FHA MANDATORY CLAUSE

Chapter 6, Section A HUD 4155.2

5. Closing Certifications and Sales Contracts, continued

(SEE PDF BELOW)

4155.2 6.A.5.c Except for houses sold by FHA under the REO program, FHA is not a party

Policy on Sales to the sales agreement.

Contracts

When a sales contract contains conditions that, if performed, would violate FHA's requirements, the lender must obtain an addendum or modification to the purchase agreement that allows conformance to those requirements.

Nevertheless, failure to perform a condition of the sales contract is not grounds for denying loan endorsement, provided the loan closes in compliance with all regulations and policies.

Example: The sales contract may require the seller to pay an amount in excess of present seller contribution limitations.

4155.2 6.A.5.d An amendatory clause must be included in the sales contract when the

Amendatory borrower has not been informed of the appraised value by receiving a copy of

Clause to the 1111D-92800.513, Conditional Commitment/DE Statement of Appraised value

Sales Contract or VA-NOV before signing the sales contract.

The amendatory clause is not required on

• HUD REO sales

• FHA's 203(k) loan program

• sales in which the seller is

- Fannie Mae

- Freddie Mac

- the Department of Veterans Affairs (V A)

- Rural Housing Services

other federal, state, and local government agencies

- a lender disposing of REO assets, or a seller at a foreclosure sale, and

• those sales in which the borrower will not be an owner-occupant (for example, sales to nonprofit agencies).

Reference: See 1IUD 4155.2 6.A.5.c for the required language for the Amendatory Clause to the sales contract.