3 weeks prior to close that you have a problem.

Upstate New York, New York

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