FHA Confusion, Need Clarification on Approval and When to List

Owners called to initiate a short sale over a month ago.  They have an FHA loan and were in the process of trying to obtain a loan modification but got frustrated and decided to sell.  I was told by BoA in order to get approved for an FHA short sale owners have to exhaust all efforts to stay in the home.  HUD sent them an offer to rent the home which they were not interested in doing.  While we were waiting to hear back from underwriting on the loan mod (hoping for the denial), the owners moved out.  Now the catch.  They are automatically removed from the Loan Modification so no denial and they are no longer owner occupants which is a requirement for an FHA short sale.  I need clear direction on how to initiate this short sale.  BofA said to have them write a new hardship letter expaining why they moved out.    Can I list it now or do I need to wait for an approval?  Thank you for any feedback in regards.  They want to sell and I want to list. 

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Permalink Reply by Kevin - Greenville, SC on February 8, 2012 at 4:51pm

List when you and your client are ready.  A variance for non-owner occupancy is fairly easy to obtain for an FHA PFS.

Permalink Reply by Kevin - Greenville, SC on February 8, 2012 at 5:18pm

This is something BOA will need to submit.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sf...

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sf...

Variance - A Lender is required to submit form HUD-90041, Request for Variance Procedure on any Loss Mitigation Option where all HUD requirements have not been met. These Variances are to be submitted via Extension and Variance Automated Requests System (EVARS). All Variances are considered on a case-by-case basis. When preparing a Variance for Special Forbearance, Trial Payment Plan, Loan Modification, Partial Claim or Deed-in-Lieu, the Lender is to select "other button". When preparing a Variance for the Preforeclosure Sale Program and FHA-HAMP Option, the Lender is to utilize the drop down menu and select the appropriate choice.

Permalink Reply by Jen Basnight on February 8, 2012 at 7:08pm

Hi Kevin,

Thank you very much for your response.  Let me see if I understand this correctly.  I call BoA and initiate the short sale and they will include the HUD-90041 form when requesting approval.  There is a chance FHA would deny the variance request and the short sale altogether based on the move out.  With that in mind, Your are saying it is OK to go ahead and list now?  We shouldn't wait?  Sorry.... I just want don't want to get ahead of myself.

Permalink Reply by Kevin - Greenville, SC on February 8, 2012 at 8:48pm

Yes, go ahead and list now.  There is very little chance that FHA will deny the variance request in my experience for the non-owner occupancy issue.  Call me if you need further assistance 864-485-9283.

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