Help with ridiculous underwriter demands

[Gary Meyers]

Hi All,

I am in a bit of a bind here. I am looking for advice with an FHA sale. To put it lightly, we're getting screwed. A little back story...

My fiance and I bought the home we live in last year in June. We have spent a lot of time and money fixing it up. We bought the house for about $100k. It's almost 100 years old but has had various things done over the years including new foundation, new roof, new insulation, new wiring (still old) etc etc. For a 100 year old budget home at 870 sq/ft, it's not bad really. It butts up to a train track that keeps me up at night which is why we want to move. Other than that, it's a great little affordable house. It alos has an add-on attached shop/garage and the land is about 1/4 acre in town where most lots are around 5-6000 sq/ft. The only real downside if the train tracks. Which we realize would bring the value down and/or make it a bit harder to sell. Well, we ghot two offers on the first day for sale. Great, right? Not so much. Here we are almost 3 months later a day before closing and the underwriter for the gentleman and purchasing our house is demanding we fix nearly everything on the inspection report! Not the FHA appraisal, the inspection report!

When we first put the house up for sale, it was the beginning of July. We already had an offer accepted for a home we wanted to buy and move to. We had remodeled the bathroom, repainted the entire house walls and trim, fixed a dozen various things that were wrong when we bought the house. Mind you, we bought the house with an FHA loan and it passed FHA inspection then and it's in far better shape now. WE did the whole negotiation thing with the buyer and agreed to about a dozen items to fix including half a dozen small items like a missing light fixture globe, oven anti-tip bracket and stuff like that. Then I had a structural engineer come in to address what the inspector called "improperly anchored support posts" under the house. They also wanted the entire garage area electrical wiring put into conduit and similar jobs liek that around the house. I had the engineer evaluate the structure and I fixed the posts, hired electrician to to electrical work and fixed the other items. This was done over 1 month ago today. Then we were told the FHA appraiser was going to take over a month to appraise the house! We found this odd because it took our appeaser on the house we are buying a couple weeks and it takes theirs almost 3 weeks longer... So we got repairs done, had all docs signed etc. I even did a bunch of extra pre-FHA appraisal work like repainted the exterior of the house. Then we thought we were good to go and just had to wait for the appraisal date and for that to be finished...

So the appraiser comes out and gives us a clean review and values the house at asking price or above (they wouldn't tell us exactly what it was). So the FHA appraiser doesn't ask us to fix anything. They clear the house as meeting FHA guidelines. We're in the clear, right? Wrong. Here we are ONE day before closing. And the buyers lender just dropped an email with 18 EIGHTEEN items that "must be completed prior to funding."

WTF right? So this lender has a clean FHA appraisal at or above purchase price and a client that has already negotiated various repairs they want done. But the lender just completely sidesteps all of that and looks at the buyers home inspection report and demands a huge list of repairs! Some of the items we already fixed as they were in the list we agreed to previously. But a bunch of them are asinine stuff like GFCI outlets in all rooms, they want ALL the outlets grounded! That would require rewiring the entire house, right? They cited a bunch of random crap like some edge drip flashing on a 3 foot section of the roof (the roof is actually only 2 years old) and they want the sump pump under the house services and permanently wired for power. We have never used nor ever needed to use it (it was there when we moved in). They even want the garage "fireproofed" with gypsum on the side (what used to be the exterior of the house) and a fire door even though the door is an isulated metal door. And it's even really a garage, it's an attached lean-to on the side of the house sort of like an add-on storage area or work shop. Keep in mind, this is all straight from the underwriter and he/shee got all of this from the buyers home inspection report. And NONE of this was required by the FHA appraiser.

So are we totally screwed or what? We have dumped a bunch of cash into fixing up and repairing everything already and sunk the rest of our cash into the deal for our new home. Oh, and get this, they have had this inspection report for almost two months now. We have been sitting here waiting, doing nothing thinking we're just waiting on the appraisal. Then after the appraisal that is clean and clear, they cite a home inspection report they've had for almost two months with a dozen new repairs the day before closing!?

It get's even more bizarre. I spied in the email string that was forwarded to me from my realtor that the underwriter sent the home inspection report to the appraiser "UNDERWRITER SENT HOME INSPECTION REPORT TO APPRAISER. APPRAISER TO AMEND APPRAISAL TO SHOW WHAT WORK MUST BE REQUIRED TO MEET FHA PROPERTY STANDARS" (sorry for caps copy/paste). So they are making the FHA appraiser who already cleared the house insert items from a two month old inspection report a day before closing so that we HAVE to do all these repairs.

There has got to be something fishy and/or illegal going on here. This lender is straight up bullying us into fixing a bunch of stuff. I mean, what is the point? The appraisal came back at or above purchase price and it meets FHA guidelines. Why on Earth would this lender do this? We already had to postpone our close date a month because it took this lender so long to get an appraiser out. This is literally costing people thousands of dollars. There's a chain of 5 house sales being held up from this (our buyers house he is selling, the house we're buying, the house they're buying etc).

Is there anything I can do? Should I hire an attorney? it's almost liek this lender doesn't want to fund this house. But instead of just denying the loan in the first place they are playing ridiculous games. Or maybe the buyer is buddy buddy with the underwriter for this lender and they are working this stuff in so it get's done? Why else would they be doing this? This seems like a clean deal to me. I can't believe this is happening!!

Thanks for any help guys. My fiance and I are just about to go insane. We've put blood sweat and tears (and lots of cash) into this and now this bomb is dropped on us and we have to delay closing again!

Thanks!