FHA - HUD Short Sales


FHA - HUD Short Sales

HUD rules for FHA short sales, tips, experiences, etc.

Fax LOA:  918-236-3274

PH 877 622-8525

Members: 581
Latest Activity: Apr 26

FHA Preforeclosure Sale Guidelines


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7-9-13 Updated Pre-Foreclosure Sale (PFS) and Deed in Lieu (DIL) of Foreclosure - Effective 10-1-13.

FHA National Servicing Center 

(877) 622-8525 Customer Service

1-800-489-1733 Fax

1-866-808-5050 Fax for LOA


301 NW 6th Street, Suite 200
Oklahoma City, OK 73102
National Servicing Center:


Please note that effective October 1, 2014, Deval LLC will no longer be HUD's National Servicing  loan servicing contractor. The new contractor, Novad Management Consulting will be your new point of contact.


For all Customer Service questions please contact [email protected]

FHA Contract Clause

"Sale is contingent upon the seller receiving prior written approval of Insert Name of Lender/Servicer."

FHA 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.


Discussion Forum

Hud/FHA declining to do short sale

Started by Savita Savita. Last reply by Brett Goldsmith Sep 26, 2018. 1 Reply

NOVAD as 2nd lien

Started by Noelle Battle. Last reply by Jason Sanseverino Mar 6, 2018. 3 Replies

Comment Wall


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Comment by Guerry Clegg on September 12, 2018 at 11:32am

So Brett and Alexis, it sounds like HUD has loosen their rule about the allowable/disallowable costs. Is that right? If so that's good to know. It still has to net 88 percent for the first 30 days, so that doesn't allow much wiggle room any way.

Comment by Al on September 12, 2018 at 10:45am

Reason why I ask is on my previous offer for the same property the bank only allowed 1% but it was a conventional offer. Now I have a fha offer and seller is asking 3% but its a fha offer. 

Comment by Brett Goldsmith on September 12, 2018 at 9:50am

3% is typically approved for FHA buyers if the minimum NET for investor is being exceeded. If you are asking for closing costs and obtaining conventional financing you likely will not be approved for any credits towards closing costs.

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Comment by Alexis Adams on September 12, 2018 at 9:19am

Al, I have gotten 3% of sale price approved many times for an FHA buyer. I suggest providing the buyer's side of the HUD/CD and also get a closing cost worksheet from the buyer's lender outlining all costs. This has helped in the past. I most recent had 3% concessions approved last week for an FHA buyer. Hope this helps.

Comment by Chad Gelsinger on September 12, 2018 at 9:12am

Hi Al,

FHA Preforeclosure Sales allow 1% of Buyer's FHA Loan Amount for closing cost assistance. A variance can be requested for 1% of Buyer's Conventional Loan amount. We can typically get 1% of Sale Price approved, but the regs are for Loan Amounts. 

There are ALLOWED and DISALLOWED EXPENSES under HUD guidelines. See attached.FHA%20Allowable%20Expenses%20Udated%2001-2014.pdf Chad. 

Comment by Al on September 12, 2018 at 9:00am

What is the maximum allowable closing cost assistance. For fha pfs can I ask for 2% of sales price? 

Comment by Neddie B. on August 29, 2018 at 4:59am

Thank you @Dean and @Brett.

Comment by Dean E Eshelman, CPA, CDPE, IRES on August 28, 2018 at 2:29pm

@Neddie [email protected] Goldsmith Internal Revenue Code(IRC) Seciton 108 Cancellaltion of Debt (COD) also known as the insolvency statute. Yes talk to CPA -- Basically, iSec. 108(a)(1)(B) provides for the exclusion of COD income if the debt discharge occurs when the taxpayer is insolvent. Sec. 108(d)(3) defines insolvency of the taxpayer as the excess of liabilities over the fair market value (FMV) of assets determined immediately before the discharge of debt. The excluded income is limited to the amount by which a taxpayer is insolvent, as stated in Sec. 108(a)(3). For example, if the taxpayer has COD income of $500,000 and the excess of liabilities over assets immediately before the discharge is $450,000, the taxpayer includes $50,000 of COD income in his or her gross income

Comment by Brett Goldsmith on August 28, 2018 at 2:06pm

@Neddie PFS short sales always settle debt in full. 1099C will be for settled amount and borrower should look into if they are insolvent or not.

Comment by Neddie B. on August 28, 2018 at 12:06pm

The HUD short sale was approved (PreForeclosure Sale Program). The approval states:
"The net amount will be accepted as final payment and the lien released, an IRS 1099C will be filed at year end in accordance with IRS regulations."
It sounds like a full release. No mention of the note though. What's your take? TYIA


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