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Permalink Reply by Bryant Tutas on May 17, 2012 at 10:43am

It's one of those thing that "Is what it is". The seller should just answer the questions truthfully then if there is a problem figure out how to solve it. ALL properties are in "marketable condition". They just may not be in "financing condition".

Hasn't Midland placed a forced insurance policy on the propetty?

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Permalink Reply by Corinn on May 18, 2012 at 2:35am

Thank you Bryant.   I asked the rep @ Midland if there was a forced placed policy and they didn't know.  I'm just concerned b/c the last Midland I did, they were ready to close the file and move to foreclosure over a very small thing in the appraisal, which required the homeowner to make a claim over damages...that had already been fixed.  It was crazy and frustrating, which is what all my Midland files seem to be these days!  Ughhh!  I do plan on having the homeowner answer honestly, I just wanted a little feedback from others.  Thanks again!

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Permalink Reply by Kevin - Greenville, SC on May 18, 2012 at 4:39am

 Removal of Repair Limitations –With prior approval from HUD, properties with surchargeable damage (i.e., damage caused by fire, flood, earthquake, hurricane, boiler explosion or mortgagee neglect) may be eligible for the PFS program if funds - sufficient to cover the government’s estimated repair costs - are applied to reduce the outstanding debt when a claim is filed.

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Permalink Reply by Kevin - Greenville, SC on May 18, 2012 at 5:06am

This is what HUD say's about the Condition of the property is regards to the Pre-Foreclosure Sale option - 

F. Property Condition

Properties that have sustained damage may be eligible for the PFS option. If the cause
of the damage is fire, flood, earthquake, tornado, boiler explosion (for condominium’s only)
or mortgagee neglect (i.e., surchargeable damages as defined in 24 CFR Part § 203.378)
mortgagees must obtain prior approval from the NSC at the address above. Prior to seeking
this approval, the mortgagee must obtain the government’s estimate of the cost to repair the
surchargeable damage by contacting the HUD Management and Marketing (M&M) Contractor
with jurisdiction for the geographic area where the property is located. A list of M&M
Contractors can be found on the Internet at: http://www.hud.gov/offices/hsg/sfh/reo/mm/

Page 8 of 18

Pre-Foreclosure Sale Procedures

mmingo.cfm.

Upon receipt of the government’s repair estimate, the mortgagee must submit a Form HUD-
90041 (Request for Variance) to the NSC to obtain the approval needed to enter into a PFS
Agreement with the mortgagor.

In accordance with 24 CFR Part § 203.379 mortgagees are responsible for the cost of
surchargeable property damage. If the property is being sold “As Is” subject to the damage, the
mortgagee will be required to deduct the government’s estimate of the cost of the damage from
its PFS claim (See Appendix A - Claim Filing Instructions for Item 109).

If the property is being sold “As Repaired” and funds for surchargeable repairs will be
escrowed or provided as a credit to the borrower at closing, the amount of the repair escrow or
repair credit is not an allowable settlement cost as defined in Section J of this ML and may not
be included in the net sales proceeds calculation.

If the damage is not surchargeable it is not necessary to obtain approval from NSC prior
to approving the PFS Agreement. Regardless of the cause of the damage, the mortgagee must
work with the mortgagor to file a hazard insurance claim and either use the proceeds to repair
the property or adjust the claim by the amount of the insurance settlement (non-surchargeable
damage) or the government’s repair cost estimate.

Mortgagors are required to disclose any property damage to the mortgagee during the
application or after the PFS approval. In the event a property sustains significant damage after
a mortgagor has received approval to participate in the PFS program, the mortgagee must re-
evaluate the property to determine if it continues to qualify for the PFS Program and terminate
participation if the extent of the damage changes the property’s FMV. .

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