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.