Closing · Fannie Mae B2-3-05 · TREC 20-19 ¶14Hurricane or storm damage before closing: what the lender and the contract require

When a disaster may have damaged a home under contract, two sets of rules apply. The lender's: on a Fannie Mae loan the lender warrants that the property is not damaged by fire, wind or other loss, so before the loan is delivered it must take reasonable steps to find out whether the condition changed – it decides whether a property inspection or a new appraisal is needed, and for a condo it looks at both the unit and the building. Damage that does not affect safety, soundness or structural integrity and is covered by insurance can go ahead, with professional repair estimates and funds set aside to finish the repairs; uninsured damage, or damage affecting safety or structure, must be repaired before the loan is delivered. In FEMA-declared disaster areas eligible for individual assistance, new casefiles do not get value acceptance (appraisal waiver) offers, and credit, income and asset documents and the appraisal may be up to 180 days old at the note date. Then the contract's: in Texas, paragraph 14 of the TREC resale contract makes the seller restore damage that happens after the effective date by the closing date; if the seller cannot for reasons beyond their control, the buyer may terminate and get the earnest money back, extend performance by up to 15 days, or accept the property as is with an assignment of insurance proceeds (if the insurer allows) and a credit for the deductible.