I am working with Wells Fargo on a 203K on a investment property. This is not my first parade here; I am competent with the financing process. What a bureaucratic nightmare! I have jumped through every hoop possible regarding financial documentation (our credit score is in the 800’s) and they still keep requesting redundant financial information, most of which I have already provided. Apparently, know one in this process actually reads any of the information provided. Wells Fargo seems to be ignorant regarding tax returns because they keep requesting a Schd A tax form which we don’t use to file!
Add to that the nightmare of working with Granite Construction, Wells Fargo’s bid inspection sub contractor. The inspector that came to the house approved the scope of work and the bid with no additional recommenders. He forwarded that to Granite, who by looking at the photos from the comfort of their desk four states away, now demands I up the bid price (and ultimately the mortgage principle) for items such as brush clearing, paint (the house is completely painted inside and out), demolition of out buildings, etc. Many requested items are already on the original bid…again; don’t they know how to read?
Of course, the 203K FORBIDS the buyer from performing any of the work themselves. So what, I have to pay a contractor prevailing wage to cut bush from outbuildings? What person in their right mind would add that cost to a mortgage and amortize it over 30years? Mind you, all these additional items will greatly enhance the bottom line for both Wells Fargo and Granite Construction. I sense collusion here.
Everybody profits and the buyer is left with a mortgage that is more than they wanted to spend. Note we have been working on this loan for 2 months. The seller is exhausted and will not give another extension. So really, it is too late to go elsewhere. I wonder if Wells plays it this way? By the time they start upping the bid, the buyer is too far into the process to go elsewhere. It also makes me wonder how many people have been forced into properties that are a financial push only to not be able to make the payments. Then the bank forecloses, and sells the property back to Fannie or Freddy at inflated prices, the bank also gets paid by their lender’s insurance rider, not to mention the upfront fees they collected in the thousands of dollars. They profit greatly. I have tried to contact the Feds regarding this, but no one seems to know if the bank/construction sub contractor can arbitrarily demand the seller include aesthetic repairs and superfluous items. I have no intention of leaving the property with berry bushes close to the outbuildings. I don’t live like that and my other rental properties will prove that fact. Unfortunately, this is what happens when corporations collude with the Federal Government. They profit but the little guy pays. Thank you Senator Dodd and Senator Frank! What a mess you created and then retired!
Don't use this program. Seek private finance. It will cost more but you will benefit in the end.