Tags:
Susan, It's a given with an FHA PFS -
Pre-Foreclosure Sale: In cases where the borrower is unable or unwilling to maintainownership and the market value of the property is less than the level of debt, this option allows borrowers to sell their property and apply the proceeds to retire the debt. Any debt inexcess of the sales proceeds is forgiven. This process generally is preferred by borrowers because a foreclosure generally has more serious consequences for their credit rating.
Susan. If this was a FHA PFS sale then there will be no deficiency because the lender is reimbursed by HUD for the difference between what they receive through the sale and what is owed including past due interest and costs. Even if the borrower attempts the PFS and fails, due to no fault of their own, and the orperty is forelcosed on the lender and HUD will not go after a deficiency.
Mortgagee guidelines are attached.
Thanks Kevin & Bryant,
That was my 'assumption' as well however the letter does not have the verbiage. Wonder why?
Deidre,
Were yours FHA loans?
Deidre St. Romain said:
I have had the dis-pleasure of working only two with Chase and they refuse to put the language in - they would rather foreclose and they did...if anyone else has had success I invite your suggestions!
All,
Just in case anyone else ever wants this clarified here is what the negotiator at Chase told me just now. He said that HUD will not allow them to add that verbiage into their letter but that any deficiency is absolutely waived so long as the short sale closes as per their approval letter. He also mentioned that I could have my sellers call HUD directly to get the information 866-449-1661. Just figured I'd pass along this information in case anyone else searches this exact issue again.
Thanks for starting this discussion, that is applicable to my questions too with an FHA short sale.
One twist on mine: there is a 2nd mortgage too. The second mtg holder seems willing to release the lien for the nominal payout Chase gives ($1500) and the $1,000 FHA seller incentive the seller is willing to sign over to the 2nd mortgage holder. Can the 2nd mortgage holder still go after the deficiency on this, even though the 1st mortgage holder can't due to FHA PFS guidelines?
Additionally, if it is allowed to go into foreclosure, can the second still go after a deficiency after foreclosure?
It would seem really odd if the 2nd winds up with more rights and ability to burden the seller than the first mortgage holder.
Richard,
According to the Program Director (Matt Martin) of The National Servicing Center at HUD they won't pursue if the Borrower in good faith participated in the PFS program, whether it was successful or not.
Thank you for the update Susan. I have sold several homes through PFS and have not yet had this happen, but wouldn't be surprised if it did. Thank you again for the information.
Pre-Foreclosure Sale: In cases where the borrower is unable or unwilling to maintainownership and the market value of the property is less than the level of debt, this option allows borrowers to sell their property and apply the proceeds to retire the debt. Any debt inexcess of the sales proceeds is forgiven. This process generally is preferred by borrowers because a foreclosure generally has more serious consequences for their credit rating.
© 2024 Created by Short Sale Superstars LLC. Powered by
Short Sale Superstars, LLC and www.ShortSaleSuperstars.com does not endorse the real estate agents, loan officers, attorneys, real estate brokers and other participants listed on this site. These real estate profiles, blogs, blog entries and forums are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a short sale. Short Sale Superstars, LLC takes no responsibility for the content on these pages that are written by the members of this community.