Comment

Comment by Bill Garrett on May 13, 2011 at 9:58am

The BAC guy responded a few minutes ago and cited page 5 of Mortgagee Letter 2008-43.  I have tried to attach the pertinent pages of the doc. 

 

It will be interesting to see how our friends at BAC may now be applying this language.

 

 HUD Morgagee Letter 2008-43 pp 1 & 5

Comment by Bryant Tutas on May 13, 2011 at 9:51am

Great discussion guys. And thanks Darrell for providing this good information to our members. Love getting it from the source

 

Comment by Bill Black on May 13, 2011 at 9:04am

What does Darrell from HUD mean? That if an FHA short sale is completed from let's say B of A and it was shorted by $100K but they never proved the homeowner was reviewed for a loan modification that they (BofA) would have to pay 3x's the amount back? I am confused by the "accesses a penalty usually three times the unpaid principle balance so a $100K has just become a $300K loan they now own and have to sell." How could they sell a 300,000 loan that is not tied to anything?  

From Darrell-

 

"In the post audit they run the numbers and if they have a surplus HUD doesn’t pay the claim and then accesses a penalty usually three times the unpaid principle balance so a $100K has just become a $300K loan they now own and have to sell.

Comment by Bill Garrett on May 13, 2011 at 8:44am

I am waiting to hear back from the guy at BAC.  I will certainly post what I learn.  Thanks.

Comment by Kevin - Greenville, SC on May 13, 2011 at 8:41am

Bill,

 

Let me (us) know what else you may find out in regards to further investigation.

Comment by Kevin - Greenville, SC on May 13, 2011 at 8:40am

Bill,

 

Lack of it being part of a mortgagee letter I don't see BAC or another or

Servicer having such discretion.... Just my thoughts...

Comment by Bill Garrett on May 13, 2011 at 8:37am

Kevin: 

I think you are correct with respect to your interpretation that this material from Darrell Powell doesn't mandate the borrower actually participate in the FHA HAMP program.  The lender simply must make an investigation and determination that the borrower has insufficient surplus income to carry the existing mortgage obligation.  We are all familiar with the FHA SS process that includes review of the borrower's financial worksheet.  I now see this review is, at least in part, intended to conform with the FHA requirement that the lender determine whether the borrower has surplus income. 

 

It appears that FHA has left it to the discretion of the lender as to how to determine if the borrower has any surplus income.  My concern now is that perhaps BAC has recently implemented a requirement that the borrower actually go through the modification process, as the BAC's new method for determining whether there's any surplus income.  I don't want to sound any premature alarm but I think the issue warrants some further investigation.

 

That other quote ["FHA requires that the file be reviewed...] which I provided below is not from a published Mortgagee Letter. It is instead the email comment from someone (usually very reliable) in the FHA short sale dept at BAC.

Comment by Kevin - Greenville, SC on May 13, 2011 at 8:16am

Which mortgagee letter is this contained in?

 

"FHA requires the file be reviewed for other options, Some files may have just been missed prior. But ALL files must 1st be reviewed, the home owner does not have a say in that matter. The goal is to save the home, if he can’t qualify for other options he can then move forward."  

Comment by Kevin - Greenville, SC on May 13, 2011 at 8:11am

I don't read this that they must apply for FHA-HAMP first before  being considered for PFS (wasn't that the original question?), just that they have to review their financials for the PFS option.

Comment by Bill Garrett on May 13, 2011 at 8:11am

AND, the response to the same question from a very reliable source in the department at BAC for FHA short sales:

 

"FHA requires the file be reviewed for other options, Some files may have just been missed prior. But ALL files must 1st be reviewed, the home owner does not have a say in that matter. The goal is to save the home, if he can’t qualify for other options he can then move forward."

 

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