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HUD issues FHA lender guidance on short sales

Posted by DanaVoelzke on December 21, 2009 at 5:49am

I just watched a video announcing some new HUD guidelines with respect to borrowers looking to obtain FHA loans after having completed a short sale. It makes a distinction between borrowers who were delinquent at the time of the short sale those that weren't.It also says borrowers who took advantage of the short sale simply to take advantage of market conditions or who moved locally are not eligible for an FHA loan for 3 years. I guess my question is how could someone be approved for a short sale "to take advantage of market conditions"? I thought you needed to demonstrate a hardship to get approved for a short sale. I have never seen a decline in equity cited as a hardship, but maybe I'm wrong about that.I guess HUD is attempting to prevent people from abusing the system. Do you think it will help?

HUD, guidelines, lender

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Comments

Wendy Rulnick December 26, 2009 at 5:39am

Dana -The HUD guideline penalizing someone who moves locally does not make sense, what if they moved because they could not pay their mortgage? Thank you for posting the guidelines. You could also post this on the HUD FHA group.
Bryant Tutas December 21, 2009 at 11:12am

Dana, Most of my sellers are investors who are selling because the value has dropped so much it no longer makes sense to keep paying the mortgage. Their Short sales get approved. If a foreclosure is inevitable, even if the seller is just not honoring their obligations, a short sale may still be approved because it's all about the money for the lenders. They are making financial decisions not moral judgments. Make sense?