HELP !! FHA Short Sale Catch-22 Need Professional Advice

I am a buyer of an FHA short-sale. There's no problem with property valuation. We're having trouble getting ATP issued because Seller has unpaid HOA Dues and a Lien was filed. The seller is not able to pay the lien and we (the buyers) have agreed to pay the unpaid HOA dues.

Here's the problem...FHA will NOT release the ATP UNLESS the HOA lien is RECORDED and RELEASED. We have agreed to pay the HOA Fees AT CLOSING (in a separate escrow if needed) which means it will be technically released at closing. The property is going to foreclose in 70 days.

How you resolved something like this ? The amount of the fees is more than $2500. We have no problem paying them....it's just that we don't want to pay them unless we know we are closing on the property.

We appreciate any insight to how to resolve this.

Thank You.

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Replies to This Discussion

Permalink Reply by Wendy Rulnick on March 12, 2012 at 2:12pm

Background - who is the loan servicer?

Permalink Reply by Sharon Byrd on March 12, 2012 at 2:19pm

It is a Wells Fargo Loan. The problem is not Wells Fargo...it is FHA who wants the HOA Lien Released AND Recorded before they will release the ATP. FHA is insisting on recorded lien releases BEFORE THE SALE GOES THRU, but no one will pay the fees before closing. However, we (the buyers) will pay the fees AT CLOSING.

Permalink Reply by Kevin - Greenville, SC on March 12, 2012 at 5:32pm

Sharon,

It can be done and it's not required prior to the issuance of an ATP even though Wells Fargo is telling you that. Have you signed an Addendum to the fact you will be taking care of the HOA Lien at closing? If so, push Wells Fargo to request what's called a variance from HUD in order to issue the ATP and close.

Call me if you need futher clarification.

Kevin - 864-485-9283

Permalink Reply by Sharon Byrd on March 13, 2012 at 10:02am

Thanks for the reply Kevin ! Is the reason for the Variance because the secondary lien if over $2500 ? If the HOA lien was say for $500....then I would NOT have to get a variance..right ? If the HOA Lien was say for $500...then it seems to be that this could be taken care of within the standard PFS program because ML2008-43 allows up to $2500 for secondary liens.

The problem we're hearing from the agent is that FHA is requiring the lien to be Released AND Recorded before they will issue the ATP. The HOA and I prefer to just handle the amount in closing...but FHA is insisting that it be released prior to releasing the ATP.

The HOA has agreed to release the lien if we (the buyers) pay it off....but then we risk losing our money if the ATP never get issued.

I don't understand why this short sale is stalled...because it is NOT a valuation issue or a money issue...every one can get paid at closing ?

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