FHA Loan Addendum

FHA LOAN ADDENDUM

This FHA Loan Addendum (the "Addendum") is entered into on by and between Buyer: and Seller: in connection with the Purchase Agreement dated for the real property located at (the "Property").

RECITALS

WHEREAS, Buyer intends to obtain financing insured by the Federal Housing Administration ("FHA") under the National Housing Act; and

WHEREAS, FHA financing requires an FHA case number, appraisal compliance with FHA standards, and may require repairs, escrow holdbacks, or other corrective actions as a condition to insurability of the mortgage; and

WHEREAS, the parties desire to set forth their respective responsibilities and remedies relating to the Buyer's FHA loan approval, appraisal requirements, and any FHA-required repairs or escrows.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the parties agree as follows:

1. FHA FINANCING CONDITION

1.1 Condition Precedent. Buyer's obligation to close the transaction is expressly conditioned upon Buyer obtaining an FHA-insured loan commitment meeting Buyer's approval and FHA case number issuance. If Buyer fails to obtain such FHA financing within the financing contingency period set forth in the Purchase Agreement, Buyer may terminate the Purchase Agreement as provided therein.

1.2 Loan Terms. The proposed FHA loan is anticipated to be in the principal amount of with an FHA case number (if issued) of . Buyer shall promptly provide Seller and Seller's agent with written notice of loan approval or denial.

2. APPRAISAL, REPAIRS AND ESCROWS

2.1 FHA Appraisal. The parties acknowledge that FHA appraisal requirements are separate from any inspection contingencies. If the FHA appraiser identifies repairs or deficiencies required by FHA for mortgage insurance approval, Seller shall cure such deficiencies as set forth in this Section unless otherwise agreed in writing.

2.2 Seller's Repair Obligations. Seller agrees to complete the FHA-required repairs described below by the Repair Completion Date. List of FHA-required repairs and specifications (if any):

2.3 Holdbacks and Escrows. If FHA permits an escrow holdback in lieu of completion of repairs prior to closing, Seller agrees to the creation of an escrow or holdback account acceptable to FHA and Lender to secure completion of the work. The amount of any escrow shall be the greater of the amount required by FHA or the reasonable cost estimate to complete the repairs. If escrow is required, the escrow instructions shall be agreed in writing prior to closing.

3. INSPECTIONS, ACCESS, AND COOPERATION

3.1 Inspections. Buyer or Buyer's agents shall be permitted reasonable access to the Property to satisfy FHA appraisal and inspection requirements and to obtain estimates for required repairs, provided Buyer gives Seller reasonable notice.

3.2 Cooperation. Seller shall reasonably cooperate with Buyer and Buyer's lender in obtaining FHA case number issuance, providing documentation reasonably requested by the lender or FHA, and facilitating completion of repairs or escrow arrangements.

4. MORTGAGE INSURANCE, COSTS, AND PAYMENT OBLIGATIONS

4.1 Mortgage Insurance Premium. Buyer acknowledges that FHA mortgage insurance premiums ("MIP") and any upfront mortgage insurance premium may be required by FHA and shall be paid as follows: initial MIP (select one)

Buyer will pay initial MIP and monthly MIP as required by FHA Seller agrees to pay initial MIP or contribution toward buyer's MIP in the amount of

4.2 Other Costs. Each party shall be responsible for customary costs as set forth in the Purchase Agreement, except as otherwise agreed in this Addendum.

5. CLOSING, TIME FOR PERFORMANCE, AND EXTENSIONS

5.1 Closing Date. The parties agree to use good faith efforts to close on or before the Closing Date in the Purchase Agreement. If FHA-required repairs or escrow arrangements delay issuance of the FHA mortgage insurance endorsement, the parties shall extend the closing date by written agreement for a period not to exceed days unless otherwise mutually agreed in writing.

5.2 Termination Right. If Buyer is unable to obtain FHA financing or FHA approval within the time periods required by the Purchase Agreement and any agreed extension, Buyer may terminate the Purchase Agreement by written notice in accordance with the Purchase Agreement, and earnest money shall be disbursed as provided therein.

6. DEFAULT, REMEDIES AND ATTORNEYS' FEES

6.1 Remedies. Upon a material breach of this Addendum, the non-breaching party shall be entitled to pursue remedies available under the Purchase Agreement and at law or in equity, including specific performance where appropriate. Nothing in this Addendum shall limit a party's right to seek damages for breach.

6.2 Attorneys' Fees. If either party defaults under this Addendum and the non-defaulting party commences an action to enforce its rights, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs as awarded by the court or agreed in the Purchase Agreement.

7. NOTICES

All notices required or permitted under this Addendum shall be in writing and delivered in accordance with the notice provisions of the Purchase Agreement to the addresses stated above, or to such other address as a party may designate by written notice.

8. REPRESENTATIONS AND WARRANTIES

8.1 Seller's Representations. Seller represents and warrants to Buyer that Seller has not received written notice of any condition of the Property that would render the Property ineligible for FHA insurance other than as disclosed in writing to Buyer prior to the execution of this Addendum.

8.2 Buyer's Representations. Buyer represents that Buyer has applied or will apply for FHA financing in good faith and will promptly provide the lender with all documentation required by the lender and FHA.

9. MISCELLANEOUS

9.1 Governing Law. This Addendum shall be governed by and construed in accordance with the laws of the state in which the Property is located, without regard to conflict of law principles.

9.2 Entire Agreement. This Addendum, together with the Purchase Agreement, contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.

9.3 Severability. If any provision of this Addendum is determined to be invalid, illegal, or unenforceable in whole or in part, the remaining provisions shall remain in full force and effect.

9.4 Amendments. No amendment, modification or waiver of any provision of this Addendum shall be effective unless made in writing and signed by both parties.

9.5 Waiver. The waiver by either party of a breach of any provision of this Addendum shall not operate or be construed as a waiver of any subsequent breach.

9.6 Counterparts. This Addendum may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

ACKNOWLEDGMENT

The parties acknowledge that they have read and understand this Addendum, that they have had an opportunity to obtain independent advice, and that they intend to be legally bound by its terms.

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