Can you do a FHA HUD Short Sale if the property is vacant?-Lender tells me no and would need HUD Approval

Hi All,

We are working on a FHA HUD short sale with a short sale lender and I got the following message:

"The file does not qualify for HUD’s “Pre-Foreclosure Sale” program (PFS).  In order to see if HUD will grant an exception (variance) on this file and allow it to participate in the PFS program, I need the borrower to write a vacancy letter.  This letter needs to be specific as to:

  • The approximate date the borrower vacated the property.
  • Why the borrower vacated the property.
  • What are her current living arrangements?
  • How much documentable rent does the borrower currently pay where she resides?

Please send the vacancy letter directly back to me.  Once I have this info, I will submit the variance request to HUD. "

I was reading through the PFS program and it states that the property can be vacant it just can't be condemned.  

Has any lender told you this?  Is this true what the lender is telling?  

Thank you for your help! 

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Replies to This Discussion

yes. you're getting correct info here more or less.

So, have you seen hud give approval to proceed with the short sale if the property has been vacant?

I have never been rejected on requesting a variance for vacant homes before.  I don't know the technicalities of what their guidelines are (I think their standard is like 90 days maybe), but all of my owners have written letters that state something to the effect of their hardship requiring them to relocate and they have attempted to sell their home since departing but have not been successful.  I even have homeowners who have been approved who have been renting their house for the several years.  The premise that they stress is that they have been doing everything they can to keep the house afloat (i.e. listed with an agent, renting it to help cover the mortgage, etc) and to avoid a short sale/foreclosure and are requesting a variance because they are now being forced to short sale the house.

Thank you Jennifer and Kevin! 

The only thing that I have ever run into is to say that the property is not maintained. Since it isn't defined, I've had negotiators ask for more insane detail - the worst was for someone still living there. Had to say all kinds of things like they shovel the walks, etc. This detail is not a HUD thing, it is a dumb bank thing.

Just make sure that the property is "maintained" and you shouldn't have a problem. This seems to be one of the more nonsensical HUD rules. You have a willing buyer, but they won't allow the sale if the owner isn't maintaining the property, huh? So you should just let it meltdown instead?

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