Replies to This Discussion

Permalink Reply by John Edelman on June 8, 2012 at 3:00pm

FHA will allow up to $2500 to pay off a 2nd lien.  The amount that they will allow depends on how long you have been in the PFS program.  If you are paying off a 2nd lien - the seller incentive is used up first.

Permalink Reply by Kevin - Greenville, SC on June 8, 2012 at 7:00pm

$2500 during the first 90 days of the ATP Marketing Period $2250 after that.  A variance will be required for an amount greater.  Usually the tiered net proceeds will need to be met after payment.

Permalink Reply by Ann Howard on June 9, 2012 at 7:59am

On HOA liens, because they are not part of the loan, and are a personal liablity,they do not pay. In some cases the Buyer can pay if the home owner is behind in their payments and cannot pay. With short sales we always council our clients to keep up on the HOA dues even if they can not pay the mortgage payments.

Permalink Reply by Kelly W. Maynard on June 9, 2012 at 8:15am

Hi Ann,

Ideally, I agree with you, I always advise my clients to keep up on their HOA dues, etc.  With this particular short sale the Seller owes over $6000 in HOA fees.  After reading everyone's responses I am getting the consensus that in an FHA short sale that they will allow $2500 during the first 90 days to pay off the HOA lien and perhaps additional money after the first 90 days, and/or the money that the Seller would receive would be applied as well.  I am hoping to negotiate with the HOA to accept the actual money due and waive the late fees, etc.  A couple of people said I will most likely have to get a variance for the payoff on the HOA lien.

I have a lot of experience with doing short sales, however this is the first with an HOA lien.  I am debating whether to take this on, or not.  I could refer her to another agent, I just don't know anyone locally that has dealt with HOA liens either.

Permalink Reply by Pete Reese on June 10, 2012 at 3:07am

I would say you should definitely take this on....almost every deal can be put together with a little creativity!   However, in CA, BofA won't pay any HOA dues/late fees in my experience (not for a lack of trying).

I would just price the property attractively, and then have the buyer side pay for this....just let them know that this is a requirement from the beginning.  Also, you should have some success in getting the HOA to settle for a much lower amount.

Also, I'm not sure what the value of the house is, but if you can't find a buyer to pay for this for some reason, you could reduce the total commission and pay for it this way (after you reduce the HOA payoff to $1k-$2k).  Obviously this is not ideal, but it is better to make something rather than nothing at all!!

Permalink Reply by Kelly W. Maynard on June 10, 2012 at 10:41am

Thank you Pete for your advice.  Very encouraging!

Permalink Reply by Pete Reese on June 10, 2012 at 10:50am

No problem Kelly!  One thing I always try to keep in mind (especially on the more complicated deals) is that they will come together with enough persistence.  Sometimes if you just chip away at the issues one at a time, you will eventually be able to accomplish some very complicated tasks.

Permalink Reply by Ann Howard on June 10, 2012 at 6:26am

You should go for it, as for the HOA fees, put them in on the HUD that you send the bank, assuming the bank will not pay, when you put the listing in the MLS you should disclose in the confidential section Buyer to pay (the amount) delinquent HOA dues. Better to be upfront than to have to counter it out later because the HOA will not release the lien until they are paid. The only other alternative would be to negotiate the HOA fees and split the difference between the Buyer, Buyer’s Agent and you if the Seller is unable to pay.

Permalink Reply by Kelly W. Maynard on June 10, 2012 at 10:43am

Thanks Ann!  I think I have a good idea as to how I am going to get this accomplished, thanks to your advice and others.

Thanks again!