What is an FHA Short Sale ? What is FHA Short Sale Help ?
FHA stands for the US Federal Housing Administration which is a part of HUD ( HUD stands for Department of Housing and Urban Development ) whom provides mortgage insurance for FHA-approved lenders.These loans are normally given to first-time home buyers that cannot afford the conventional 20% down payment. For First time home buyers or any buyers who wouldn’t be able to afford a typical down payment and may not qualify for private mortgage insurance. Typically with FHA you can obtain a loan with as little as 3% down.
An FHA Short Sale is simply the Short Sale of a home with an FHA Loan however they are very different than a Short Sale completed on a home with any other form of conventional lending.
What is a Short Sale ?
A Short Sale is the sale of Real Property when the proceeds of the sale will not be enough to payoff the liens/obligations recorded against the property because the subject property is underwater. Because the loans are not being paid off in full Short Sales require approval from all liens holders.
FHA Short Sale Help
HUD will allow a borrower to sell their home for less than what is owed and agrees to accept a certain percentage of the homes appraised value, FHA has very specific set guidelines as to what they will allow the mortgage servicer to approve. Some mortgage servicers participate in the streamline FHA short sale Help process, where a borrower can apply before obtaining an offer on the home and get an “ATP” which gives the borrower 120 days to obtain an offer that meets their guidelines. Completing an FHA Short Sale can take a bit longer then a conventional short sale due to a two-step eligibility process:
- Step one: FHA Short Sale Help reviews the borrower for a loan modification/home retention options first before allowing the borrower to pursue a short sale. A borrower must be declined for all home retention options before a Short Sale is entertained. If you are current on your payments getting past this step is very difficult and you need to show signs of “imminent default”.
- Step two: Once the home retention options are declined the mortgage servicer will move on the the Short Sale portion of the FHA Short Sale Help and will order an interior appraisal. The offer must meet the guidelines/minimum net requirements established on the ATP. Specifically the net.
Things to Look out for with FHA Short Sales/FHA Short Sale Help ?
- If the Loan is more than 40 payments delinquent the borrower is only eligible for home retention options.
- FHA requires a home to be on the market for 15 days before an offer can be accepted
- The homeowner must be in default, or soon be in default, as a result of an adverse and unavoidable situation.
- The property cannot be vacant for more than 12 months, If the home is vacant for more than 12 months you aren’t eligible unless you have been relocated for employment. It is possible to request that FHA make an exception to this rule by reviewing a variance. variances are approved on a case-by-case basis.
- Rental properties are not eligible but variances may be made for rental properties if you can show that the property was not purchased as a rental, that it was not used as a rental for more than 18 months, and that the reason for vacating was related to the cause of default (for example, job loss or transfer, divorce or death).
How Can I Obtain FHA Short Sale Help ?
- Call Us For Free Consultation 888-558-5856
- Complete the Form Below to get an Email and Phone Call from our Team