This one is classic ... Request to Participate in the FHA Preforeclosure Sale Program faxed to US Bank <yep, the guys in Owensboro, KY> April 14, 2011. Receive an offer which is faxed to the bank July 14th. Bank initiates foreclosure proceedings August 31, 2011, setting a foreclosure sale date for 1/9/2012.
Bank finally issues the ATP on 11/7/2011, and approves the sale contract on 11/14/2011 (but doesn't forward the approval until 11/21/2011).
Buyer got cold feet and walked last week. (Lost interest after being in the deal 6 months!) So we are actively marketing the property again ...
I went back to look at the ATP and saw that it is only good until 1/7/2012 -- that's only a 60-day marketing period! So it is expiring 2 days before the foreclosure sale date ..
I contacted the Negotiator to point out this mistake. She said it is no mistake -- citing some HUD guideline, she said that there can only be a 60-day marekting period when there is an active foreclosure!
I have read and re-read Mortgagee Letter 2008-43 many, many times. I don't see anything about a limit on the marketing period when there is active foreclosure. Instead, I see that foreclosure activity is to be delayed during the marketing period (page 5, paragraph 2).
I have urgently requested a postponement of the foreclosure sale date in order to get a new Buyer. However, the Negotiator is taking the position that we must get a new Buyer by 1/7/2012 in order to postpone.
I spoke with William Collins, Acting Program Director of the HUD National Servicing Center (general phone number is 877-622-8525) on Friday, January 6th. We had a long conversation and he was extremely polite. However, he confirmed there IS an UNWRITTEN POLICY from his office (HUD) stating that if a property with an FHA loan is in active foreclosure, an ATP can ONLY be issued if there is a bonafide offer. And, the marketing period for the ATP is only long enough to get the offer reviewed and the sale closed. If the sale falls through, the ATP cannot be extended and the foreclosure proceeds. He emphasized the word "Preforeclosure" in the "Preforeclosure Sale Program". According to their office, the guidelines in Mortgagee Letter 2008-43 are intended only to apply before the Mortgagee has initated the foreclosure process.
In our particular case, the request to participate -- and receipt of a bonafide offer -- occurred well in advance of initiation of the foreclosure proceedings. However, it doesn't matter. The ATP was not issued until after foreclosure was initiated. When the Buyer walked, our case was out of compliance with PFS guidelines.
If we had someone miraculously been able to come up with a new Buyer over the Christmas holidays and submitted it by the end of the day 1/6 to the Servicer, I was told they might possibly have considered postponing the sale date scheduled for this Monday, 1/9. Unfortunately, we could not, and the FC sale date is set to proceed as scheduled.
I cannot tell you how sick this makes me feel.
hmm. Almost every one of the FHA PFS I have worked the borrower had already been sued for Foreclosure prior to the issuance of the ATP and no offers were in place. ATP's were issued for ALL and they were valid for 120 days.
Typically the a Mortgagee is suppose to review the Borrower for the PFS Program prior to referring for Foreclosure, but.......
"According to their office, the guidelines in Mortgagee Letter 2008-43 are intended only to apply before the Mortgagee has initated the foreclosure process."
Technically that's correct, the problem is that almost ALL the time the Servicer doesn't review the Borrower for ALL Loss Mitigation options including disposition before commencing the Foreclosure action even though the are REQUIRED to.
Did you get this worked out?
Read page 3 for length of the Pre-Foreclose Program sale period -
Im curious too. Our ATP was issued on 11/30 but only granted 30 days to find an offer, which we did. However, the buyer's financing is taking longer than the Short Sale Approval letter allowed and the sale date is only 3 weeks away...
It's a Chase bank FHA short sale, which is a Tier 1 lender. How do we get them to postpone?
Shouldn't this be easy with an offer already in place?
What was the situation behind the ATP being issued? Was an exception made for the Seller to Participate?
FHA Loss Mitigation has two main goals.
1. To minimize the loss the the FHA Insurance Fund.
2. To assist the Borrower in avoiding Foreclose.
reason why I ask is the bank says seller concession needs to be at 1% but that was on a previous conventional offer. My new offer is an fha offer and buyer is asking 3% at 3% it would still meet net.