USDA Rural Housing Loans

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USDA Rural Housing Loans

Here's information to help with USDA short sales

Website: http://www.rurdev.usda.gov/rhs/
Members: 44
Latest Activity: Sep 13

USDA Short Sale Information

 

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These loans are handled through the servicer. Just check to see how they are handling the submission.

In order for a loan to be considered for a pre-foreclosure sale, the loan

must be in default (delinquent) for more than 30 days at the time the

pre-foreclosure sale is closed.

 

Agency pre-approval is required for non-occupant borrowers

when it is verified that the need to vacate is related to the cause

of the default (job loss, transfer, divorce, death).

 

PFS is not available to borrowers who have abandoned their

mortgage obligation despite their continued ability to pay.

 

****Properties that have sustained serious damage (from fire, flood,

earthquake, tornado, or other man made or natural disasters) should

not be considered for PFS if the cost of repair exceeds 10 percent of

the As Repaired appraised value.

 

The documentation requirements for a pre-foreclosure sale differ

depending on the type of borrower.

 

Employee in a private or public organization

  • Letter from borrower outlining failure to pay/hardship

  • Current pay-stub

  • BPO/appraisal

  • Sales contract/HUD-1 Settlement Statement, and

  • Credit report.

 

Self Employed

  • Year-to-date profit and loss statement

  • Previous year’s profit and loss statement, and

  • Previous year’s signed tax return.

 

USDA PFS Guidelines.pdf 

Here's a link if you need to locate a local office.

http://www.rurdev.usda.gov/recd_map.html

 USDA Value Dispute Form.pdf

USDA Loss Mit Guide.pdf

 

BofA USDA SS Packet.pdf

USDA Is a Tough Collector When Mortgages Go Bad

http://online.wsj.com/article/SB10001424052702304371504577406002591760584.html

Discussion Forum

Have client with USDA Direct loan needing a short sale

Started by Sheila Vardakis. Last reply by Dot Nicklus Jun 16. 1 Reply

I have been told these are different than the guaranteed loans so would love someone brains to pick on this pleaseeeeeeeeeeeeeeeee.  thanks :)Continue

Tags: sale, short, direct, usda

Have client with USDA Direct loan needing a short sale

Started by Sheila Vardakis Jan 4. 0 Replies

I have been told these are different than the guaranteed loans so would love someone brains to pick on this pleaseeeeeeeeeeeeeeeee.  thanks :)Continue

Tags: sale, short, direct, usda

Need help with a USDA short sale serviced by Chase

Started by Melanie Yarberry. Last reply by Melanie Yarberry Mar 10, 2016. 2 Replies

We are working on a USDA short sale with Chase and the file has been declined & closed multiple times. It was closed for "voluntary hardship" because the seller moved out of state to find work…Continue

Help with USDA short sale - need contact

Started by Glenda Sher. Last reply by Carrie Fairman Feb 24, 2015. 5 Replies

Does anyone have any ideas on how to escalate a file that was denied by USDA?Serviced by Chase. Chase says investor denied due to borrower lack of hardship. Totally ridiculous.  They refused her many…Continue

Comment Wall

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Comment by Brett Goldsmith on January 1, 2017 at 9:20am

@sheila

What are your questions? I've completed quite a few USDA short sales.

Brett@ishortsalenow.com

www.ishortsalenow.com

310-564-6389

Comment by Sheila Vardakis on December 31, 2016 at 1:01pm

hi guys...........got a question.  I have a USDA Direct loan that needs to do a short sale.  the situation is extremely gloom for this homeowner.  I have found info for short sales that pertains to the guaranteed loans but not for direct loans.  I would love if someone here has done one and can help answer some questions I have.  Thanks!

Comment by Bill Garrett on June 22, 2016 at 7:59am

MINIMUM NET PERCENTAGE?...............Is there a standard percentage used by USDA is calculating an acceptable minimum net (similar to what is done with VA or FHA loans)?............Thanks.

Comment by Chad Gelsinger on November 2, 2015 at 5:59am

USDA Direct Loans (where there is NO SERVICER) follows different rules and regulations. With a direct loan, we have never seen a waiver of deficiency when the approval letter is issued. Typically, about 90 days after the sale, USDA issues a demand letter for payment... At this time, the borrower needs to send another workout package requesting a waiver of deficiency. All of our clients have received a waiver of deficiency at that time. We have not had any clients needing to repay the debt. Chad. 

Comment by Kevin - Greenville, SC on October 29, 2015 at 9:57pm

from a 2013 Guide - 

  1. Pre-Foreclosure Sale (referred to as a “short sale”) - Allows borrowers in default to sell their home and use the proceeds to satisfy the mortgage debt, even if the proceeds are less than the amount owed. This option can only be extended to a borrower who is in default due to a verified involuntary inability to pay.20 Agency pre-approval is required for non- occupant borrowers when it is verified that the need to vacate is related to the cause of the default (job loss, transfer, divorce, or death) and the reason for default must be permanent. However, a short sale is not available to borrowers who have abandoned their mortgage obligation, despite their continued ability to pay. A borrower, who successfully sells the property, securing the loan using the short sale option, is relieved of the mortgage obligation. In addition, the borrower shall not be pursued for deficiency judgments by either the lender or the agency. 

http://www.usda.gov/oig/webdocs/04703-0003-HY.pdf

Comment by Kevin - Greenville, SC on October 29, 2015 at 9:52pm

This is a new guide keep in mind (dated 9.15). I'm not sure if their guidelines were the same when they sent your client their demand letter.

Comment by Kevin - Greenville, SC on October 29, 2015 at 9:50pm

A borrower who successfully sells the property securing the loan using the PFS option is relieved of the mortgage obligation. The borrower shall not be pursued for deficiency judgments by either the servicer or the Agency. 

https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/3555/DocumentationAnd...

Comment by Kevin - Greenville, SC on October 29, 2015 at 9:46pm

Geno, what did the short sale approval letter say about the deficiency?

Comment by Geno Carnera on October 28, 2015 at 10:28am

I completed a direct USDA SS about a year ago.  

I submitted a pre-approval for waiver of obligation in a non-judicial state.  Waiver of obligation was denied by USDA.  I explained to the Home Owner and to the "USDA servicer" that they could remain in the house and get foreclosed on and be automatically released from the first lien obligation.  The Home Owner wanted to proceed with the SS.  

90 days after close of escrow, USDA sent demand for remainder of short fall. Client was forced into BK.

Comment by Bill Garrett on August 28, 2014 at 2:31pm

DO WE NEED AN OFFER TO BEGIN SS PROCESS?

Is it necessary to have a buyer's offer to begin the USDA short sale process?  Or, is there a retention/waterfall review similar to an FHA mortgage?  Thanks

 

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