Mortgages Blog

Finance Blogs » Mortgages Blog » How Sandy affects area homebuyers

How Sandy affects area homebuyers

By Holden Lewis ·
Wednesday, November 7, 2012
Posted: 4 pm ET

Sandy spells bad news to homebuyers in the afflicted area who were waiting to close on their transactions and move into their new homes. Many buyers should expect delays. Some deals will fall through, especially for homes that were significantly damaged.

Keep in mind there's a difference between what Fannie Mae and Freddie Mac allow lenders to do and what lenders end up doing. Often, lenders impose stricter lending requirements on borrowers than Fannie and Freddie require.

The following applies to borrowers who applied for mortgages before Nov. 1, who were scheduled to close after Nov. 1, and who live where a major disaster has been declared because of Sandy (all or parts of Connecticut, New Jersey and New York):

  • Fannie and Freddie will allow lenders to rely on appraisals up to 180 days old. Previously, the limit had been 120 days. In just about every case, the lender will require an inspection. If the house is in good shape -- it was undamaged, or damage has been repaired -- the lender can rely on an appraisal up to 180 days old.

Keep in mind that the 180-day appraisal requirement is something that Fannie and Freddie allow -- it's not something they require lenders to do. Lenders reportedly have been telling borrowers that they have to get after-storm appraisals.

In all cases, lenders have to guarantee that the buyer is buying a home in good condition. That means damage must be repaired before the sale can go through and the mortgage can be closed.

Was your closing delayed as a result of Sandy? Fill me in @HoldenL.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment