When doing an HUD (also called FHA) Pre Foreclosure sale, you can get the sale price approved in advance.  Your seller should apply to his lender to see if he qualifies. Doing this at time of listing or before, you can really speed up the approval of a contract.  You see, by getting the short sale lender the seller financial documents and request to participate, they will order an appraisal. That value is shared with the seller and the listing agent.

In this case, Bank of America took four months to send the HUD package to the seller after application.  It took them almost four more months to issue an “Approval to Participate“.  By that time we already had a contract submitted that more than covered the appraised value.

This lengthy process with Bank of America’s HUD PFS program may have been an anomaly.  My advice to short sale listing agents and sellers, is to apply as soon as you know you want to go forward with the program.  This will save you valuable time when you finally get a buyer.

It’s Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: itswendy@rulnickrealty.com

Destin FL Real Estate

Destin Short Sales & Pre Foreclosure Help.

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The post HUD Pre Foreclosure Sale Approved in DeFuniak Springs FL first appeared on Rulnick Realty.

August 25, 2008 PREFORECLOSURE SALES PROGRAM

(Wendy’s Note: HUD uses the term “preforeclosure sale” for “Short Sale”.)

1. Sale must be an “arms length” transaction. *Wendy’s note: Arms length means independent parties,  e.g. not related, you cannot sell to your brother.
2. HUD will pay “all reasonable cost of the sale including up to 6% sales commission, local/state transfer tax stamp and other customary closing cost.”  *Wendy’s note: HUD site also states there is leeway regarding what is “customary”.
3. Appraised value of the short sale property must be at least 63% of the outstanding mortgage.
4. Net sales proceeds must be at least 82% of the property’s ” as is ” appraised value, defined as selling price minus sales commission, consideration paid to seller, max $1,000 to discharge any lien and customary sellers closing costs. *Wendy’s note: $1,000 is not very much to pay a junior lien in the current market.
5. The property must be owner-occupied, not vacated nor an investment property. Exceptions: if the seller can prove he had to move due to the hardship (job loss, transfer, divorce, death)
6. The seller must be 31 days delinquent or more at the time of the closing.
7. The seller must provide documentation of a reduction in income or an increase in living expense.
8. The seller must apply for the Preforeclosure Sale Program with an Application to Participate HUD-90036 along with lender-required financial documentation.
9. The lender must obtain a standard FHA appraisal from an appraiser who does not share any interest with the mortgagor or mortgagor ‘ s agent. The appraisal is valid for six months.
10. The lender must obtain a title search to verify that the title is not impaired with un-resolvable title problems or junior liens that cannot be discharged as allowed by HUD.
11. The seller must maintain the property until closing.
12. The seller must list the property with a licensed real estate broker, unrelated to the mortgagor. The listing agreement must include a specific cancellation clause in the event the terms of the sale are not acceptable to HUD.

This is by no means a complete re-cap of the HUD guidelines, but should provide some guidance to those with a HUD loan.

The post 12 Keys to HUD Short Sales first appeared on Rulnick Realty.