Pending sales for single family homes since August 1st.Need more specific information-let me know.

Yes it is!.  I was running through Jungle Jim’s in Fairfield and couldn’t resist taking a picture of these giant watermelons.  As far as I’m concerned-watermelons are synonymous with summertime.

As you round the gentle curve on Ross Road, in Fairfield, you pass by a very historic address -6181 Ross Road. The Elisha Morgan Mansion nestled in Gilbert Farms was built around 1817.  The Mansion is listed on the National Register of Historic Places.

 If you are out and about enjoy walking around the wonderful grounds surrounding the Mansion.   

FHA and Fannie Mae are slamming the condo market. 

For areas with an abundance of condominiums, like Fairfield, the new rulings could have a negative impact.

 FHA Mortgages:

In the past FHA approved a complex as meeting their standards- and future borrowers using FHA mortgages did not have to jump through hoops to get a loan approved.  Beginning around October 1st of this year- FHA condo approvals issued prior to 10/1/2008 are being eliminated and condos projects will have to be recertified with HUD.    What this means to buyers and sellers - longer time to closing while the complex is reviewed and approved.  If the condominium complex cannot obtain FHA approval- sellers will have to rely on a much smaller pool of buyers who  qualify for conventional mortgages or cash buyers.

Fannie Mae:

Add to the potential crunch of FHA approvals, Fannie Mae  announced a decision to tighten its lending rules to condominium buyers.  Under the new rules, if a condo association has more than 15% of its units delinquent over a month- Fannie Mae is not guaranteeing the loan. And owner occupied units must be at 70% instead of 51%.   For complexes not meeting the guidelines lenders (banks, credit unions…) can’t provide a loan unless they plan on holding onto it forever.  Most lenders do not operate this way.

It will probably take some time for the jittery condo market to normalize - in the mean time condo buyers and sellers are pinned in a ring refereed by FHA and Fannie Mae.

Today more and more sellers in the greater Cincinnati area aren’t receiving checks when they close on the sale!

It’s referred to as a “dry closing” because funds aren’t handed out at closing.  Usually (but not always) a dry closing is the result of a lender requirement to review all the signed closing documents prior to authorizing release of the money.

Usually it’s not the fault of anybody sitting around the closing table- it’s a lender requirement.  In many cases, the person handling the closing simply faxes all the material to the lender and approval comes within 30-40  minutes.  However, more and more, the lenders are not responding in a timely manner- and buyers and sellers are left in an awkward position. 

Sometimes the seller is contractually obligated to provide occupancy at closing and they have vacated the property anticipating payment at the time of closing.  Buyers expecting to move in the same day as closing and scheduled movers, appliance deliveries, cable/dish installation and a multitude of other things.

The rubber hits the road when everybody signs the closing documents and the seller doesn’t receive their money.  The seller has some options:

• Give the buyer the keys and hope the closing check will arrive that day
• Not allow occupancy until payment is received
• Seek legal council

I haven’t heard of anybody jumping up and down yelling “Show me the money” -yet.

But buyers and sellers need to know what is happening before they sit down at the closing table.  In a previous blog I covered potential closing delays caused by new government regulations added to the current lender requirement to review signed documents may have an impact on more and more closings.  It would be helpful if all the parties were warned in advance about the possibility of a “dry closing”- but nothing in the normal documents requires providing this information to buyers and sellers.

Of course there are other reasons for dry closings.  Sometimes the payoff on the seller’s mortgage can’t be obtained, condominium clear letters aren’t received, old liens against the property requiring a lot of footwork to clear, buyer did not provide required paperwork in a timely manner- delaying the loan process.  Most of these can be cleared up prior to the closing but can sometimes cause ongoing problems.

It would be helpful if buyers started asking their lender about their closing policy before the actual closing.  Privacy regulations often prohibit lenders from communicating with anybody but the buyer- so agents are not aware of potential of a “dry closing”.  Another solution would be escrow closings- where parties sign the paperwork by a specified date and the “closing” is scheduled for a future date.  This gives the title company time to clear all the hurdles and hand out funds on the scheduled date.  The down side of escrow closings is the added cost.

If you need more information about closing problems or real estate call or email.