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FHA National Servicing Center
(877) 622-8525 Customer Service
(469) 674-4451 Fax
301 NW 6th Street, Suite 200
Oklahoma City, OK 73102
National Servicing Center:
FHA contract clause
"Sale is contingent upon the seller receiving prior written approval of Insert Name of Lender/Servicer."
Listing agreement clause
“Seller may cancel this agreement prior to the ending date
of the listing period without advance notice to the broker, and
without payment of a commission or any other consideration if
the property is conveyed to the mortgage insurer or the mortgage
holder.” The sale completion is subject to approval (under HUD
guidelines) by the mortgagee.
Q. Is there anything in Mortgagee Letter 2008-43 that would prohibit an Agent that represent's both Seller and Buyer from collecting the full 6% commission in a PFS?
A. Max commission is 6%, servicer is to follow state law on how commission can or cannot be paid.
Program Director, Loss Mitigation
Loss Mitigation Results- "The dual goals of the FHA Loss Mitigation Program are to help FHA insured borrowers avoid foreclosure and to minimize losses to our Insurance Funds."
April 11, 2008
Important Update:Bank of America is offering some HUD borrowers an additonal $4,000 in relocation assistance.
When your seller has an FHA mortgage on their home, these are the guidelines . The homeowner should go ahead and apply and send in the complete financial package required by the bank to the bank or servicer when the listing is taken (or even before if possible). An appraisal will be done by an FHA certified appraiser.
When the appraisal comes in and the short sale package is approved the bank will issue a HUD-90045 which will list the price that the home should be sold for. This listed price on the HUD-90045 Approval to Participate will reflect 88% of the appraised value, so depending on the length of the marketing period this price will decrease to a floor of 84% of the appraised value.
When a contract comes in, as long as it meets the details in the guidelines (net proceeds, closing costs, etc.) , it should be approved. The guidelines only give the bank 5 working days to review the contract for sale if the seller has already been approved for the program. (Caution: Allow more time than this for the lienholder approval in your contract because this is not always followed!)
The bank is not allowed (without Approval from HUD) to accept an offer that does not meet the minimum allowable thresholds. Important Note: The marketing period for purposes of the net proceeds calculation does not start until the Approval to Participate (HUD-90045) has been issued!
Rules issued by HUD 12-24-08 for the FHA Preforeclosure Sale program. The rules outline net proceeds, acceptable closing costs, payment of liens, etc. :
08-43 PFS Program guidelines issued 12-24-08.
Most people don't realize this little caveat - In addition to the standard four-month period to market HUD properties sold under a pre-foreclosure sale, Tier 1 lenders receive an automatic extension of two extra months to market those properties. Bank of America, Wells Fargo and Chase along with some others are currently Tier 1 lenders (rarely followed by these Servicer's).
Net Loss on Claims
The net loss rate on claims remains high in the current economic environment, but it is in-line with actuarial projections made at the start of the fiscal year. Net loss rates on foreclosure cases are comparable to where they have been over the past year. FHA’s overall loss rate continues to benefit from strong preforeclosure (short) sale activity as a default resolution tool. Preforeclosure (or, short) sales result in a lower net loss per claim than if a loan were to otherwise go through the entire foreclosure process and HUD then manage and sell the property. In this quarter HUD paid claims for 4,072 preforeclosure sales, up from 2,714 in the year-earlier period. That increase represents more than a 2 percentage point change in share of all claim payments, from 12.3 percent one year ago to 14.4 percent in FY 2011 Q1
This final rule amends HUD's civil money penalty regulations to reflect HUD's authorization to impose treble damages on a mortgagee for any mortgage for which the mortgagee had a duty but failed to engage in appropriate loss mitigation actions. The final rule follows publication of a proposed rule, takes into consideration the public comments received on the proposed rule, but makes no changes at this final rule stage.
Section 230(a) of title II of the NHA, as amended, makes it mandatory for the mortgagee, upon the default of a single family mortgage, to engage in loss mitigation actions (including, but not limited to, special forbearance, loan modification, and deeds in lieu of foreclosure) for the purpose of providing alternatives to foreclosure.
Application to Participate: FHA Application and Financial Form
HUDs Information Disclosure Form (HUD-90035) HUD 90035-Information Disclosure.pdf
Supposedly the 90035 was updated when the new rules were issued in 12/08 to incorporate both 90035 and 90036 but I have not been able to find an updated 90035. I just submitted the application 90036 on my last FHA short sale and didn't have a problem.
Other HUD resources for FHA PFS program:
Lender Short Sale Packages