USDA as Investor / PennyMac as Servicer

We're currently working on a short sale where PennyMac is the servicer and USDA is the investor.  PennyMac relayed their appraised value and the required minimum net needed for approval.  We submitted an offer that exceeded the minimum net required, but the USDA still denied the short sale stating that the appraisal listed 113k in repairs needed to the property.  Their official denial was that it was denied due to excessive repairs needed.  This is also an estate deal so the seller is a representative of the estate and has never lived in the property.

Has anyone had any luck getting around this/ disputing this?  The appraisal and subsequent offer are reflective of the true as is value so it doesn't make sense why they would deny the short sale.  Any recommendations are greatly appreciated!

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Permalink Reply by Phoenix Nest Homes on March 7, 2023 at 7:55am

They likely want to have a insurance claim made. They can also have the bpo amended or adjusted. I believe its anything over 100k.  Maybe do your own with less.  I have been finding A LOT recently the investors just want the house and make excuses. This is an odd case.  This is one of the rare cases you may need to dispute a bpo for being too much in your favor.  On the positive note I have had a few of these and all ended up in approval.  Stay persistent.  Talk to higher ups.  Do not give up!

Permalink Reply by Shauna Andrade on March 7, 2023 at 7:59am

Thank you for the response!  We've had this happen to a few with PHH as the servicer and HUD as the investor - very frustrating.  We'll try what you suggested - thanks again!

Permalink Reply by Minna Reid on March 20, 2023 at 3:34am

You can request a variance from HUD on an FHA. I have had much success with variances. I would imagine USDA has a similar process (although I have never had to try with USDA to confirm). Someone correct me if I'm wrong. Would love to know for sure.

Permalink Reply by Shauna Andrade on March 20, 2023 at 4:09am

Hi Minna, we've done this on HUD files, but never USDA.  We just emailed the lender to see if that's an option.  I'll let you know how it goes.  Thank you!

Permalink Reply by Shauna Andrade on March 23, 2023 at 2:58am

It worked!!!!! Thank you for the tip :)

Permalink Reply by Phoenix Nest Homes on March 24, 2023 at 3:27am

Great job! Another one down!

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