FHA Requirements Not Met - No Heat!

[Melissa1223]

I have a question about our FHA loan. If anyone has any input it would be greatly appreciated!

We bought our house in 2005. We were turned down for an ARM (thank goodness!) but were able to secure an FHA-backed 30 year fixed. FHA inspected the property and required us to fix a few minor things (about $500 in repairs) before the closing.

Flash forward to the present. We owe $129,000 on a house valued at $40,000 and are paying $1250/mo. We have requested a loan modification from our bank, Wells Fargo, no word yet. And we engaged the services of a real estate agent to list the house with a short sale as the goal.

While doing the walk through with the agent she was surprised the home was approved for FHA financing considering it has no heat. We have no central air and no permanent heat source. In the summer we use window units and during the winter we wheel in some plug in space heaters and hope nothing catches on fire!

According to the little bit of research I've done it looks like the FHA requirements state each habitable room must have a heat source. Is this not the case in Florida? If it is a requirement for the loan and it was overlooked, do we have any recourse?

Any input would be great, even if you can just tell us who to ask. I called a real estate attorney today and they told me they don't handle this type of issue. So what practice field am I looking for? Or do I call HUD? Or what? Thanks so much for your time and help!

~Melissa

[Moe Bedard]

Hello Melissa and thanks for joining the community!

My understanding is that your agent is correct. I think the issue would be with the inspector, agent who sold the home and the appraiser. As far as recourse, those would be the people I that you might possibly be able to sue.

However, a lawyer as always is your best bet to see what legal recourse you actually do have. This would definitely be a real estate and mortgage attorney area of law. Many lawyers are just not up to speed on all of this and you just need to find the one that is.

In any event, there is prob ally very little that can be done and the headache may not be worth the fight.

[Marshall Rosenbach Esq.]

Melissa - definitely call HUD and ask them what, if anything, you can do with respect to your loan. But the more important problem is your situation. You should continue with Wells Fargo and work on getting a modification. I know they will work with you but it does take persistence. If you don't mind giving up the home, make sure that when your agent closes on the short sale, the approval from the bank includes a waiver of any deficiency and that the proceeds from the short sale satisfy the mortgage and note.

[Melissa1223]

Thanks for the quick response guys!! I sent an email to HUD, we shall see what they say. And I will look for a real estate/mortgage attorney interestd in investigating our claim, if any.

Thanks again!

[Moe Bedard]

No problem and please keep us posted on your progress with HUD because this interests me a lot

I wish you the best in your fight!

[Melissa1223]

On Wed. I sent an Email to the FHA office info@fhaoutreach.com

Dear Sirs:

Quick question!

It seems that to get an FHA loan in most areas the property must have a permanent heat source. Is this the case in FL?

Thanks for your help!

On Thurs. they sent a response telling me the matter had been "escalated to the Atlanta Homeownership Center for review and response. "

This morning I got an email stating:

"Homes located in the Caribbean, Hawaii and the Florida counties of Lee, Charlotte, Glades, Hendry, Palm Beach, Collier, Broward, Monroe and Miami-Dade do not require heat if, the lack of, is "typical" for the market area and does not adversely affect the marketability of the property."

My home is located in Brevard County, not one of the counties listed. I called the 800 number they gave, 1-800-225-5342, and spoke to a nice girl named Brenda, explained my question and told her my house is not in the counties listed. She put me on hold and did some research. Brenda says if the house is not in those counties heat is required for the house to be eligible for FHA financing. TaDa!!!! I think I now get to wear my 'victim of predatory lending club' hat with pride.

So I asked what I should do next, Brenda at FHA suggested I call my lender and advise them of the situation. I'm thinking it is time to engage the services of an attorney.

Will keep updated as the story develops.

[Marshall Rosenbach Esq.]

I would use this irregularity as leverage in support of a request for a loan modification, or in support of your request as part of your short sale for the lender to accept the short sale proceeds in full satisfaction of the entire debt (as opposed to in satisfaction of the mortgage only, which would leave you exposed to a deficiency judgment). In terms of cancelling the loan, even if you could do that (provided the claim is not time barred), you would have to tender back to the bank the money you borrowed, which I assume you cannot do. That's why the most practical way to use this information is in furtherance of your modification or short sale efforts.