HUD denied FHA short sale

Does anyone have any advice for the following sitution?

I have been working on a Bank of America FHA short sale. HUD denied the file because the homeowner proactively took a job out of state prior to him losing his job due to downsizing in his former company.  He took the job and made plans to relocate before the short sale was attempted.

I have gone through 2 different negotiators at BofA and both times they said that HUD denied the short sale.

Have any of you dealt with this type of denial from HUD??

 

Thanks for any insight you can give me!!

 

 

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Replies to This Discussion

Permalink Reply by Wendy Rulnick on December 9, 2010 at 5:14pm
Tricia, sounds like his hardship letter was not clear.  I suggest he get a letter from his former employer stating he was about to lose his job.
Permalink Reply by Wendy Rulnick on December 9, 2010 at 5:18pm
Also, HUD wants the seller living in the house for PFS sale.  If not, there must be a hardship reason why they moved out. 
Permalink Reply by Kent Dills on December 10, 2010 at 2:48am

Tricia, I just had to go over a servicer's head (that's all B of A is on this FHA loan) directly to HUD on an issue to get it resolved.  Sounds like you might have to do the same.  Call me at 817-495-8028 to discuss. Kent

Permalink Reply by Jim Schneider on December 10, 2010 at 3:38am

Kent,

I've got a similar situation brewing. BofA FHA loan, we'd like to get a pre-approval for the short sale owner occupancy may be questioned. Would you mind if I gave you a call?

Kent Dills said:

Tricia, I just had to go over a servicer's head (that's all B of A is on this FHA loan) directly to HUD on an issue to get it resolved.  Sounds like you might have to do the same.  Call me at 817-495-8028 begin_of_the_skype_highlighting              817-495-8028      end_of_the_skype_highlighting to discuss. Kent

Permalink Reply by Tricia La Motte on December 10, 2010 at 4:45am

Hi Kent,


Thank you so much for your response.  I'm sure we'll talk soon...I just left you a message.


Kent Dills said:

Tricia, I just had to go over a servicer's head (that's all B of A is on this FHA loan) directly to HUD on an issue to get it resolved.  Sounds like you might have to do the same.  Call me at 817-495-8028 to discuss. Kent

Permalink Reply by Tricia La Motte on December 10, 2010 at 4:47am

Wendy,


Thank you for taking the time to respond.  I am still pursuing this, and will post the outcome.


Wendy Rulnick said:

Also, HUD wants the seller living in the house for PFS sale.  If not, there must be a hardship reason why they moved out. 
Permalink Reply by Michael Schneider on December 15, 2010 at 3:31am

Are they being denied for PFS?  Need to review the financials....

For PFS, the mortgagor also needs to show that they cannot support the mortgage and that they cannot pay the deficiency.    I would think that relocation alone is not sufficient for PFS.

Eg, Relocation with ability to continue paying could be denied by HUD guidelines, I think.

Permalink Reply by Bill Garrett on December 21, 2010 at 5:20am

Does anyone have readily available the citations to the actual FHA/HUD provisions related to the allowable exceptions to the general rule that the property must be owner occupied?   Thanks.

Permalink Reply by Michael Schneider on December 21, 2010 at 5:47am

Just google for HUD Mortgagee Letter 2008-43.

In my experience, Servicers are pretty reasonable on this part of the sale process.

It's the appraisals that are the problem....

Bill Garrett said:

Does anyone have readily available the citations to the actual FHA/HUD provisions related to the allowable exceptions to the general rule that the property must be owner occupied?   Thanks.

Permalink Reply by Jim Schneider on December 21, 2010 at 5:56am

Here it is, but the letter says,

"Non-owner Occupant Exceptions – Mortgagees are authorized to grant reasonable exceptions to non-occupant mortgagors when documentation indicates a property was not purchased as a rental or used as a rental for more than 18 months, immediately preceding the approval into the PFS program."

and the word's I'd note are mortgagees which means the bank, and authorized, which is different than required. So the bank get's to decide if the exception is reasonable?

Attachments:
Permalink Reply by Bill Garrett on December 21, 2010 at 6:02am

Thanks to the Schneiders (Michael and Jim) for the quick responses and the info. That mortgagee letter is exactly what I was looking for. 

Permalink Reply by Jim Schneider on December 21, 2010 at 6:52am

Disclaimer: Michael and I are not brothers despite the same last name and our similar dashing good looks.

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