How to negotiate HOA ATTORNEY'S lien release on Short sale

Very interesting.... in fact, I was just ready to make a separate post on this EXACT topic, but thought I would include it here.

I just got BoA approval on my HAFA short sale with BoA as the first and an HoA second lien. The HoA (through their attorney) agreed to take $2500 as full settlement.

Now... I read through the MHA Supplemental Directive and thoroughly read the portion about the Seller using their relocation incentive. The MHA Directive will NOT allow that incentive to be used for a non-mortgage lien.

But, I spoke with my negotiator today just to ask anyway. I specifically stated that this is a lien. She said it was OK. I could reduce the HAFA relo incentive by $2500, place the remainder in the 500s section of the HUD and then place the HOA lien payoff in the 1300 section.

I even got it in writing in an email from the negotiator that this was the procedure she wanted to payoff the HOA "dues/lien".

Now... my guess is that by putting it in the 1300s section, it appears as just 'dues' and not a lien. Maybe that was her reasoning, because the Directive DOES allow the incentive to be used for other things.

This is not a FNMA loan, by the way.

Anyway, it might be worth it to ask your negotiator if your seller can use the relo money for this purpose.

Replies

Drew Ludlow February 27, 2012 at 7:14am

Very interesting.... in fact, I was just ready to make a separate post on this EXACT topic, but thought I would include it here.

I just got BoA approval on my HAFA short sale with BoA as the first and an HoA second lien. The HoA (through their attorney) agreed to take $2500 as full settlement.

Now... I read through the MHA Supplemental Directive and thoroughly read the portion about the Seller using their relocation incentive. The MHA Directive will NOT allow that incentive to be used for a non-mortgage lien.

But, I spoke with my negotiator today just to ask anyway. I specifically stated that this is a lien. She said it was OK. I could reduce the HAFA relo incentive by $2500, place the remainder in the 500s section of the HUD and then place the HOA lien payoff in the 1300 section.

I even got it in writing in an email from the negotiator that this was the procedure she wanted to payoff the HOA "dues/lien".

Now... my guess is that by putting it in the 1300s section, it appears as just 'dues' and not a lien. Maybe that was her reasoning, because the Directive DOES allow the incentive to be used for other things.

This is not a FNMA loan, by the way.

Anyway, it might be worth it to ask your negotiator if your seller can use the relo money for this purpose.
- William F Griffin Jr > Drew Ludlow February 27, 2012 at 2:15pm
  
  Get a new buyer that will buy subject to lien. We just sold 3 short sales in the last month where the buyer took it subject to the lien.

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