Ok, let’s get serious here. Last week, the Dept of HUD published Mortgagee Letter 2008-43 which details the new procedures for the FHA Pre-Foreclosure sale. The PFS is what FHA calls their Short Sale and if a seller is shorting an FHA loan, then here’s what you need to know.
>>They removed the calculation that required the property to appraise for at least 63% of the indebtedness (this is helpful because many properties have dropped below 37% of the mortgage balance).
>>HUD used to accept 82% of the appraised value as their net - now it is 88% if it sells within 30-days marketing time, 86% if it sells in 60-days, and 84% after 60 days.
>>Prior to ML 2008-43, HUD would pay zero buyer closing costs on an FHA short sale, now they will pay 1% of buyer’s closing costs if the new buyer is obtaining FHA financing.
>>They’ve increased the amount allowable to discharge junior liens up to $2,500.
>>FHA allows the seller to walk away with up to a $1,000 check at closing
Before I sign off here, I’d like to make a comment that IMO there has never been a time in the real estate industry where it has been so important to know your trade. I’ll also add that there has never been a time when knowing the answers has been so satisfying. I hope everyone is constantly learning and applying what they can to help the folks in your real estate locale and earn a profit in the process. If it was easy, everyone could do it. Since it’s not, the job is yours.
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