Hi, Has anyone been successful in doing a Streamlined Short Sale with HUD?  I have a seller that we had listed about a year ago and we had an offer.  At the time, they had provided all of their financials to their lender and the lender was very shady, we got HUD involved and finally were told that the seller did not qualify for a shortsale based on financial date.  The HUD rep told us that we could wait and try to do a streamlined SS after 90 days and no financial data would be required.  So, my seller decided to try to rent property out.  She caught up on her payments, but I guess was not able to get the property rented, so she is now 2 months late again.  Just wondering if we can try for the streamlined SS once she is 90 days late.  We are in AZ, but seller now lives in NH.  Even though we are a non-recourse state, because her home is on more than 2.5 acres, the bank can come after her for the deficiency. 

She really would like to do a DIL, but again, the lender is EXTREMELY shady and she doesn't trust them.  I really don't trust them either, so thought as long as we had HUD involved, they would have to do whatever HUD says.

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Hi Cat, we have completed many Streamline Short Sales. Most of the Servicers/Lenders are following the HUD/FHA guidelines with little exception. I would like to know which Servicer is "shady." How was it that the Borrower didn't qualify a year ago. Most every Servicer requires the use of HUD's Deficit Income Test to prove monthly income vs expenses. Remember, the Servicers are required to verify expenses, so if there are questionable expenses, they will not be used.

In order to qualify for either a Traditional or a Streamline SS, most lenders want financial documentation to see if the Borrower qualifies. To qualify for a Streamline, the Borrower must be 90 days delinquent AND each Borrower must have a credit score below 620. IF these 2 are not present, they are not qualified for the Streamline. The guidelines state the Lender MAY approve a mortgagee (Borrower) without obtaining a COMPLETE mortgagor (Servicer) workout packet, but that does not mean there won't be any financial info requested.

The Borrower is only qualified for a DIL, if they have been issued an Approval To Participate. This means they must go through the Short Sale process first. The ATP is issued stating the home is marketed for at least 120 days. If a buyer cannot be obtained within the time frame, the DIL option is available. The Borrower must request the review for DIL after the 120 day marketing period. Keep in mind, there are restrictions on the DIL. If the home is in Active Foreclosure, usually the lenders will NOT issue an Approval To Participate, therefore, the Borrower will not be eligible for a DIL.

HUD has guidelines in place for the Servicers... Not the Borrowers. Think of HUD as an insurance company backing the FHA loan. IF the Servicer wants to complete a SS or DIL, they must follow the guidelines to receive the insurance money. Most of the Servicers are allowed to interpret the guidelines as needed. IF the Servicers don't follow the guidelines, HUD can withhold the insurance payment/claim. Hope this helps, Chad.

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