Hello,
I have mixed feedback on whether or not an approval is needed prior to listing an FHA Bank of America Short Sale. Owners have been attempting to obtain a loan modification, but like most, decided to do a short sale. Sellers will be faxing all the required docs today and will request a short sale and cease the loan mod. B of A Rep said we could list prior but an appraisal would be done. Would the list price just be adjusted accordingly? Any insight on the FHA process with B of A would be great. Also, does anyone know if B of A has a cooperative program for FHA loans? I understand all docs are faxed and Equator is not utilized. Thank you very much! Jen Basnight
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No prior Approval is needed. Proceed with Listing the Property if that is what the Seller(s) desire. You can adjust the list price once the Appraisal is back to reflect the price on the Appraisal and/or Approval to Participate if you feel it's justified. With FHA Loans, the Pre-Foreclosure Sale program is the ONLY option for a Short Sale.
I agree with Kevin. It's almost a benefit to list it prior to appraisal. The appraiser will be able to see your reasonable pricing and price adjustments that you may have needed to make based on market response.
All of my FHA B of A short sales are handled outside of Equator, although that could change with B of A's new policy. I agree with listing first. Every single one has had a problem with value, and the bank has always come down to meet my price. However, bear in mind that these are full-blown appraisals done by B of A, and they are still way over market in my area. HUD will want 88% net of value. So, as long as you can meet that percentage for the net, the sales price doesn't much matter. Also, HUD wants to pay 1% for the buyer's closing costs. It doesn't mean they won't make an exception, though.
You've gotta like HUD's policy. It's OK for a buyer to get an FHA loan and have the seller pay 3%, but when it's HUD who is approving the short sale seller fees, that 3% is a red flag.
Elizabeth Weintraub
Broker-Associate #00697006
Lyon Real Estate
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