FHA to Pay $4,500 to 2nd but Needs HUD to Reflect What Happens to $2k Balance?

Hello all,

This is a new one on me.  Nationstar provided the FHA ATP letter, and I just received the "letter of offer acceptance" a few days ago.

I provided the payoff statement for second mortgage to Nationstar with the pre-HUD, and Nationstar said "the HUD will need to reflect who will pay the remainder of the lien."

Nationstar says they will pay $4,500.00 of the second lien, and that's $2,500 more than I originally asked for.

The $2,300 deficiency will likely be waived by the second, but the second does not want any paperwork until the first is approved (the second is very easy to work with - VHDA of Virginia Housing Development Authority).

So Nationstar says the HUD must state "who or how the remainder of the lien will be paid, so, and to show the remaining balance on the HUD. Revise and resubmit for approval."

Line 505 would typically state "Payoff of Second Mortgage to VHDA $4,500" but has anyone worked with a similar situation before; does anyone know where and what they want added and to what line on the HUD?

Thanks a million in advance!


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Due it being a FHA loan they want to see how the subordinate lien is going to be settled and if it is accordance with HUD guidelines prior to moving forward with the review. How much is the 2nd willing to accept?

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Hi Brett,

It's been a weird catch 22 because I have to guess what the junior lien holder might accept to release the 2nd, as that amount needed to be placed in the HUD for FHA review. At the same time, the 2nd is just beginning to process the 2nd, and they cannot agree to the payoff amount until the first approves. So the first is asking for the 2nd to provide information that cannot yet be provided.

Anyway... where on the HUD would this "deficiency statement" go and what verbiage would be used.  Just place under line 505 "$2,300 deficiency waived; 1099-C to be issued."


It's a little tough to explain what needs to be done here. Pretty much they want to see how the gap between what is owed on the 2nd and what they are willing to give is going to be covered in order to move forward with the PFS program. This can come from the buyer or commissions. Since you don't know what the 2nd is willing to accept, you will likely need to show the whole gap being covered until you receive the settlement letter or else bank won't move forward with PFS review.

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Wow... thanks Brett!   I sincerely appreciate the insight and will post the end result in the future.


Hello all,

I need to post a follow up to my original question, to help anyone else who may run into any weird delays with Nationstar or any other "file negotiator."

After wasting two months time, waiting weeks for a reply through Equator from the file negotiator who often just repeated himself, I discovered the negotiator (Charles Snead) with Nationstar screwed up on this file on multiple levels.

I spoke to a local short sale real estate attorney who provided me with a direct number to the chief loss prevention specialist at Nationstar in Texas.  I called Texas and after explaining the situation to them, they put me in touch with the file negotiator's manager.  In turn, he admitted this file negotiator screwed up and now I have a direct number to this guy, who will see the file all the way through closing.

This original negotiator approved $4,500 to the subordinate lienholder, when he should have never approved more than $1,500 plus.  So now I have to go back to the 2nd to see if they'll take $1,500 instead of $4,500.

In addition, once I provided the approval letter from the 2nd to Nationstar, this negotiator misinterpreted the 2nd's approval letter, and it's too difficult to explain in words how and what he perceived but basically, he just didn't understand the approval letter correctly AT ALL!

Now I also need to call Novad to report this grave error because now my seller is receiving pre-foreclosure notices plus, the pre-foreclosure letter expired 12/17.  But we could have closed before the 17th, and were planning to if this original Nationstar negotiator didn't mess everything up so badly.

I've been working and negotiating short sales since 2011, but I'm done negotiating with these asinine, novice "negotiators," and I'm going to be using a short sale real estate attorney from here forward - even for the most 'easiest" VA compromise short sale too!   I just do not have the time to spare to be working with such unprofessional idiots!  As agents and brokers, we have to adhere to such high standards, and those "negotiators" should have to do the same.

These attorneys I found will buck hard for their money, and it costs the seller nothing to have a true professional deal with these knuckleheads.  I just don't have the time or patience anymore.

I will still take short sale listings, and my past experience certainly will help me provide very detailed consultations to my clients. I just took another short sale, and plan to take another next month.  But an attorney will handle the negotiations for me and my clients from now on.

My hat is off to all of you agents and brokers who can find the time to continue dealing with these boneheads, but I toss my hat in.  Whew!  An unbelievable experience indeed!


Frank Biganski, Realtor
(757) 303-0517
Reliance Realty, Inc.



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