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What you MUST know about short sales on FHA loans
Colorado Short Sale Series – Part VII
Interested in selling your house as a short-sale? Email Kathy Torline KTorline@msn.com or call 719-287-1049
Every short sale listing is different, mainly because each lender has their own way of handling things and their own set of rules regarding short sales. But in addition to different rules with each lender, there are also special requirements for FHA loans.
The Dept of HUD published Mortgagee Letter 2008-43 on December 24, 2008, which details the new 
procedures for the FHA Pre-Foreclosure sale (PFS). The PFS is what FHA calls their Short Sale. If a seller is shorting an FHA loan, here’s some of the major things they need to know:
procedures for the FHA Pre-Foreclosure sale (PFS). The PFS is what FHA calls their Short Sale. If a seller is shorting an FHA loan, here’s some of the major things they need to know:- HUD used to have a rule that required the property to appraise for at least 63% of the indebtedness , this is no longer in affect.
- HUD used to accept 82% of the appraised value as their net – now it is 88% if it sells within 30-days marketing time, 86% if it sells in 60-days, and 84% after 60 days.
- HUD will now pay 1% of buyer’s closing costs if the new buyer is obtaining FHA financing.
- HUD has now authorized Mortgagees to grant reasonable exceptions to non-occupant mortgagors when documentation indicates a property was not purchased as a rental, or used as a rental for more than 18 months.
- Prior to accepting a discounted offer, HUD requires evidence of competitive marketing from the selling broker to be presented and mortgagees are to retain this documentation in the claim review file.
If you are a seller who has an FHA loan, make sure your Realtor understands the nuisances of the FHA Short Sales guidelines. It can make the difference of making the offer work and getting approval from the Lender.
Also more details can be found on the U.S. Department of Housing and Urban Development website. The site provides many helpful links for those in financial trouble. Remember, these guidelines apply to FHA-insured loans only, and there may be some latitude in those requirements. These guidelines are subject to change.
If you enjoyed reading this article, why not To find out more information about Colorado Springs Short Sales, Call ……
Kathy (719-287-1049) KTorline@msn.com
Must Read Posts:
- Colorado Springs Homes, 4 things to know about a short sale - Part I of Short Sales Series
- Avoid Foreclosure, Know Your Options - Part II of Short Sales Series If you are interested in a short sale, It’s important to utilize a Colorado Springs Real Estate Agent that specializes in Pre-foreclosures, Foreclosures, and Short Sales; and has a successful and ethical track record. Call Kathy Torline – Nordstrom, 719-287-1049 or Nancy Shakeshaft at 719-659-4380. The All Star Team, your real estate experts!
- Colorado Springs Home Foreclosures – 11 benefits of a short sale - Part III of Short Sales Series
- The final step in the Colorado Foreclosure process – Part IV of Short Sale Series
- How long does it take to do Colorado Springs Short Sale? – Part V in Short Sale Series
- Are there tax ramifications to a Colorado Springs short sale? - Part VI in Short Sales Series
that is awesome! i hope to see more