Watch out on FHA 203K Streamline loans - The contractor can get screwed!

By
Real Estate Agent with Lyon Real Estate, Fair Oaks CA (Sacramento Area) DRE# 00809499

I've probably sold my last home on an FHA 203K Streamline loan.  They seemed pretty cool, and last year I sold 3 homes with them.

But yesterday's call changed all that. "Sally, I haven't been paid on the second half yet", said the contractor. "9,350 bucks worth".

We had been told the last draw, which is half of the contractor's bid, would take about 4 months from the completion, so had not worried.  The bill had been submitted to the client, and they had their final inspection with B of A. It had only been 9 weeks.

I called B of A just to check. "Hmmm.  You'll have to talk to the homeowner.  We closed out this loan, and the money has been applied to their principal reduction. You'll have to get it from the homeowner.

"WWHHHAAAAATTTTTTT!!!!! They don't have any money!  If they did, they wouldn't have needed your frikken loan!!!" I think I threw in some four letter words, as well. 3 to be exact.

Seems like after the final inspection by B of A, the homeowner needed to submit the final bill and a statement of completion to the bank. They didn't do it. So the bank waited 30 days, then gave the homeowner back the money in a principal reduction. Never told the contractor.

Since the contractor is out of the loop, there is no way in Hell he could have protected himself. B of A didn't notify him he wouldn't get paid, either.

How can they screw the contractor like that? I am seeing fireworks over this. I've called the originated lender, and they said they will get it straightened out, but this just happened Friday at 3:30. So far, no word. I'll give it til Monday, then all Hell will break loose. I'm prepping the Kraken right now.

I'll update you as this progresses.

Have you had this happen?

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Your Fair Oaks Realtor for homes for sale in Fair Oaks and the Sacramento Area of California.... I'm your gal (Sally Dunbar). I'm occasionally knowledgable, periodically humorous, and always willing to tell you everything I know.  What more could you ask for?

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Sally Dunbar, 30 year Broker Associate, Lyon Real Estate, Fair Oaks, CA (916) 524-1548, SDunbar@GoLyon.com "Your Fair Oaks Realtor"

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Topic:
Lending / Financial
Groups:
Bartender, Make it a Double
Club Chaos
Crap
Diary of a Realtor
Lyon Realtors
Tags:
fha 203k streamline
watch out for 203k streamline loan
loan problems
b of a
screwed
problem loan
contractor
problem
bank of america

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Rainmaker
199,008
Sally Dunbar
Fair Oaks Realtor - Fair Oaks Homes for Sale
Lyon Real Estate, Fair Oaks CA (Sacramento Area)

Jack - Yes, Mike did contact me.  I'll wait to see what happens then continue my dialogue with him.  Thanks for the connect.

June 19, 2011 04:51 PM
Rainmaker
199,008
Sally Dunbar
Fair Oaks Realtor - Fair Oaks Homes for Sale
Lyon Real Estate, Fair Oaks CA (Sacramento Area)

Update - I got the loan originator involved (who was awesome, by the way - Vitek).  The owner claimed they didn't know they had to submit anything, although B of A says they have tried to contact them for a month.  Supposedly everything has been signed.  But now the check goes to the owner to cosign.  We'll see if they will continue to be engaged in the process, and will send the check to the contractor.

These are still a pain.....

July 01, 2011 10:27 AM
Rainmaker
250,038
Jack Mossman - The Nines Team in Lodi
The Nines Team in Lodi
The Nines Team at Keller Williams

Sally - I keep watching for a further update ... is everything back on track with the contractor?  Thanks ..

July 15, 2011 05:59 PM
Rainmaker
199,008
Sally Dunbar
Fair Oaks Realtor - Fair Oaks Homes for Sale
Lyon Real Estate, Fair Oaks CA (Sacramento Area)

Update.... AFter contacting the original lender, they jumped all over BofA, and greased the wheels to get the paperwork finished that the owner's had neglected.  B of A reversed the principal reduction, and the check is now in the bank account of the contractor.  All is well.

But I do see where if the owner wasn't engaged in the process, this could go on forever, leaving the contractor to levy a lien - we all know how effective that can be!

July 15, 2011 06:04 PM
Rainmaker
250,038
Jack Mossman - The Nines Team in Lodi
The Nines Team in Lodi
The Nines Team at Keller Williams

Thanks Sally - so I'm guessing that if we value our contractor relations ... we need to stay engaged at some level ... even if we're just taking the pulse of the transaction.  I appreciate your feedback.

July 16, 2011 11:03 PM
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Rainmaker
199,008

Sally Dunbar

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Additional Information

Fair Oaks homes for sale by Realtor Sally Dunbar, who's been hoofin' it through the homes of Fair Oaks and the surrounding areas, matching up eager buyers with ready-to-move sellers, since 1979.

While I sell homes in Fair Oaks, I venture in Sacramento, Carmichael, Citrus Heights, Orangevale, Rancho Cordova, Gold River, Folsom, El Dorado Hills, Roseville, Rocklin and Granite Bay...(and Chevron loves me!)

How have I survived for so long?... By always doing what's right for my people.... Always!

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