I recently listed a short sale property with an FHA loan serviced by Bank of America, and I think, "great, we can get the short sale pre-approved". You see with FHA loans there is a pre-foreclosure sales procedure (PFS) where the servicer is required to pre-approve the short sale (see the HUD-FHA section in SSS for more info).
In a series of calls to BofA, I was told that, they don't participate in PFS, they do participate in PFS but not until there is an offer, and that the loan is owned by Ginnie Mae (it's not) so this loan is inelligible for PFS approval. None of this is true. The person I talked to in the short sale department told me that they had my letter of authorization, but were not allowed to give me the FHA case number (which is required on the forms).
In the end I had to escalate up the chain until I found a supervisor that knew what PFS was and knew that it requires pre-approving the short sale WITHOUT a sales contract. Below is a little ammo that you may want to use:
The first is a memo from HUD outlining that servicers that do not engage in loss mitigation will be assessed "treble damages" of the amount of the FHA insurance claim, that's 3 times in English.
The second is the actual section of Title 24 that lists the damages in detail and what servicers are required to do.
The third is a fax coversheet which outlines the PFS requirements and damages for non-compliance, review with your attorney and use with good health.
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Thanks Jim. Great info. I've added your forms to the FHA Group so our members can use them. Thanks for sharing.
Bryant, consider adding this as well - http://www.ginniemae.gov/media/consumer_web.pdf
Thanks Jim. Great info. I've added your forms to the FHA Group so our members can use them. Thanks for sharing.
Thanks for the info. I have a question about your cover sheet. Who ordered the BPO that's listed in your package? did you pay for the BPO?
Thanks in advance for your help.
Abraham,
great question. I enclose a bpo completed by myself. I don't know if this gets much traction or not, but I feel it at least illustrates where I'm coming from and that I didn't just pull a number out of thin air. There is a bpo form as well as a detailed manual for how to complete a bpo in the bpo section on Short Sale Superstars.
Use it in good health.
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