I'm working on a Chase one lien FHA short sale. I received a call from the negotiator today, expecting to be advised that the PFS form was being faxed, but was instead advised that my client was declined from the program due to the property being rented out for more than 18 months. The borrower made mention of having issues with a non-paying tenant in their vacancy letter, but never mentioned any time frames of the property being rented. To my knowledge they have not had the property rented for 18 months. So, my question is how does FHA verify this?

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FHA is for owner occupied properties. So the seller needs to rewrite their vacancy letter explaining why they vacated the property. And it needs to be related to the hardship. For examples: job relo, job loss, death, divorce. The non paying tenant has no baring on anything.

Yea, I understand that. I had them write a detailed vacancy letter explaining why and when they left. The property was Homestead, but they had to move due to their kids. They rented the property out just to try and keep mortgage current. The negotiator even stated that it was a very good letter and that she pushed to have this file approved. I confirmed with the homeowner again that the property has NOT been rented for 18 months. So, my question is how does FHA make this assumption and how do they verify that it's accurate?

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