FHA And Short Sale
I am working with a potential client that has an FHA loan through Citimortgage. the clients sheriff sale date is Sept 29th. I have done a couple of short sales, but not one that is a FHA. With a limited amount of time-I want to make sure I have everything covered. Is there anything that I should be aware of before I submit my bid? Please advise.
thanks
Joe
I don't think you'll have enough time but if you can move fast and get the full proposal package off within a day or two, you may be able to get the deal done. It's pushing it but I suppose it may be possible.
Also--I've been finding that lenders are less likely to short the payoff as much right before the sale as they are in the beginning of the process. I guess this makes sense as they have already spent a lot of time and money on the loan so bringing it through the sale isn't too much more of a cost. Who knows...
Do a quick search on this forum for "FHA short sale" and you'll find a wealth of information on this topic, including the following facts:
1) The owner will have to apply and be approved for short sale through a standard FHA application process. Not sure how long this takes, but it is the first step. It generally is not enough for you to include bank statements, hardship letter, etc with your offer packet: the seller must apply and be approved.
2) Generally speaking, the property must be owner occupied (cannot be vacant). Sometimes if the owner can claim it as his / her "primary residence" this is good enough.
3) The lender will not be allowed to net less than 80% of the BPO, so influencing the BPO is critical.
4) The current owner must receive $1000 at closing. Not sure if the owner could receive more, but I'm pretty sure that as a minimum the seller must get 1K.
Hopefully this is helpful. A forum search should turn up a lot more info.
Good luck.
Thank you very much!
Joe
If your initial Proposal is both complete and compelling... and supported by the Purchaser's prequal or preapproval... it's quite possible that the mortgagee will agree to adjourn the sheriff's sale.
In an FHA preforeclosure short sale application, the estimated HUD1 is critical. Seller should receive ZERO proceeds. Mortgagee to receive a NET not less than 82% of the confirmed FMV.
Make sure you have done your homework with regard to other liens, and unpaid taxes, etc.
By the way, has the Homeowner attended HUD counseling and received the certificate of completion?
ShortSalePro,
You mention about a HUD1 is critical, And the buyer should recieve Zero dollars. Mortgagee should recieve a NET not less than 82% of FMV.
I have not filled out a HUD1, but a NET to Seller- which states that the buyer will recieve ZERO dollars. The buyer had an inital mortgage of $66,000 and now owes $99,000(Penalites and Interest). She owes about $1,000 in Taxes.. I understand that you said 82% of FMV, but since she only initially owed the $66,000, I offerd them $66,000. The FMV of the house is around $97,000-$100,000 ( I included this in my offer), but the house needs about $10,000 worth of work.
would you recommend that I fill out a HUD1 and should I revisit my offer?
thanks in advance.
Joe
" have not filled out a HUD1, but a NET to Seller- which states that the buyer will recieve ZERO dollars. The buyer had an inital mortgage of $66,000 and now owes $99,000(Penalites and Interest). She owes about $1,000 in Taxes.. I understand that you said 82% of FMV, but since she only initially owed the $66,000,"
I hope that I said that the SELLER is to receive zero proceeds....
The amount that is owed on the mortgage is usually immaterial
(unless it's an FHA insured loan)
The basis for all shorts is the as is FMV.
Complimentary e-support is included with the purchase of A Short Sale Primer
[addsig]
ShortSale Pro,
You are correct, I have the seller recieves zero dollars.
l will keep that in mind, that it needs to be 82% of the FMV.
Thanks
Joe