Who is responsible for making the "cost to cure" repairs in order to get an FHA loan underwritten?

Question

We have a house under contract and the appraiser put "cost to cure" in her report. None of the bedrooms have floor coverings but 2 of them have painted floors. The cost to cure is a result of the unpainted floor. Mortgage broker says FHA will not underwrite the loan unless it is fixed. Who fixes it? We already have the carpet we want picked out. Would hate to have to go in and tear up brand new carpet over something so minor. Any ideas or answers are appreciated.

Answer 1

The general answer is the seller.  FHA requires that homes meet their guidelines prior to closing on loans they insure.

The simple reason for this policy is that should the buyer default on the mortgage, FHA (the taxpayers in other words), then own a property in atypical condition which is either going to sell below market or require an additional outlay of taxpayer funds to correct.

FHA has lightened up on some of its more nit-picky requirements but unpainted subfloors aren't going to pass (a painted subfloor, unless it's a concrete slab, wouldn't pass in my area).  Ask your broker if some kind of waiver might be obtained if the seller would lower the sale price if you escrow the cost of the carpeting, pads, and installation.

That appraisal will stay with the FHA case number for six months from its effective date, so the seller will either have to comply with the request or forgo any buyer seeking FHA or USDA Rural Development insured financing.