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FHA Short Sale & Closing Costs...

Posted by Caroline Simmons on April 5, 2011 at 1:12pm in Short Sale Discussions

I'm pretty sure I know the answer...here's to hoping for different answer!

Short Sale participation letter states: "If the loan is FHA insured the seller cannot pay the Buyer’s closing costs". Q1. That's my seller's loan, right? Not the buyer's. Buyer's agent wants it to be thier-side so they can go conventional if need be. I believe/know it's the seller. Q2. Is it possible to request a variance with ANY SUCCESS? (Please say yes and how I go about getting it.)

It will be difficult to get a (current or new ) buyer to purchase without closing costs.

Thanks!

 

 

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Tags: closing, costs, fha, sale, short, variance
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Replies

  • Mike Ashcraft May 29, 2011 at 5:19am
    I am a bit surprised by how many SS agents still believe the FHA will absolutely not approve closing costs above the 1%...
  • Mike Ashcraft May 29, 2011 at 5:10am

    Ditto on everything Vanessa said.  Early on in my Short Sale career I had an uncommonly helpful Negotiator tell me it is pretty easy to get FHA to approve a variance for closing costs as long as the Minimum Net is being met.  I have done many FHA S-Sales since and every one of them the buyer was requesting 3% for closing costs (some were FHA, some were conventional), and have always been able to get the variance approved.  Also, like Vanessa said there are some Negotiators that don't know what they are doing and you may have to fight w/ them over the fact that the FHA WILL approve the closing costs.  One thing to note is that requesting a variance (depending on how back-logged the FHA is at the time) can take an extra 2-4 weeks.  Its good to give the buyers a heads up on that, but most don't care about the extra time if it means getting their closing costs approved.  Good luck.


    Vanessa Calhoun said:

    If you have a buyer whose utilizing ANY type of financing whose requesting 3% in closing costs, have your negotiator to submit a variance request directly to HUD. They are normally approved with normal and customary closing costs AS LONG AS the required net to HUD has been met. I do this on all of my FHA shorts, which easily make up about half of my short sale business. Additionally, if you have a negotiator who refuses to submit the request, contact the FHA Servicing hotline directly. They'll jump right on it.

     

    Good luck!

  • Valerie Pressley May 29, 2011 at 1:51am

    The letter is referring to your seller's loan, not the buyer's loan.  The buyer can get any kind of financing they want.  The bank is just not going to pay any of the buyer's closing costs.

  • Teresa Simon May 25, 2011 at 9:33am
    Ask your negotiator for a variance when you submit the offer.  Read up on variances.  HUD short sale department told me about variances. 
  • Vanessa Calhoun May 25, 2011 at 8:04am
    I didn't mention VA because most of our local buyers are FHA and conv. As long as the minimum net to HUD is met, ask your negotiator to request the variance.



    Brian Bean said:

    Vanessa, only FHA and Conv?

    Just received a VA offer asking for $3,000 non-allowables to be paid by seller, whose loan is FHA. VA fall within those parameters?


    Thanks
    Vanessa Calhoun said:

    You can request a variance for up to 3% in closing costs with either a conventional or FHA. Just make sure that the net to seller falls within their required parameters. I have done it on all of my FHA short sales.

    alisa hagner said:

    If the seller has FHA financing, only a 1% seller concession will be allowed for a new FHA loan.

     

    Alisa

  • Brian Bean May 25, 2011 at 6:34am

    Vanessa, only FHA and Conv?

    Just received a VA offer asking for $3,000 non-allowables to be paid by seller, whose loan is FHA. VA fall within those parameters?


    Thanks
    Vanessa Calhoun said:

    You can request a variance for up to 3% in closing costs with either a conventional or FHA. Just make sure that the net to seller falls within their required parameters. I have done it on all of my FHA short sales.

    alisa hagner said:

    If the seller has FHA financing, only a 1% seller concession will be allowed for a new FHA loan.

     

    Alisa

  • Vanessa Calhoun April 6, 2011 at 9:47pm
    You can request a variance for up to 3% in closing costs with either a conventional or FHA. Just make sure that the net to seller falls within their required parameters. I have done it on all of my FHA short sales.

    alisa hagner said:

    If the seller has FHA financing, only a 1% seller concession will be allowed for a new FHA loan.

     

    Alisa

  • alisa hagner April 6, 2011 at 5:49pm

    If the seller has FHA financing, only a 1% seller concession will be allowed for a new FHA loan.

     

    Alisa

  • Vanessa Calhoun April 6, 2011 at 1:25am
    Excellent! It normally takes about 48 hours. If I were you, I'd go ahead and send in my 3rd party authorization to the FHA Servicing Center (make sure to include the FHA case #), so that they will already have it in their system. Then, I'd call the servicing center directly to see if the variance was approved. #ihatewaitingonotherpeople.
    • Elizabeth Monje > Vanessa Calhoun April 8, 2014 at 9:12am

      can you provide the fax number please? This is the first time I run into this believe it or not and I am quite lost here ;( Thank you much!

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