Comment

Comment by Kevin - Greenville, SC on October 19, 2011 at 9:11am

I would make Matt aware of that.

 

'In an effort to ensure that the most current Fair Market Value is used for the Preforeclosure Sale, a Lender may obtain a new FHA appraisal, even if the property was appraised by an FHA Roster Appraiser within the preceding 120 days.'

Comment by Dean E Eshelman, CPA, CDPE, IRES on October 19, 2011 at 9:06am

Yes, several times and GMAC would not do it unless the sellers paid for it.

Comment by Kevin - Greenville, SC on October 19, 2011 at 8:38am

Dean,  Did you request another As-is Appraisal under program guidelines?

Comment by Dean E Eshelman, CPA, CDPE, IRES on October 19, 2011 at 8:27am

Kevin, - the way I read the letter there are certain requirements to be met. We are $7,000 short of the net proceeds requirement. We are at 55% of sale price to total outstanding. 105/190 - original purchase price was 160. Flawed appraisal was at $120, net sale proceeds 93,131.50 - 77% far short of 84%. Further, I do not know the date the PFS program was applied for by the lender to HUD.

Here are the questions from the attorney and the response by Matt Martin. The way I read this is that HUD in the next 10 years can decide to have GMAC pursue a deficiency and if they did so without HUD's approval to call. So I read that this leaves a deficiency wide open. What is your opinion?

Matt,

 

Thanks for calling me back a few minutes ago and for your help on this file.  As we discussed, I am writing this e-mail message to confirm our discussion. 

 

As you know, this is a pre-foreclosure sale (a short sale) that is ready to close except that the lender (GMAC) has refused to confirm that it is waiving the deficiency against my clients, XXXX and XXXX.  I understood from our telephone conversation as follows:

 

1.     When a HUD/FHA pre-foreclosure sale is successfully completed, the lender is paid in full by HUD and may not pursue the borrowers for a deficiency without HUD/FHA’s approval.  Therefore, on this file, the lender GMAC cannot legally pursue a deficiency against my clients without HUD/FHA’s approval.  I would agree with this statement

 

2.     HUD/FHA does not pursue deficiencies except in investor situations, which this is not, and therefore, HUD/FHA will not authorize GMAC to seek the deficiency from my clients.  HUD has not requested the lender to pursue any deficiency on this case.

 

3.     If for some reason GMAC ever did pursue my clients for the deficiency, I just have to call you and you will put a stop to it.  Since GMAC cannot pursue a deficiency without approval from HUD this should not be an issue, if you find they did please call me.

 

If this is accurate, please confirm.  If I have misunderstood, please let me know.  Thanks.

Comment by Dean E Eshelman, CPA, CDPE, IRES on October 19, 2011 at 6:51am

Jeff, was that a FHA/HUD property?

Comment by Jeff Payne on October 19, 2011 at 6:09am

Dean, whoever at GMAC told you they would not put it in writing is lying to you :(

This is copied directly from a GMAC approval letter.

This letter confirms our acceptance of the short payoff on the above-referenced property. We agree to accept the proceeds generated by the

$215,000.00 'as is condition' purchase as full and final satisfaction on the first mortgage indebtedness on the above-referenced property.



Comment by Jim Stewart on October 19, 2011 at 5:48am

Great info Kevin!

Comment by Kevin - Greenville, SC on October 19, 2011 at 5:42am

Can this be taken to mean that Borrowers who are successful in the PFS Program won't be pursued as well?

 

If the PFS is unsuccessful and foreclosure occurs, mortgagors who participate in the PFS Program in good faith will not be pursued for deficiency judgments by the mortgagee or HUD.

http://api.ning.com/files/TCED1TrXXw4LyzYWRrZp8EO7FdUFl6sbGUV8Ehwjp...

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Yes, but the truth is HUD won’t pursue for deficiency judgments even on a non successful PFS

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Matt Martin

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Program Director, Loss Mitigation

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HUD's National Servicing Center

 

Comment by Jim Stewart on October 19, 2011 at 5:38am

Dean,

HUD PFS program guidelines state "By following procedures and time frames included in this ML, a mortgagee may submit a FHA insurance claim and be compensated for the difference between the sale proceeds and the amount owed on the mortgage (including accrued interest and reimbursable costs)." and "If the PFS is unsuccessful and foreclosure occurs, mortgagors who participate in the PFS Program in good faith will not be pursued for deficiency judgments by the mortgagee or HUD."   That language should be good enough for me to conclude that HUD won't be going after deficiency.  I've never heard of HUD going after a deficiency after a successful short sale.

Comment by Dean E Eshelman, CPA, CDPE, IRES on October 19, 2011 at 5:22am

Reference my post August 29 GMAC - Contract on 7 year old Manufactured Home -- GMAC will not put a waiver of deficiency in writing. I called my contact at HUD, Kathy Chandler, and she said that the Approval for a short sale is sufficient as HUD is absorbing the deficiency. The deficiency is an agreement between the Lender and HUD not with the homeowner.  Just don't like the say so method. Then what is the harm in stating the homeowner  deficiency is waived? HUD said the attorney and the title company should both know this. Can anyone shed any light on this?

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