ISSUE WITH FHA SHORT SALE!!
My client bought his home as a Primary residence with his girlfriend in September of 2008. They bought another home with a conventional loan as a primary residence in December of 2008. They then refinanced the First home in June of 2009. The first home is with GMAC FHA Loan and the second is with a Wells Fargo Conventional Loan. They rented out the first home and live in the second home. Like everyone they found themselves in a financial hardship and are now losing both homes. They would like to short sale the first home that is an GMAC FHA short sale. Guidlines state that they are not eligible, because it not there primary residence. Is there anyway around this?? Has Anyone been able to accomplish this??
Replies to This Discussion
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Permalink Reply by Jeff Payne on
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I have closed FHA loans in which the seller was no longer living in the home due to a job transfer. The last one was late last year, not sure if the guidelines have changed.
Did GMAC tell you that they are not eligible?
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Permalink Reply by Herb on
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They didnt move as a result of work. GMAC did tell me that they would not be eligible, so I am trying to find a way around it.
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Permalink Reply by Bryant Tutas on
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FHA is only for owner occupants. so it they already had a primary home then refinanced the first home with FHA later....well the dates don't work out. Sounds like they played some games with FHA. Or are your dates wrong? If not then FHA is right to deny them a short sale.
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Bryant, what are your thoughts on the case of the seller purchasing a home with an FHA loan and later moving to another home. They still have the FHA loan on the first home don't they? They were owner occupied when they purchased it but it sounds like in this case they moved to another home.
Would FHA make them refinance if they move out of their home with an FHA mortgage?
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I think as long as they are paying the payments then there is no issue. For a short sale FHA is going to want to know when they moved and why. I've done FHA deals where the property had been rented out for a year or so. As long as there is a legit reason why the had to move FHA will generally approve it.
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The dates are right. They were still occupying the first home as a primary residence when the refi happened, and ironically the second home was bought in an effort to save it for a friend via short sale, he eventually moved and about 13 months later they decided to occupy the home since it was bigger. Now they find themselves in this mess.
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OK that make more sense your post stated they had already bought and were living in a new primary residence and then refinanced into a FHA loan on the other home.
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Permalink Reply by Kevin - Greenville, SC on
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I have had good success with getting a variance from the FHA on all the FHA PFS I have worked when the owner no longer occupies. Have you requested GMAC ask the FHA NSC for a variance?
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In fact, I can't remember the last time I closed a PFS where the property was owner occupied at the time the ATP was issued.
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.
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Variance is NOT required - PFS and/or DIL - Owner Occupancy
The Borrower must occupy the property as a principal residence to be eligible for any of the reinstatement options (Special Forbearance, Loan Modification or Partial Claim, or FHA-HAMP). Lenders are authorized to grant reasonable exceptions to non-occupant Borrowers seeking relief through Preforeclosure Sale (PFS), or Deed-in-Lieu of Foreclosure (DIL) when it is clear that the subject property was not purchased as a rental investment, or used as a rental for more than 18 months. Justification for the above exceptions must be documented in the claim review file.
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Not yet, as I was putting the Short Sale Package together I called the customer service line to get info and he told me that they would not qualify as a result. I will take your advice and do it anyways and urge them to get a Variance, hopefully they will push it through, I will keep you posted.
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