The FHA offers homeowners 62 and older a reverse mortgage, known as the Home Equity Conversion Mortgage (HECM). It allows seniors to convert their home`s equity into regular cash payments. Since older owners are often targeted by fraudsters, the addition to the HUD-1 settlement statement was developed for use with sales contracts with a HECM. The father, the seller and the trust agent sign the endorsement. With the signature, the seller certifies with full knowledge of saw that the buyer only uses a HECM purchase credit to buy the house. It also prevents the seller from getting a senior with a HECM to buy his house with the promise to repay it after the conclusion of the fiduciary service or to provide credits or concessions outside the contract or trust contract. FTA additions add provisions and enhance the protection that already exists in a sales contract. They protect the buyer and the FHA lender from misrepresentations and can also protect a buyer`s surety. The endorsement to the real estate certification requires not only the signatures of the buyer and seller, but also those under the broker. It certifies that any person who signs respects all the conditions of the sales contract in his soul and conscience. It is also verified that the signatories have not concluded secret agreements on the site. Certification helps avoid collusion between agents, buyers or sellers that may include renegotiated or added terms such as a new sale price, seller credits and kickbacks from real estate agents.
The FHA amendment clause protects the buyer`s surety if the valuation of the home is lower than expected. An evaluation is a professional opinion based on comparable sales in the region and sometimes lower than the selling price of a sales contract. The maximum amount of a buyer`s credit is based on the weighted value. It helps the lender protect their financial interests and can give the buyer confidence that a home is worth at least the amount they are willing to pay. The modification clause informs the seller that he cannot keep the buyer`s account simply because of a low valuation. It also prohibits the seller from charging the buyer an equal penalty if the disputed value is less than the purchase price. FHA`s mortgage insurance programs are for primary residences, with limited exceptions. Most sales contracts indicate whether or not the buyer plans to use the home as their principal residence. In addition, the Residential Loan Application uniform, which the FHA buyer will fill out, requires occupancy status for the home. The FHA also requires a buyer to certify through the “HUD/VA Addendum to Uniform Residential Loan Application” that they plan to live in the home. It verifies that the buyer will reside in the house for most of the year and that he intends to occupy it within 60 days of closing. All of these precautions prevent investors from using the FHA`s loan programs to purchase investment real estate.
Addendums or “Addenda” help the Federal Housing Administration (FHA), FHA buyers, and the agency itself protect. FTA buyers often have credit problems and lower incomes, and they may also be more vulnerable to fraud. Lenders who approve and extend credit for the FHA ensure that buyers, sellers, and their agents sign certain additions to the sales agreement. Karina C. Hernandez has been a real estate agent in San Diego since 2004. She has also worked as a mortgage lent and real estate transaction coordinator. She has a B.A. in English from UCLA.
Karina has written thousands of articles for a variety of online channels over the past 10 years, including eHow, sfGate, the nest, Quicken, TurboTax, RE/Max, Zacks, and Opposing Views…