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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Real Estate Law
Satisfied Customers: 17530
Experience:  B.A.; M.B.A.; J.D.
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I closed on a 203k loan with an escrow of 27k to be done to

Customer Question

I closed on a 203k loan with an escrow of 27k for repairs to be done to the home about 6 weeks ago. The home needed an additional 13k in repairs that the 27k didn't cover and we gave this money in cash to the "approved" contractor for this 203k loan. We were told at closing the loan was now being serviced by another lender. The loan officer has been very evasive with when the funds were being disbursed and the contractor was growing impatient. The contractor ultimately divulged to me that he was unlicensed and that the loan officer told him this wouldn't be a problem, but that the new lender is requiring he be licensed and this is why its taking so long to release the funds.
About 4 weeks after closing the contractor did become licensed, which i verified via our government county website. Upon researching, FHA 203K Streamline's should only use a licensed and insured contractor with work commencing within 30 days after closing.
The problem here is that the contractor hasn't performed the duties described in our written contract because he has yet to receive a single penny from the bank. This work includes the removal of mold-laden sheetrock, an absolute hazard for my 1 year old child. Another major problem is that the first mortgage payment was due one week ago, yet I am still paying for rent at my current apartment because I cannot move in to an unlivable house.
Long story short:
1)The bank used an unlicensed contractor to approve a streamline 203k.
2)its been over 30 days and ZERO monies have been disbursed.
3)I am now burdened with a mortgage payment for a home I don't reside in, and a monthly rental payment.
I have done everything on my part to work this transaction in good faith, yet all I get is a run-around from the loan officer. Would it be wise to advise the loan officer to defer my mortgage payment or pay for my payments or should I be contacting HUD/FHA? Should I "threaten" and make them aware I know why the delay in disbursement has occurred? I am unsure of how to proceed. I would rather be amicable and be able to move in to my home. Keep in mind, the loan officer has no idea I know he approved a 203k using an unlicensed contractor.
Please advise.
Submitted: 11 months ago.
Category: Real Estate Law
Expert:  Phillips Esq. replied 11 months ago.

You need to make a demand to the loan officer to make your mortgage payments since he caused the delay and you are still paying rent on your apartment as a result of the delay. If the loan officer refuses or ignores you, then you need to file complaint with HUD/FHA to see if you can get any relief. The loan officer acted illegally in approving the loan with an unlicensed contractor.

Customer: replied 11 months ago.
What kind of "relief" could FHA/HUD offer? is there usually a quick turnaround time after submitting a complaint? What if my credit suffers due to a late mortgage payment because I have to pay rent first?
Expert:  Phillips Esq. replied 11 months ago.

What kind of "relief" could FHA/HUD offer?

Response 1: You may be giving a different schedule for payment.

is there usually a quick turnaround time after submitting a complaint?

Response 2: Unfortunately, no.

What if my credit suffers due to a late mortgage payment because I have to pay rent first?

Response 3: You may consider filing lawsuit against the loan officer for the damages.

Customer: replied 11 months ago.
unfortunately my budget allows for one monthly payment of either rent or mortgage. I still reside in my apartment, should I pay my rent first to garner their attention and press the issue of them paying my mortgage payment?
also, how would you suggest I word my "threat"? Should I strictly communicate via email between the lender and loan officer from now on?
Expert:  Phillips Esq. replied 11 months ago.

I am sorry, but I cannot answer your questions because answering them amounts to giving you legal advice, which is prohibited by the terms of service.

Customer: replied 11 months ago.
Do you have any other advice/opinions for me within the terms of service?
Expert:  Phillips Esq. replied 11 months ago.

No, I do not. I have nothing else to add to my previous responses to you.

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