FHA and Chapter 7

Good morning Superstars,

I am working a short sale where the seller's moved out of the home and are renting a home for cheaper than their mortgage after they received a foreclosure notice.

The sellers asked me to list their home and we've got the home under contract.  At the time I took the listing, the sellers were going through a Chapter 7 bankruptcy.  The sellers first and second mortgage companies have both approved the short sale, but FHA is denying the short sale stating there's now an income surplus.  I've not gotten clarification yet, but I think it's because all of the sellers debts were discharged in the bankruptcy.  Has anyone run into this? Were you able to get an approval?

Thanks,

Marlon

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Permalink Reply by Tony and Robin Pickett on May 12, 2013 at 12:01pm

If their debt was discharged in Ch7 bankruptcy, of course their income ratios will look strong.  I just got an seller approved for FHA shrot sale, with BOA who had a discharged BK.  Because of the BK, they didn't even require financials.  They should not be denied.  In fact, the discharged BK is proof that they had a financial hardship.  Did you try sending to someone in the Escalation Team?  Email me if you want an email for someone I've worked with a couple of times.

31cg1fw8yxswnPermalink Reply by 31cg1fw8yxswn on May 29, 2013 at 4:58pm

BK is definite proof of hardship....in fact, they REQUIRE that the property be released from the BK BEFORE they can move the short sale forward, this is due to certain legal issues.  IT is how it has to be. Escalate this file ASAP and then escalate it higher....and again if necessary...

I would ask online here for any agents that had post BK short sales approved and closed by those same lender/servicers/not hoders....the note holder is what really matters..

If you can refer to exact times they have accepted it, then they will have to move forward or they are not acting in good faith in the process. 

Has anyone ever thought of putting together short sale closed files ..dates..lenders laon numbers and searchable indices for this kind of thing...could be VERY helpful

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