FHA MESS!! PLEASE HELP!!!!!!

[Sillymomof3]

Ok, I will try my best to summarize the TERRIBLE mess we are in at the moment. We found our own outside lender and got approved for an FHA loan on a double-wide home to be put on our own land that we own free and clear already. (No $ down.) Since our approval, there has been one confusion after another!! Neither the lender nor the MH dealer act as though they have EVER done an FHA loan home before b/c neither of them has known how to do things from the beginning. There have been more problems with "last-minute" paperwork and stuff....I have almost gone nuts trying to keep all the necessary documents faxed to the lender. And nobody has quite been able to agree on just what the FHA regulations are.

We got rid of our single-wide to put the new double in its place, which left us homeless. We had a new bigger septic system put down and got the inspection and approval on that. An appraiser came out to appraise the land and that was ok too. An engineer came out to inspect our site. We were told he would decide how the home needed to be set-up. (There was a LOT of confusion about how it did indeed need to be set-up. Some said it had to have a concrete foundation consisting of runners, anchors in concrete, etc. Others said it did not.) The engineer said that it did not have to be set-up on the concrete runners. He said that just putting it on the ordinary concrete blocks and pads like about 99% of the other homes in our area (Mississippi) are done would be fine.

Finally, the dealer felt that everything had been done to satisfy FHA requirements and it was safe to deliver and set-up the home. (He had been VERY reluctant to deliver due to the payment after the fact nature of FHA loans.) Everything was going fine. They were quick about setting it up, trimming it out, etc. It looks great, no complaints with the home itself whatsoever. We moved back in as soon as the set-up was 100% complete because it is very difficult staying with relatives when you have 3 kids. And we had already been without a home for almost a month as the weather delayed the delivery and set-up of the new home at the last minute AFTER we had already moved out of our old trailer.

We were told all along (by the lender) that the appraiser would come out again after everything was complete and that he would make a final inspection on it all. Then, after the home was set-up, they took that back and said that he would not, that there would be no more inspections. A couple of days before we were set to close the loan, we were told that an FHA inspector had to come out for an inspection. He came and the home did not pass. He said that the home had to be set-up on the concrete runners and had to have brick (NOT vinyl) skirting. There were some other things, like stoops at every door, walks to the driveway, etc., that were not done too, but the foundation stuff was the worst of course. (He also said we were not supposed to have moved in before his inspection, but noone ever told us that. We didn't even know he was comng unitl well after we moved in.)

The lender then tried to get us a conventional loan approval and could not. They are now suggesting that we maybe try fixing things to meet FHA standards. Problem is, it would cost so much to do that now, that our loan amount would increase enough that we cannot afford the monthly payments. (The payments have already increased WELL beyond what we originally told them we could afford but we drew the line at this latest increase.) The dealer has gotten us approved now through one of their lenders (by lying about us having income we don't have). The problem with that is that the loan term is shorter with a much higher interest rate than our original FHA approval making the monthly note totally unaffordable for us. Tomorrow I have to call the dealer and tell them that it is going to be more than we can afford. And of course, they are going to come get the home because we are pretty much out of options.

So, now we are going to be left without any home at all. Not to mention all the money we already put out on setting this thing up. And the dealer is REALLY in the hole, after setting this house up and now having to get it back, and AFTER we have lived in it for 3 weeks.

My questions are:
(1) WHO is to blame for this mess??? Dealer? Lender? Engineer?
(2) Do we have any rights to damages for all we are out now??
(3) Can we be held liable at all for any of the costs the dealer or lender has incurred, even for the inspections, appraiser, etc.???

PLEASE offer your input as we are terrified of what may happen now. It is bad enough that we are scrambling to find a place to live, but we also have the added threat of these people taking action against us even though none of it is our fault!! HELP!!!!!

[rmurray]

YIKES..

This highlights some of the problems folks have when they get their own finance..many loan originators are very unfamiliar with their own banks requirements...but in defense of the originator..the follow up paperwork is common..underwriters can be a pain..and will add all kinds of seeming dumb requirements...

It is impossible for me to understand how stupid a dealer can be....There should be NO dealer in your area unfamiliar with FHA requirements...and...masonary underpinning is one of them...Now...inexperienced FHA inspectors can also be very wrong..as in this case....they all see the regulations differently..

Generally a FHA set in the SE will require poured (often with rebar) footings...anchors in concrete (or an alternative system that is FHA approved) and masonry or wood skirting with a footer poured...There are even a few FHA inspectors accepting vinyl skirting...Some will accept portable footings..

For solutions....The FHA requires a FINAL inspection by either a FHA approved inspector...OR...FHA approved engineer...Assuming the engineer you had is FHA approved...he can do the final inspection...I assume he will approve his own design...This would be the simplest solution...

If he is not approved...it is time for you and the dealer to have a pow wow...This dealer is in a big pickle...You do not have to allow him to come on the land to remove the home...he has already spent $5000 or more on home he cannot legally retrieve...If you allow him to come on the land..he will spend another $4000...He is currently out of trust (he has lenders and they do not allow this situation to happen..he will have to pay off the whole home) and is risking his whole dealership...It is time for him to learn about the most common program in the industry,,,He has from $5000 to $10000 in profit in his figures..time for him to give it up...much better for him and you than the alternatives that you can make him face...You could resist his efforts to remove the home for many months..even with bankruptcy for many years..he knows this..he will coorporate...

You should not be paying 1 cent more..time for those pros to take responsibility..He can retrofit this home for less then $5000..NO MATTER what the final outcome is to pass the inpsection..(remember different inspectors has different ideas of what the rules are)...This dealer might want to call and ask his competitors which inspector or engineer they use...then fix the home to fit the rules...

You seem to have done things right..you should not be hurting here...these "pros" should..they all have more money than you...and it is time they took a bath...

It would seem there is liability here both on the dealer part..and the engineers part...you will need an attorney for advice...

DO NOT ALLOW THE DEALER TO LIE ON ANY CREDIT APP...YOU WILL HAVE TO SIGN IT..AND YOU COULD BE CHARGED WITH A FEDERAL FELONY....even if he lowers the price to cover the increased payment..

DO NOT give up the home until you have spoken with an attorney..

[mac]

You go girl! You did your good-faith best. Let us know how it turns out.

[Mark]

The foundation should have been inspected before the home was set, and if didn't meet FHA requirements, that was the time to find out.
Concrete blocks do not a permanent foundation make.

Just to give you something for comparison, my (FHA) was set on full length concrete runners, with double rebar, with backfilled concrete block perimeter wall, also with rebar, centerline supports were backfilled concrete block, again with rebar. A foundation plate was bolted to the wall, and then the home was bolted to the plate with foundation plate straps every 12", termite treatment and full coverage vapor barrier.
That is what it took to meet FHA requirements, just for the foundation.

Do NOT let the dealer get you into claiming more income than you have!
FHA has 120 DAYS to come and review the records.

As for not moving in, you weren't even suppose to have access to the home until after closing, since it's not technically yours until closing.

Shorter loan terms typically have LOWER rates, not higher.

Just an aside that wasn't mentioned.. You put your land in lieu, that means somebody other than you now owns your land. They won't reposses the trailer, they will foreclose on the property (home AND land). You lose the house, the land, and any money you've paid out. Putting your land up was the dealers security interest in ensuring that you would go through with the deal and if you didn't, they had something of value to compensate.

It's time to find a lawyer, a letter from a lawyer speaks 100 times louder than a letter from you.

[Andrew/RHLending]

My gosh!

My sympathies go out to the borrower. In my view, the lender, engineer and dealer are all to blame.

A dealer should know what they are doing before executing a binding transaction. I'm assuming that somewhere along the line someone executed a mechanic's lien contract on the property to include the house and improvements......Anyhow, if they don't know how to do a loan, they should have found out before or passed.

The lender should use inspectors/engineers that are used to MH transactions in FHA. They should have references on who does these from experience.

The "engineer" was tremendously bad. It is his job to know the rules. I don't know all the MS standards, but FHA states pretty plainly how the foundation is to be constructed. It's his stamp on the "plans" that has to be underwritten by the lender...BEFORE construction. There was supposed to be an inspection by the engineer or a FHA fee panel inspector to show the foundation was poured and attached to the home as per the approved drawing.

So I would go after all three parties and tell anyone and everyone to stay away from those folks.

Unfortunately, it's situations like these that harm the MH industry as a whole. People start to believe everyone is incompetent and/or lying.

I wish you were in Texas so we could help.

Good luck and stay strong.

[Sillymomof3]

Just a quick update...

I did speak with an attorney today. He said that the worst that can happen is the dealer will come out and get the home. We have no cash invested nor did we sign the deed that the dealer had wanted us to giving him the land should something like this happen in the end. The lawyer says we are not liable at all for any of the expenses. He said to just be thankful we don't have any real money tied up in the deal. However, we still wonder if we have any rights or can reclaim any of our losses. [The attorney is not a real estate expert (hard to find one in our rural area) and feels we should just cut our losses and let it go.]

After I informed the dealer about our unwillingness to accept the new loan terms, they started scrambling to try to get us a better deal. They did drop the selling price another $7,000 and got the interest rate dropped almost 1% and got 3 years added to the repayment period. But, the monthly payment is still too high. Can they keep tweaking with it maybe, since they have done it a couple of times already or do you feel the lender they are using has given us the best deal he will?? (Our credit is not so great, as you have probably guessed, but we are also using 22 acres of land for the loan. The land alone would cover the price of the home if it came down to it.)

We really want to keep this house. We thought we had been smart and done all of our homework ahead of time. And it took us months to find a home that met all of our needs/quality requirements. We never thought that we could have these kinds of problems. All we focused on was finding a quality house at a good price. And we feel we got that. It sickens us now to have to give it up. Not only that, but now we are left with NO home at all and no where to go except with relatives unitl we can find something to rent I guess. The stress of this whole situation is gonna be the death of us!!

[rmurray]

You might be better to check an attorney out of your area....Construction..mechanics liens can be filed without your knowledge or approval...In most areas it is standard proceedure..Now thankfully for you..you have a DUMB dealer and he probably does not know he can do this..

As is said...if the dealer is lying about the income..this alternative should not be considered...PERIOD...Federal prison is no fun..


Since the dealer is willing to give up $7000..this home can be fixed...Maybe the dealer could call another dealer and ask advice..offer to pay $1000 to someone familiar with the rules in the area and let them manage the retro fit of the foundation...Since you already own the land...an engineer was not really ever required..You are doing a FHA refi...not FHA new aquisition...these rules are different and a little easier to achieve...All you really need is a FHA fee inspector..that is it..Foundation did NOT require pre inspection (although it would have been a good idea)..

As i said..Fee inspectors have all different interpretations of the rules..Call another dealer and ask for a referral to one familiar with manufactured homes...Ask him what the requirements are by his standards...

This can be done...wish I was in the area..could get the ball rolling right away with this dealers $7K...and your equity..and desire..This process should take about 2 weeks..and you can go to a close..

[Gary Haller]

This is a tough situation. with deals hard to come by. Retailers are doing what needs to be done to help people get homes when the qualifications really arent there.

In todays market when things go wrong . It needs to be a shared expierence.
What happens when a family with money gets into a jam building a new home/
Its called cost overrun . and how is that dealt with ? usually there is some money around to take care of these problems.

Sure a Retailer should know FHA Finance. And so should the customer.
Especially when the reatil customer goes door to door from retailer to retailer beating the prices down to bare bones. Who should be the general contractor at this point ?

When it comes to private land I keep a few lessons in mind that absolutely apply in this case . I always think that the desk has two sides .customers and in this case the Builders.
I never deliver a home to private property with out a down payment and I have to think long and hard before I will deliver without a lanlord waiver or quick claim .

These are standards in the Industriy.. It isnt like 5 or 10 years ago when the payment came in a little high in the end customer would say I will find a way.

Today people balk in fear. And expect the retailer to eat the whole mess. I would suggest everybody sit at the table and reclose this deal. Because the customer really wants the home . This type of situation can be avoided by proper planning.

Good Luck

[Gary Haller]

This is a tough situation. with deals hard to come by. Retailers are doing what needs to be done to help people get homes when the qualifications really arent there.

In todays market when things go wrong . It needs to be a shared expierence.
What happens when a family with money gets into a jam building a new home/
Its called cost overrun . and how is that dealt with ? usually there is some money around to take care of these problems.

Sure a Retailer should know FHA Finance. And so should the customer.
Especially when the reatil customer goes door to door from retailer to retailer beating the prices down to bare bones. Who should be the general contractor at this point ?

When it comes to private land I keep a few lessons in mind that absolutely apply in this case . I always think that the desk has two sides .customers and in this case the Builders.
I never deliver a home to private property with out a down payment and I have to think long and hard before I will deliver without a lanlord waiver or quick claim .

These are standards in the Industriy.. It isnt like 5 or 10 years ago when the payment came in a little high in the end customer would say I will find a way.

Today people balk in fear. And expect the retailer to eat the whole mess. I would suggest everybody sit at the table and reclose this deal. Because the customer really wants the home . This type of situation can be avoided by proper planning.

Good Luck

[B. Gilliam]

The dealer and FHA inspector are completely to blame !! I agree with Andrew in his post. FHA is complicated, but after you have done a couple, you usually know all the little things FHA needs. If the dealer really cares about it's customer, it will do all the work necessary to conform to FHA standards.The lender expects the dealer and engineer to understand FHA. The inspector/engineer needs a refresher course and should possibly have his FHA status taken away. You, the customer, are doing right !!!