Whenever
an FHA-insured mortgage is involved. FHA short sales must advance through a
very exact and systemized process.
Before a short sale can
be initiated — The U.S. Department of Housing and Urban Development (HUD)
requires that the homeowner be reviewed for all home retention options (modification) before a short sale is
pursued.
This 30- to 90-day process seeks to determine
whether a legitimate hardship exists and if a short sale is appropriate. The
review also will certify that the home has not been rented for more than 18
months and is being maintained, that there is a marketable title, and that the
property has only one FHA-insured loan.
A
listing agreement or offer is not required in order for the homeowners to be
approved. Once the homeowner is approved to short sell their home,
foreclosure is put on hold and the homeowner receives an Approval to
Participate (ATP) letter.
Submitting a Contract for Purchase to the
Mortgage Holder: Banks do not begin
negotiating the purchase contract until after the homeowner is approved to
participate and has given them a signed copy of their ATP, usually within seven
days.
Homeowner involvement — FHA
short sales must be initiated by the homeowner, not an agent. Contact your assigned Customer Relationship
Manager (CRM).
Seller
Incentives: HUD dictates the amount
of incentives payable to the seller.
Agent involvement — Seller’s
agents need to work with the homeowner to make sure the following items are
organized and completed once the ATP has been executed.
Those include:
§ Pay
stubs (dates, amounts, names, institutions)
§ Bank
statements (all pages, accounts, and borrowers)
§ Hardship
letter
§ Occupancy
certificate
§ Marketable
title
I took most of this material from an email I received, the Bank of America monthly newsletter. If you would like to see their version, go to crm@lenderoffice.bankofamerica.com
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