FHA Loan/lender issues

[Pamela M.]

Hi all,

I am in the process of buying an owner occupied multifamily (3 unit to be precise in Newark). This has been an ongoing saga. I was aiming for 5% FHA which I was approved for. But there were so many silly issues and I think the lender just had no clue of the lending rules. We were/are supposed to close on September 1st. I would like some advice. These are the things that happened (listed below).

1. The FHA appraiser had a typo in his report: Instead of typing in 55 for the longetivity of the property he typed in 15. My lender said he cannot give me a 30 year loan based on that although the property was in great condition. We went back and forth. That took a week to resolve with the appraiser finally fessing up to the mistake.

2. I had joined a new job and because of other personal issues they wanted me to show 1 year of employment. So the closing was delayed for 2 months (This was June end). The seller agreed  (which is rare in this market) and we decided Sept 1st would be the day. The lender assured me there was no other issue. I waited thinking that everything is ready. 

3. 2 weeks back  (mid august) the lender  informs me that the underwriter wants to see 75% of the rents to cover my mortgage. Its the standalone test. The seller had not raised rents according to the market. The seller had it as an investment property and I would have it as an owner occupied. This was not pointed out to me during or before we went into hiatus for 2 months. The seller and I would have moved on. But now I am definitely stuck.

Now the issue is the seller wants to put the property back on market and I think I will lose my downpayment. I have pointed out all these things to the lender and they are going back and forth with the appraiser with comparables but I have no hope at this point. It's still not Sept 1st but what are my lending options with 5% downpayment for a multifamily? 

Can someone advice me?

Thanks,

P

[Liz Beaird]

Wow! As a newbie investor, this is the kind of nightmare I’m nervous about getting into. I have not heard about the standalone test before this, so you’re certainly not the only one that could have gotten caught in this net. I’m so thankful you posted your problem here. I wish you the best and hope you find a solution that works for you.