So I have a short sale that is FHA with Ocwen.  The seller was denied because she purchased another house, tried to sell her house for what she owed, couldn't and then decided to short sale.  Ocwen and HUD denied her because she is "Strategically Defaulting" and that she could financially afford the payments. 

In July of 2013, HUD issued a letter to all FHA approved Mortgagees Servicing Single Family Mortgages where they updated PFS guidelines.

They have a "streamlined PFS" where a non-owner occupant can avoid verifying hardship of filling out a packet by meeting the following criteria:

1. Mortgagor(s) are 90 days delinquent.

2. Have a score of 620 or below.

My question is this:

Can she wait until both of these conditions exist and re- apply for a PFS?  Will she be given Streamlined Eligibility Status?

I need to find out ASAP!

Thanks for the help!

Views: 356

Attachments:

Replies to This Discussion

She "Bought" and now trying to "Bail"  and she had the intent to do exactly that !

My client lost her job and moved out of state for her new job. She and her husband rented out their house to cover the cost of the the FHA mortgage. The tenant stopped paying, had to be evicted. They want to sell the house, but they owe more that it is worth in the present market. In their new location they bought another house.Their credit is very good, and they hate to mess it up. Their lender is telling them to stop making payments on the FHA mortgage to do a short sale. Do they have to get their credit down to 620 too?

It's a big no no for anyone (including the bank) to tell the Seller to stop making payments to qualify for a loss mitigation option. Thier credit score may never drop to 620 or below and even if it did there is ZERO guarantee a Short Sale would be sucessful.

Andy,  a few questions\ideas to try to give you some direction

1. when did you start the process?  If it was prior to 10/1/13 they may have used the old guidelines. In which case, try again!

2.  How far away did she move?  Might it constitute a relocation?

3.  Can you demonstrate a deficit?  Make sure expenses for both houses are being included.  Under the new guidelines, you may even have to provide statements for utilities, credit cards, etc.

4.  Is there some creative way she can justify the move? 

5.  Have you tried speaking with HUD about this?  Don't just take Ocwen's word for it.

Kathleen:  Simple answer is  No, they don't have to stop paying now. Per HUD guidelines, the borrower has to be at least 31 days past due at closing.  The 620 mark is to do a streamlined PFS.  They will qualify for a standard PFS (even when they are current) but they will have to provide more paperwork & possibly make a cash contribution.  Ask if there is a specific reason they are concerned about their credit score.  Its going to take a hit regardless.  However, it should bounce back fairly quickly unless they change their behavior.

Thom: Remember the adage "if you can't say something nice.....?"  We're all here because we're trying to learn from and help each other.  And I'm sure we've all had short sale files that were strategic.  So what good does it do anyone to judge someone else's client?

She did not move that far away. She is retired and on a fixed income.  She is already 60 days late and her credit score is falling but is not at 620 yet.  The lender has not told her to stop making payments, but has denied her PFS.  The reason is is that she doesn't meet HUD guidelines for a PFS. 

We started the process in November. We had sent all of our financial information to the lender, but they see it as a Strategic default.  The only way I can see for this to work is through a Streamlined Eligibilty for a PFS.

At this point we will wait until all the conditions have been met and resubmit.  In my discussions with the negotiator the simply said that they cannot send it to HUD because it doesn't meet HUD guidelines.  My thought is that by meeting the Streamlined PFS guidelines they will approve this.  Thoughts? 

Oh and I have never encouraged my client to not make payments nor has the lender.

Andy, always question anything a servicer says.  Its in their best interest to keep this mortgage going.  Ask why she was turned down & challenge it.  Find out your client's FHA case number, send a 3rd party auth to [email protected] & call the HUD servicing center to find out for yourself.

RSS

Members

© 2024   Created by Brett Goldsmith.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************