Callers have asked if a buyer is required to apply for third-party financing if the Third Party Financing Addendum (TXR 1901, TREC 40-9) is attached to the contract. The answer is yes. The Third Party Financing Addendum says at the top that the buyer “shall apply promptly for all financing described below and make every reasonable effort to obtain approval for the financing.” Buyers who want to be protected by the loan approval contingencies in Paragraph 2 of the addendum must make a reasonable effort to obtain financing approval.
—Ryan Bauman, staff attorney
Are you kidding?
Does the Seller must be notified up on applying for financing and provide the loan processor’s contact information and get up date on underwriter’s approval or approval with items to be cured by the borrower? Seller need to be in loop with the information of financing process as it affect the subject property.
There should be fee to charge for Financial addendum just like option fee on contract, so that buyer can not play the game to get an excuse for termination contract and get full refund of earnest money without applying the loan or shop around for loan. Seller hold the property for this addendum’s contingency so there should be clause for fees to be paid by the buyer.
Okay. I have a question about that. If the Third Party Financing Addendum has “Conventional Loan”, but the Buyers are able to get a FHA that helps them out financially and gives them a better rate, does the Seller have to accept this change? AND isn’t it the end game to the same whether it is a “conventional” or FHA loan if the Seller receives the amount agreed upon in the One to Four Residential Contract at the closing table? If there are FHA Lender required repairs that the Buyers are willing to do since the Seller refuses to do,… Read more »