Depending on the estimate, FHA loans currently make up approximately 25% of total mortgage originations. Recent experience has led me to realize that although most real estate professionals know what they’re doing, there are still many who need a little coaching on the main disclosure; the FHA Amendatory Clause/ Real Estate Certification.
Here are three essential things professionals and consumers need to know:
- This disclosure MUST be signed by the homebuyer(s), homeseller(s), and real estate professionals (both selling and listing agent) involved in the transaction.
- What also needs to be filled out? At the top of the form the homebuyer(s), homeseller(s), property address, and date of agreement should be filled in. In addition, the blank space following the “$” symbol in the Amendatory Clause section should be filled with the original purchase price of the offer.
- The signatures on the FHA Amendatory Clause MUST be dated on the SAME DATE THAT THE RESPECTIVE PARTY ORIGINALLY SIGNED THE EARNEST MONEY AGREEMENT. The signature and dates for the Real Estate Certification are not date sensitive.
If John & Jody Homebuyer write an offer with their real estate agent Shelly Sellalot to purchase a home on September 1st, then John & Jody must sign and date the Amendatory Clause on September 1st.
If the sellers, Jay & Judy Homeseller, along with their listing agent Bob Bigbucks, respond to the offer on September 2nd, then Jay & Judy must sign the Amendatory Clause on September 2nd irregardless of their response (unless they simply reject the offer all together).
With regard to the Real Estate Certification John, Jody, Shelly, Jay, Judy, and Bob all need to sign this section but the date is not critical.
What are the parties signing? In so many words the Amendatory Clause gives the homebuyer(s) permission to back out of the transaction and receive their earnest money back if the property does not appraise for the amount they are buying the house for.
The Real Estate Certification states that the entirety of the sales agreement is disclosed in the earnest money agreement and accompanying addendums which are ALL provided to the lender.