FHA/short Sale
I am working with Citimortgage on a short sale with a FHA client. They have sent the appraiser out, and he came back with an appraised value of $106K. The loss mitigation dept came back to me and told me that I can buy the house for around $96K, and that would cover all of Citimortgages cost of $88K.(I don't know why he would tell me this).
I am under the impression that you can buy an FHA house in a short sale for 82% of the loan value. Please advise. thank you in advance!
Joe
"I am under the impression that you can buy an FHA house in a short sale for 82% of the loan value."
All preforeclosure short sales are predicated upon the subject's as-is, fair market value.
In the case of an FHA insured loan, the mortgagee must net not less than 82% of the property's as-is, FMV.
FHA has rules they have to go buy when excepting a short sale. It's 60/10, They can not except no less than 60% of the appraisel and the repairs can not be more than 10% of the ARV. It's like a catch 22 if you think about it. They will except 82% because that will fall in the guide lines but if your creative with numbers you can get less accepted.
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The 10% threshhold has to do with catastrophic losses due to earthquake, flood, fire, etc. which might result in an insurance claim settlement to the beneficiary (mortgagee).
So, sometimes it's best not to wage a war of numbers with 'number crunchers...'
Concentrate on condition when using a sales comparrison approach to establish the FMV.
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