Agenda - Council - 09/08/1998 - Laserfiche WebLink

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CONDITION OF SALE N Earnest Money. Amount/Timing All sales (FHA and non-FHA) - To be deposited in the Broker's Trust Account: $500 for properties on which the bid amount is $50,000 or tess; $1,500 for properties over $50,000 but no more than $75,000; $2,000 for properties over $75,000. For the purpose of complying with State of Minnesota Trust Account provisions, HUD as seller will allow the Broker to hold the check until the bid opening has revealed that the purchaser's bid is the apparent high bid. However, the Broker will be responsible for providing earnest money to HUD in accord with directions so the Broker is at risk if s/he does not have control over the funds as of bid submission. Failure to close by the date specified in the HUD contract acceptance letter (or an extended closing date approved by HUD in writing) will result in forfeiture of all earnest money, except as provided below in the Return/Forfeiture section. Earnest Money. Return/Forfeiture Condominium Properties - Purchasers using the 15-day right of recision provision allowed by Minnesota law are not subject to loss of earnest money or the $50.00 cancellation fee (for FHA- eligible sales) if the required documents are submitted within the time limit. For all condo cancellations, however, a $25.00 copying fee will be required from earnest money ffthe condominium documents are not returned at the time of cancellation. Sales of property eligible for FHA insurance - If, using due diligence, the buyer is unable to obtain any financing for the purchase, the proper cancellation procedures as specified in the Broker Guide must be followed. Evidence of denial of financing for an FHA-insured loan by a qualified FHA lender will be required. If the process in the Broker Guide is correctly followed and HUD approves the cancellation, HUD will authorize the return of earnest money minus a $50 cancellation fee to an owner-occupant purchaser and the return of 50% of the earnest money deposit to a non- owner-occupant purchaser. If the property is eligible for FI-IA financing hub the purchaser elects to seek financing other than an FHA-insured loan and the buyer is unable to obtain approval for that financing, this provision does not apply. Instead, buyers have the option of seeking FHA-insured financing in order to qualify for the above provisions or of being treated as purchasers of properties not eligible for FHA insurance for the purpose of determining how much earnest money will be forfeited. (See below) Inability to obtain financing because of the financial burden of a currently- owned property which remains unsold is not a basis for return of earnest money; alt will be forfeited. Sales of property not eligible for FHA insurance - If, using due diligence, an owner-occupant purchaser is unable to obtain financing for the purchase from a recognized mortgage lender, the proper cancellation procedures as set forth in the Broker Guide must be followed. If the process is correctly followed and HUD approves the cancellation, HUD will require an amount equal to 50% of the earnest money deposit and allow the remainder to be returned ~o the purchaser. Inability to obtain financing because of the financial burden of a currently-financed property which remains unsold is not a basis for return of earnest money; all will be forfeited. Non-owner-occupant purchasers of properties not eligible for FHA insurance who do not close en the sale forfeit all earnest money. Sales of Property under FHA's Section 203(k) Financing - Properties advertised as eligible for FHA Insurance must be processed for FHA 203(b) financing should 203(k) not be approvable. Only ff a buyer is unable to obtain any FHA financing will the earnest money return provisions for FHA- eligible properties apply. Properties advertised as not eligible for FHA Insurance but permitting the use of 203(k) financing will be treated as not eligible for the purposes of earnest money return. Proper Cancellation Procedures Required - These provisions permitting return of earnest money apply only to sales cancellations following the procedures in the Broker Guide and approved before the HUD-established deadline for closing. Otherwise all earnest money is forfeit. Extension Policy ~: Extensions to the established deadline for closing are granted at the sole discretion of HUD. They must be requested and paid for in advance through the HUD Closing Agent. However, if advance payment is not made and HUD allows the closing to occur mqer the deadline closing date, funds will be retained by HUD at closing to cover the extension fee. I I '1 I I I I 1 i I I I I I I I I I