New FHA Short Sale Guidelines effective 10/1/2013. FRUSTRATING!!! I have clients that have been unemployed on and off for the past 3 years. Tried to do a loan mod and of course told to stop making payments. Denied the loan mod. Advised that home was going into foreclosure and they would have to move out. They did so. When I got involved the foreclosure process was postponed. We again tried the loan mod to go through the waterfall process, loan mod denied again, and moved to qualify for the short sale process. We were progressing until last week. Notified that as of 10/1/13, new FHA guidelines do not allow a short sale if the property is vacant and the borrowers have a credit score of 620+, and because they can't go through the short sale motions, they don't qualify for deed in lieu. How these people have a credit score that is too high to qualify for a short sale is crazy. They haven't made a house payment for years, in part due to the advice they were getting and lack of help extended to them. I escalated this with HUD, and they said they couldn't do anything unless the borrowers move back into the home. It was difficult for them to find housing, the move was stressful, and draining. Moving back in is not an option. Any Advice out there??
Going through the same exact thing now. BOA told the borrowers to move so they can foreclose, and its since been 3.5yrs. You CAN get into short sale if its vacant. Escalate with HUD. Now BOA is telling me that HUD will not allow Short Sales if a foreclosure process has been INITIATED. It's a load of crap. They are just milking the Gov for servicing dollars by dragging out the process for FHA loans as long as possible (years). You have to contact HUD for just about everything. Expect BOA to deny the short sale 4-5 times during the process. GOOD LUCK!
yep. Wells Fargo has learned BOA's game now too.
I did escalate with HUD. They shut me down. Only confirmed that if the property is vacant and the borrowers credit score was 620+ there was no options. Just not sure how they have a credit score that is too high, after having years of mortgage lates.
Susan why don't you have the sellers run their own credit report and obtain FICO score to see if the bank is giving accurate information or not.
This whole thing is just dumb. If the bank is going to do silly things then the seller needs to just play their game. So the seller needs to put a chair in the house and turn on the utilites in their name. Boom problem solved the seller now lives in the home. Re-start the short sale, when they ask who occupies the house, the seller does and you have the utility bills to prove it.
I'm fairly certain you're getting some bad intel from the person you spoke with at HUD. There are two tiers there.
I just read Mortgagee Letter 2013-23.
Mortgagees may approve a mortgagor for a Streamlined PFS or DIL without verifying hardship or obtaining a complete mortgagor workout packet3 if each of the conditions below exists:
(Page 4) For Non-Owner-Occupants:
Mortgagor(s) are 90 days or more delinquent on their FHA-insured loan as of the date of the mortgagee’s review; and Each mortgagor has a credit score of 620 or below.
(Page 5) Principal residences, second homes, and investment properties are eligible for disposition under the Streamlined PFS and DIL processes, provided that all mortgagors meet all program requirements. Such properties may be vacant, but cannot be condemned.
These rules are for a Streamlined PFS. I'm thinking that a full PFS is still available to them. Ask the servicer what the difference is between the Streamlined PFS and the PFS. I'll bet you'll get somewhere.
Destiny Real Estate
Professional Short Sale Negotiator
What is the best FHA document to use as a guide for PFS to review for clients and compare with what the lender has to say?
Mortgagee Letters 2008-43 and 2013-23.
Great...thank you for posting.
Running their own credit report is a good idea. I like the chair idea too! Thanks All - Susan
Why did they move out in the first place?
I always tell clients to stay or to move back in.