any suggestion on overcoming HUD's 18 month owner occupancy rule?

FHA short sale with GMAC-foreclosure date is Jan. 5 2010. Submitted complete Short Sale package to GMAC loss mitigation last week-they have moved quickly in reviewing the file. on Dec. 20th-generated letter to homeowner not qualified to do a modification due to not enough income, mr. homeowner try a short sale. DUH! In discussion with Loan Servicing today for status of the short sale package we submitted-GMAC has denied Seller a short sale (generated a letter on Dec. 23 to homeowner) due to HUD's rule on occupancy: more than 18 mos since Seller occupied property-Seller married, new wife had a house also-don't need 2 houses-living in his while trying to sell hers-couldn't get hers sold, so moved in hers, tried selling/renting his for past 2 years-many problems, finally doing a short sale-and denied! The property has been occupied by a tenant who was evicted, but not the homeowner. Any way to overcome this HUD rule in regards to occupancy? It seems the net figure of a short sale vs. foreclosure would be more important than occupancy rule?

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Replies to This Discussion

Permalink Reply by Mori Langshaw Sr on December 30, 2009 at 5:16am
I havent heard of the 18 month rule, but do know about the 24 month OO rule. I assume that you meant LESS "....than 18 months since seller occupied property....". (If the rule is you can't buy another HUD home as an OO within 18 months of purchasing, then "...MORE than 18 months..." would be ok, right? What am I missing?)

But your right, short sale v. foreclosure would be more important than the rule. There is good news and bads news. The bad news is that HUD is a bureaucratic organizations and can be sticklers for "rules". The good news is that HUD is a bureaucratic organization and, with proper coercion, will overlook rules.
Permalink Reply by Christy Cole on December 30, 2009 at 5:30am
Thank you for the reply-they are not looking to purchase again anytime soon. The eligibility rule from HUD per the Preforeclosure Sales Program is: not used as a rental for more than 18 mos.

Mori Langshaw Sr said:
I havent heard of the 18 month rule, but do know about the 24 month OO rule. I assume that you meant LESS "....than 18 months since seller occupied property....". (If the rule is you can't buy another HUD home as an OO within 18 months of purchasing, then "...MORE than 18 months..." would be ok, right? What am I missing?)

But your right, short sale v. foreclosure would be more important than the rule. There is good news and bads news. The bad news is that HUD is a bureaucratic organizations and can be sticklers for "rules". The good news is that HUD is a bureaucratic organization and, with proper coercion, will overlook rules.
Permalink Reply by Christy Cole on December 30, 2009 at 5:31am
what is the 24 month oo rule? I'm not seeing that in the guidelines.

Mori Langshaw Sr said:
I havent heard of the 18 month rule, but do know about the 24 month OO rule. I assume that you meant LESS "....than 18 months since seller occupied property....". (If the rule is you can't buy another HUD home as an OO within 18 months of purchasing, then "...MORE than 18 months..." would be ok, right? What am I missing?)

But your right, short sale v. foreclosure would be more important than the rule. There is good news and bads news. The bad news is that HUD is a bureaucratic organizations and can be sticklers for "rules". The good news is that HUD is a bureaucratic organization and, with proper coercion, will overlook rules.

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