Closing Cost Assistance in an FHA Short Sale

Hi Bryant. Thank you for the information. That is what I thought. The servicer will have to submit a variance request to HUD and see what HUD says. Unfortunately, on the FHA short sale in question, I have had 3 verbal offers. Not even counting in the 3% closing cost assistance, the offers would be at least $3,000 to $8,000 short of the 84% minimum net. With the 3% factored in those nets would have been about $7,000 to $12,000 short. Based on those net figures I told the buyer agents that those offers would require the servicer to file a variance request with HUD due to the 3% closing cost assistance and the minimum net being significantly below HUD's requirement and that, as a result, the offers did not have a high probability of being approved. I would have submitted the best overall offer to my seller and then sent the executed contract to the servicer anyway since we don't have a better offer. However, the buyers wanted to know with a near certainty that their offers were going to be approved since the price was already approved by the servicer. Of course, that price was the list price, not the buyers' substantially lower offers. I am not sure why they thought that any price would be fine and quickly approved.

Replies

Jessica Eisenhauer June 2, 2012 at 3:11pm

I have got 3% towards closing costs 2 times. They have to put in for an exception to be approved by HUD, but I haven't seen them not approve one yet so far anyway.
- Chad Murdock > Jessica Eisenhauer July 25, 2012 at 10:49am
  
  How long did it take to receive the variance to allow 3% towards buyers closing costs?
  
  Chad
Jim McCormack June 2, 2012 at 10:47am

Hi Bryant. Thank you for the information. That is what I thought. The servicer will have to submit a variance request to HUD and see what HUD says. Unfortunately, on the FHA short sale in question, I have had 3 verbal offers. Not even counting in the 3% closing cost assistance, the offers would be at least $3,000 to $8,000 short of the 84% minimum net. With the 3% factored in those nets would have been about $7,000 to $12,000 short. Based on those net figures I told the buyer agents that those offers would require the servicer to file a variance request with HUD due to the 3% closing cost assistance and the minimum net being significantly below HUD's requirement and that, as a result, the offers did not have a high probability of being approved. I would have submitted the best overall offer to my seller and then sent the executed contract to the servicer anyway since we don't have a better offer. However, the buyers wanted to know with a near certainty that their offers were going to be approved since the price was already approved by the servicer. Of course, that price was the list price, not the buyers' substantially lower offers. I am not sure why they thought that any price would be fine and quickly approved.
Bryant Tutas June 2, 2012 at 8:56am

I have had 3% paid in the past. If there are no other options and you are nearing the 120 marketing deadline then it wouldn't hurt to try. Just make sure the NET is high enough to cover the increase in costs.

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