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FHA contribution to junior liens

Posted by Drew Ludlow on September 25, 2012 at 10:37am in Short Sale Discussions

I've got a Seller who has an FHA insured loan and we are starting the process for acceptance into the FHA Preforeclosure Program.

 

I just found out that there is a judgement against the Seller for around $2k.

 

FHA states that they will contribute up to $1500 to the release of junior liens after the $1000 incentive is applied.

 

Does anyone know if a) a judgement is considered a junior lien in FHA eyes and b) is the $1500 based upon a percentage of the amount owed, or is it a flat $1500 no matter what?

 

And yes, I know that a judgement can be attached to property.  In this case it is attached to the house.  But I also know that banks can be discriminatory against purchase money liens and personal judgement liens.

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Replies

  • Kevin - Greenville, SC September 25, 2012 at 3:04pm

    Does anyone know if a) a judgement is considered a junior lien in FHA eyes - Yes.

    Is the $1500 based upon a percentage of the amount owed, or is it a flat $1500 no matter what? - Flat, but this would come in the form of a reduction in the net proceeds to the Servicer/FHA.

    • Drew Ludlow > Kevin - Greenville, SC September 26, 2012 at 1:19pm

      Thanks.  Just what I thought, but wanted to make sure.

  • Jonathan Katz September 25, 2012 at 1:32pm

    Generally, HUD will release 2,500 total to additional liens or judgments. This may depend on how much the lender is NET'ing. Hope this helps!

    Brett@ishortsalenow.com

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