I am buying a house. The lender gave me a big package with lot of documents. One of the document is "HUD Addendum to Uniform Loan Application" and line item 25(3a) Says the following"I was aware of this valuation when I signed my contract and I have paid or will pay in cash from my own resources at or prior to loan closing a sum equal to the difference between the contract purchase price or cost and the HUD /FHA established value. I do not and will not have outstanding after loan closing any unpaid contractual obligation on account of such cash payment"25(3b) says the same thing except the first line read as " I was not aware....but ...)The application already checked 3a. Now my understanding is that appraisal has not been done yet and if I sign the document does it means that if the appraisal comes short / less than the purchase price, then I will have to pay the difference from my own pocket at closing.Kindly let me know
You are correct and that is what it says -- and it also states that if you do pay this cash amount you will not take out another loan to do it. My suggestion is to not sign or return that document until you find out what the Appraised Value is if you are not prepared to step up and put some cash into the deal from your own pocket in the event that the Appraisal falls short.
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Thanks, XXXXX XXXXX do not sign this document without consulting my attorney, can the lender stop processing the process further and will deny the request? Do they usually?
They might stop the process until the appraisal comes back. But if the value to appraisal is too much of a gap, it sounds like you do not want the property or the loan anyway. I suggest you tell the lender your concern and that there is no way that you can come up with a big cash amount at closing to cover any problems from this and see what they say -- but I would not sign it until the appraisal comes back.
13 years experience in RE Law, including LL/Tenant, contractor disputes, comm'l prop. issues
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