Hello Colleagues, I have a situation where the borrower with an FHA loan has died and the family handling the estate is interested in trying for a Short Sale.  Does anyone know if this is allowable?  They don't want to just walk away from the property or let it go into foreclosure.

Any feedback would be most appreciated.

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Hi Linda,

I have a situation like this with Wachovia (now Wells Fargo), they needed this:

 

Copy of death certificate

 

Letters of Testamentary naming the seller listed on the contract as the Executor of the Estate for the deceased seller or a document on the Closing Title Co. letterhead stating that the short sale can close based on their title search and the documents that have been provided to them

 

It is allowed, just make sure you contact the bank and see what else they need. But this is what I needed for Wells Fargo. My loan was conventional, fyi.

I did an FHA short sale the same way last year with Wells Fargo as the lender

Yes, I have experience with this. I have found that lenders are eager to settle a short sale when you say "dead" but you must have the Personal Representative in place to close. Sorry to sound disrespectful if I am about the death of your seller, but DEAD is good for you and you can write your ticket. it's also a moral way to finish the estate in my opinion and family appreciates the opportunity to handle it this way. Let me know if you want to know more. It happens I have alot of experience with this. Take care!

Thanks guys!  This is a BOFA loan so I shall call to see what they require!

FHA at BofA is very painfully slow. However, with death cert and executrix/tor documentation, and reminding the negotiator when he asks for paystubs, etc that your dead client doesn't have one will do it for you as fast as another other BofA FHA deal.

I too am working on a short sale where the borrower - disceased - had a reverse mortgage. No problem.

House is in a trust, needed to fax trustee info to the bank and proceeded as if it were a 'regular' sale.

Very easy.

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