Has anyone ever had USDA say that they cant do a short sale since the home had been a rental property in the past? Is there a way around this?

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Here are the USDA guidelines

The property must be owner occupied. So you need to ask for a variance. Why did the seller move? Was it job relocation, health issues, death, divorce? If none of the above they may have an issue getting this one through.

Thanks for the USDA guidelines link, I have been searching for the information. I have a couple of questions in reading through it. What is: "Employee in a private or public organization-  SFHGLP Servicing Plan"? There are several references to the SFHGLP throughout the text.

Also the guidelines say that the property must not be listed for more that 90 days. I have a borrower who has just started on his short sale and he was not in default when he came to me but will now be 30 days late. Info I have read elsewhere (BofA guidelines) says that the borrower must have the ATP already in hand before listing the property on the market. So should we withdraw the home from the market until he gets the ATP so the 90 days can start from there? or leave on the market hoping to get an offer to submit. Other shorts I have done need an offer in before the lender will seriously consider approval of a short sale.

Finally, the borrower will be moving out soon to move into job provided housing (wife got a job at a motel about one mile away). They plan to have an unrelated person move into the house to maintain and keep utilities on. Would that make it so he would not be eligible for the PFS? What if the tenant wanted to buy the home?

Thanks for any guidance on this matter.

I would think they could obtain a Variance much like the FHA will grant.

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