Monday, December 12, 2011

query: when does a "repair credit" not go on the hud

If there is a repair credit from seller to buyer and there is a mortgage lender involved in the transaction the credit goes on the HUD-1, period, end of story.  Any other suggestion, even if it comes from a representative of the lender is collusion to defraud the lender.  What?  How could a lender representative collude to defraud itself?  Well, just test the representative.  Ask for written instructions telling you to place handle a repair credit OFF the HUD-1.  Bet your bottom dollar you won't get that in writing because the lender representative knows they would be in trouble with their employer by working outside of underwriting guidelines.  They want YOU to take the risk and will make you feel like a fool for not playing along.  Don't play that game.  It leads to jail and other bad stuff.

The easiest way to handle a repair credit is to ask the lender if it can be converted to a seller assist with closing costs.  This can be done so long as the seller isn't already giving a seller assist that is at the limit of the mortgage underwriting guidelines.  If that's the case then they'll just have to make that repair or forget it - no cash credit allowed.

Lender underwriting guidelines are real.  You have to trust that there is a reason that monies moving from seller to buyer are limited.   So, stay on HUD.  Off HUD is for bad guys and I'm sure you aren't wearing a black hat. ;)

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