How do I get a HUD lien for $7500 (2008 loan/grant) off the title on my FHA short sale.

I had clients that purchased a home with me in September of 2008.  That was when the Government had a $7500 interest free loan with a 15 year repayment that they were calling a "Grant".  My clients are in construction and have been in and out of work here in the state of Arizona and are currently needing to sell the home short or allow it to go to foreclosure.  

I had my title company do a title search on the property and HUD has put a $7,711.12 lien on the property.

Has anyone dealt with this before?  HUD appears to be a big black hole where this is concerned and it seems that no one I have contacted has even any idea what Im talking about, how to get it remedied or know if anyone whom might have answers.  Google hasn't had the answers for me either.

Here are my questions:

1.  Who do I contact at HUD that would know how to handle this?

2.  Will my clients have to pay the $7500 back if they will not make any money from the sale?

3.  Who can release that lien?  How long does it take?  

 

Has anyone else run across this yet, and if so... I would sure appreciate your assistance! 

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Permalink Reply by Stephen Trad on October 29, 2011 at 3:23am

HUD Mortgagee Letter 2008-43 clearly states that HUD will NOT go short.  You will have to get your bank's negotiator to use this letter to combat the minimum Net and apply for a variance.  You can also use the money that was going back to the sellers for "re-lo" or whatever they call it to apply to the outstanding balance.  We've had success with this method, but it is paramount to have a competent person at both the bank and title company to help you out with this.  Even though you think it's the same organization going short on themselves, remember that govt agencies do stupid sh*t all day long and often cut off their nose to spite their face.  Good luck!!

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