What?? According to WELLS FARGO, they can't have a JUNIOR LIEN on an FHA short sale????

Just had my short sale denied on a Wells Fargo serviced short sale. The homeowner, who is just trying to do the "right thing" and settle, seems to have just been lumped with the homeowners playing the "rent free" game.


A week or so ago, I was informed by the processor that the postponement request was denied due to a junior lien still being on title. Supposively, this is an "FHA requirement." As most of you know, most short sales require ALL liens to be worked concurrently.  


Does this make sense to anyone?

Sounds like just another reason to move with the foreclosure -- which wouldn't be the best in ANYONE'S interests because there's a buyer right now willing to pay market value and can close in 30 days. Yes, I understand from a servicer's standpoint that there are homeowners who are simply using short sale as one more way to stall foreclosure, but they have to review each case more closely and make sure they help those trying to do what's right.


I was able to work up the ladder and found a local short sale manager yesterday. After further investigation, a received a call this morning from a contact at Wells Fargo stating that so-called "FHA requirement."

Anyone know of such a requirement?

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That is a bunch of crap.  Are they saying you can't have a junior lien?   I was on a webinar with Bank of America earlier today.  The Lenders are required to follow FHA Pre-foreclosure guidelines and it allows for the payment of up to $2500 for junior liens. FHA Mortgagee Letter 2008-43 gives all of the requirements of the program and they are supposed to follow it.   You might call FHA for clarification.   I have attached a copy of the Letter.   If it doesn't upload let me know and I can email it directly to you.


Thanks for the attachment, Debbie! Do you find their webinars helpful?

Within the Mortgagee letter, I found the following relevant information:

"All properties sold under the PFS Program must have marketable title.  Prior to execution of Form HUD-90045 ( Approval to Participate) the mortgagee must obtain a title search or preliminary report verifying that the title is not impaired with un-resolvable title problems or with junior liens that cannot be discharged as permitted by HUD.  If the mortgagee determines that these issues can be resolved, the mortgagor may be accepted into the PFS Program and resolution of said issues may be pursued while the property is being marketed."

I guess they're calling my lien (which can easily be removed through a reconveyance deed prior to closing) "un-resolvable." Let me go back to Wells on this. Thanks.

I do find them helpful.  The one yesterday was on FHA's.   THey finally have the FHA Pre-foreclosure information on the agent resourse site supposedly.   I haven't had time to go in and look at it, but  that has been one of my issues with BA - FHA's were a guessing game.because there was no information on them

Wells Fargo seems to be making up their own rules as they go along.

Maybe what Wells is stating that you need to have Settlement approval in writing from the 2nd Lien before you can close??  Do you already have approval in writing from the Second at Wells Fargo's price??

No. They made it clear they will not proceed without a recorded lien release. I have a feeling that even if we by some miracle got it, it would be something else. There's just too much pressure on staff to move forward with foreclosure in response to all the gambits some of the homeowners and attorneys have been playing. Unfortunately, it ends up punishing the homeowners and agents who are trying to do what they thought was mutually beneficial.

I think you all will agree that if a servicer does not WANT to approve a SS, there's a million reasons you can use to decline it and foreclose. In many cases, humans make the decisions -- not guidelines.

Keep asking around and Escalating At Wells Fargo if you know that the Second will agree to the amount Wells has allocated on the Preliminary HUD-1. It is worth it to keep fighting.

I've been doing that for 2 weeks now. You can only do so much "fighting". You get tired of the "sorry -- it's out of our hands" canned responses.

I'm starting to re-think my stance on the homeowner filing an injunction. I guess that's a topic for another thread.

Try contacting FHA.  I don't have a number but someone on the forum might.    I agree with you that some of these they just don't want to short sale.

FHA/HUD National Service Center # is 877-622-8525.  Make sure you have the FHA Case number from the original loan docs handy.

Thanks - I am going to keep that one also. 

Update: The listing foreclosed yesterday. Reverted to benificiary.


This is my 2nd foreclosure in 1 month. The other was with BofA. While I know every agent will have some unsuccessful Short Sales, it always hurts. Prior to those 2 foreclosures, I had ONE in the two years prior.

Going to move some discussion to some other threads. I'm thinking of adapting. :-)



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