Comment

Comment by Bill Black on April 9, 2012 at 8:46am

Rosemary- FHA allows a purchase ONLY when past short sale was NOT on a FHA loan. So yes in order to get a PFS a late needs to occur but there is no way to have a Clear CAIVRS # since that loan defaulted. 
The program is set up for a scenario like this- A person was on a conventional loan in California and was transferred to Washington State. They were forced to sell and in this situation was current- even came in with money to make last payment at time of closing but also agreed to split the difference in loss of $70,000 and paid $35,000 to Bank of America. Now in Washington State we are able to get him a FHA loan because he never had a 30 AND the only thing may have showed a "Settlement in Full" but income, assets is all in line with FHA. It is not a common situation but does exist.  

Comment by Michael Schneider on April 9, 2012 at 8:22am

Be careful on this requirement.

Some servicers interpret this as two or more payments missed at time of approval into PFS.  Not at time of closing.

Comment by Ro Reed on April 9, 2012 at 8:16am

I am currently working with a seller with a BofA FHA loan. He has never missed a payment, working odd jobs to stay afloat. His second steady stream of income is ending so he needs to short sell.  My question: he has excellent credit and would like to move into a smaller home with a smaller mortgage. According to the PFS guidelines it states that "The Mortgagor must be 31 days or more delinquent at the time of the Preforeclosure Sale closing."  First, is this always the case? (We have already had an appraisal done, have an offer, and a great negotiator.  She has never mentioned the fact that he is current.)  Secondly, has anyone been able to time it so that the seller can still qualify even if he is forced to be late on that final payment?  

I've gotten so much conflicting information from lenders I've spoken with I'd love to hear from someone who has been involved in a successful short sale and buy transaction. '

Thanks!

Comment by Steven Michael Gray on April 9, 2012 at 7:38am

Submitted a short sale to Citi where they net 87.4% of their appraised value. Offer denied because the seller makes $300 more a month than his bills (which is technically incorrect as he is salary/commission based and his income fluctuates). He also lives out of state as he lost his job in-state. If you add in his new rent to expenses, he makes less with the numbers Citi used (showed them this). This is a slam dunk deal for Citi no matter how you look at it. I contacted the local HUD office and they gave me the same reasoning for denial and said he can move back in the home (he cannot as he lives over 1,000 miles away now) and catch up payments (he's 9 months behind). What else can I do? Do not know where to go at a national level with HUD to get this done. Buyers are about to walk. 

Comment by Myra McCaskill on April 5, 2012 at 2:40pm

Thank you!

Comment by Kevin - Greenville, SC on April 5, 2012 at 2:11pm

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.

Comment by Kevin - Greenville, SC on April 5, 2012 at 1:55pm

Myra, You're welcome.  It sounds like you may even have to go above the Manger and possibly even go to HUD to get this resolved, but start there.

Comment by Myra McCaskill on April 5, 2012 at 1:53pm

Kevin, thank you for the insight.  I will use this fact when I speak to the manager.

Comment by Kevin - Greenville, SC on April 5, 2012 at 1:41pm

Foreclosure - Foreclosure should only be considered as a last resort and should not be initiated until all Loss Mitigation Options have been exhausted. When foreclosure cannot be avoided, it must be started quickly and prosecuted vigorously to minimize losses to both the Lender and HUD.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sf...

Comment by Kevin - Greenville, SC on April 5, 2012 at 1:36pm

Myra,  It is Wells Fargo that has to exhaust all attempts for retention and or another Loss Mitigation option including a Pre-Foreclosure Sale prior to the initiation or completion of Foreclosure, not the Borrower's.

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