FHA Preforeclosure Sales Program - What are the maxiumum allowable buyer closing cost...

What are the maximum allowable buyer closing cost a seller can pay when the buyer is obtaining a new FHA insured loan?

The default answer tends to be 3%, however, you have to pay attention last part.  I know that HUD guidelines state the following:

 

"HUD allows up to 1% of the buyer's mortgage amount for closing costs to be included in the "Seller's Costs" on the HUD-1 for all transactions that involve a new FHA-insured mortgage."

 

Have any of you Short Sale Superstars seen anything to the contrary? 

Views: 1664

Reply to This

Replies to This Discussion

I have had 3% approved. The key is to make sure the NET lines up with the figure on the ATP HUD 90045. If the net is high enough then all things are possible. But I would make sure the buyer has other resources in case the additional closing costs are denied.

How long did you have to wait to get the 3% approved?  I have one that is approved for the 1% but the buyer wants me to see if FHA will allow them the 3% my negotiator at BOA said that it is going to take an additional 3 to 5 weeks for them to come back with an answer.

I am just wondering when I should start escalating and pushing. My sellers need to get this behind them soon.

Thank you

FHA usually responds to a variance request in about 3-5 days, not weeks.

Bryant,

"I would make sure the buyer has other resources in case the additional closing costs are denied." - A very good point indeed.

I have had 6%, approved with FHA PFS at GMAC.  Obviously for the ratios to work, the buyer paid more than the FHA appraisal.  I would tell BofA to get started because the variance is needed. They always try to scare you with a long time frame but in reality I have seen it take much short than what they quote.  The last one I did they issued the conditional approval so we could get the buyer started while were still waiting on a closing costs variance (also with BofA FHA SS Dept.) approval on variance came about a week after the approval....

From what 'they say', HUD will allow only 1% if the Buyer is using FHA financing too.  If the Buyer is using other financing (conventional), then you can ask for a 3% variance.  Never heard of 6%... but what I am learning is that no matter what the guidelines, it all depends upon the servicer and the negotiator.

My variance only took an extra week at most.

I have had 3% paid for buyers using VA, FHA, and Conventional loans through the PFS program.  The key, like Bryant says, is to be sure you are netting the correct amount per the ATP HUD 90045.  I have successfully had Suntrust, BOA and WF get the variances approved.  All did take longer than approving contracts with the 1% closing costs for FHA or the 0% for other loan types since the variance has to be approved by HUD.  The last lead time I got from BOA for getting the additional closing costs approved was about 30 days since it isn't able to be done "in house".  Several of the negotiators try to talk you out of it or tell you it will be quicker to just do the 1% but just push for it.  If they are taking too long, call and get HUD involved.

Similar to Bryant I've had 3% approved and maybe more if I went back and looked at my files. I had a similar situation with Bank of America to you and it's not a matter of HUD taking four or five weeks, it's matter of BAC dragging its feet or the negotiator simply not wanting to mess with it.  I've had similar situations with Wells.  Not sure what their problem is... All they have to do is enter the variance request into a computer system and wait for a reply.  I've never had one denied once I got them to enter it as long as it meets their net.

Again, it all depends on the negotiator and whether they will take the time to request the variance.  Obviously, HUD doesn't have to grant the variance but in my experience they usually do. I've closed deals with FHA buyers who got more than 1% in closing cost help. The only one I can think of where the buyer didn't get more than 1% was a Citibank loan where the negotiator simply refused to even ask for the variance.  

Dale,

I've gotten variance's approved for 3% when the Buyer is not getting an FHA Loan.  It's all about the net proceeds.   However, I would keep it 3% or under.

Variance's usually only take a day or two for a reply once it's submitted by the Mortgagee.  

I think, as Dale mentioned, the issue is not whether or not you can get 3% or 6%, but if it is allowable in a FHA pre-foreclosure sale, when the buyer is obtaining a new FHA-insured loan, for more than 1% of the buyer's closing cost to be paid for by the seller.

 

The quote I included:

 

"HUD allows up to 1% of the buyer's mortgage amount for closing costs to be included in the "Seller's Costs" on the HUD-1 for all transactions that involve a new FHA-insured mortgage."

 

This comes directly from the HUD pre-foreclosure sale guidelines, not the servicer.

 

It sounds like many of us have had experience in requesting variances. A variance is not always an option and if you can avoid having to ask for them your short sales tend to go much smoother. I was also told by a servicer, that if they're constantly asking for variances there are ramifications.

 

I agree with Dale, you may have had some slip by the servicer, however, it's nearly impossible, as you may have experienced, for a servicer to keep on the flurry of changes and different guidelines.

 

It sounds like many of us have had experience in requesting variances.  A varience is not always an option and if you can avoid having to ask for them your short sales tend to go much smoother.  I was also told by a servicer, that if they're contstantly asking for variences there are ramifications. 

 

I agree with Dale, you may have had some slip by the servicer, however, it's nearly impossible, as you may have experienced, for a servicer to keep on the flurry of changes and different guidelines. 

Most Servicer's require a copy of the Buyer's GFE to see if their closing costs equal or exceed the amount requested in order for them to submit a request for a Variance.

RSS

Members

© 2021   Created by Brett Goldsmith.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************