Comment

Comment by Jim Stewart on November 23, 2010 at 11:21am

Ben,
1. the answer is yes, the 2nd is free to pursue/not pursue deficiency at their leisure, depending on your states laws on that kind of thing.
2. I am doing an FHA short sale where Citi has the first and GMAC the 2nd. Citi has not required the seller to sign any waiver to this point. Both are approved and we are just waiting on financing to close. No clue why Chase requires that and Citi doesn't.

Comment by Michael Schneider on November 23, 2010 at 11:19am

Ben,
2nd is separate, no requirement by HUD for the 2nd to waive the deficiency (ala HAFA), as a condition for FHA preforeclosure sale. So, yes, separate negotiation with the 2nd.
And, again yes, if FHA is paying consideration to the 2nd for release, then it comes first from the seller incentive, up to max of $2500. If additional payment is required by the 2nd, then it must comes from someone: buyer, seller, commission.
The waiver letter is not standard, I think. But, I think I have had one Servicer require it. I think the Servicer may be protecting themselves from a follow-on HUD audit, where they may get dinged for allowing non-allowable fees on the HUD or not offer the incentive payment.
BUT, I actually cannot find HUD written documentation stating that HUD/FHA waives their right to pursue the deficiency (on the FHA 1st).
All of this assumes that you have completed the application to PFS and have the ATP in hand (Preforeclosure Sale Program and Approval to Participate). Must follow the bible: Mortgagee Letter 2008-43

Comment by Ben Shult on November 23, 2010 at 10:56am

I have an FHA short sale, and there is a 2nd mortgage as well.
Two questions:
1) While the primary lender can't pursue deficiency (as I understand it), can the 2nd insist on deficiency since THEY are not HUD backed/FHA?
2) The 1st mtg holder (Chase) says that the usual seller incentive cash payment to seller has to go to paying off the nominal fee to the 2nd mortgage holder, so the seller can't get it. But, they also say the seller has to sign a waiver letter stating he waives the incentive $. if the $ "has to" go to the 2nd mtg holder, why does the seller have to sign a waiver?


This is a great community and an excellent resource-- my thanks to all who contribute their knowledge and experience to others here.

Comment by Ava Anderson on November 17, 2010 at 2:51pm

Yes they do allow relocation expense. The one I had has a $750 relocation expense and $250 bonus if closed before 90 days after approval by bank.

Comment by David A. Roebuck on November 17, 2010 at 2:46pm

Any one know if FHA Short Sales allow for the seller relocation expense

Comment by Michael Schneider on November 5, 2010 at 3:54am

Yes, I do think that is still the case. A BofA FHA short sale is handled via fax. Not sure if there is a plan to migrate to Equator.

Comment by Wendy Smith on November 5, 2010 at 3:49am

I've never done an FHA short sale and I've gotten a lot of information from this group however, I need to make sure I understand correctly - an FHA short sale does NOT go thru Equator, right? help!

Comment by Michael Schneider on November 5, 2010 at 3:36am

Colleagues,
I have a question that perhaps someone can help with:
I do many FHA/PFS short sales. I've always assumed that a sale under the FHA/PFS program comes with a waiver of the deficiency. Meaning, HUD and the mortgagee agree that neither will pursue the deficiency.
So, I looked for this the ML 2008-43 and ML 2000-05, but I could not actually find the statement that clearly indicates the waiver of deficiency rights.
The closest I could find is:

A PFS sale must be an outright sale of the property. If a foreclosure occurs after the mortgagor unsuccessfully participated in the PFS process in good faith, neither the mortgagee nor HUD will pursue the mortgagor for a deficiency judgment.

But, this statement is conditioned on "failure", and I want the same statement for "success".

So, where is is statement of "waiver of the deficiency" under PFS? Or, does PFS not have the waiver?

Comment by Jim Stewart on October 28, 2010 at 9:41am

John,
Patrick Hopkins is the negotiator.

Comment by John Edelman on October 27, 2010 at 4:54am

Jim,

Who is your negotiator at B of A? I am working several FHA short sales with them right now.

I may have some contact info for you to get things rolling.

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