FHA Short Sale Transactions Must Take Note of the New 2009 Guidelines

FHA Loans in need of a Short Sale, Charlotte Real Estate, North Carolina

On December 24^th, 2008 the Department of Housing and Urban Development (HUD) released "Mortgage Letter 2008-43". This new information was sent to the attention of single family servicing managers in reference to the PFS Program, Pre-foreclosure Sale Program. The FHA still remains committed to helping families avoid foreclosure. The PFS loss mitigation option allows mortgagors in default to to sell his or her home and use sale proceeds in satisfaction of the mortgage debt when the proceeds of the sale or less than what is owed.

Major changes for 2009 include:

Elimination of the clause calling for 63 percent or greater property appraisal versus debt. Now properties can appraise at any value and still be eligible for the program.
Increased Net. Instead of the former 82 percent net based upon appraisal value the new limits will be 88 percent if sold with 30 days, 86 percent if sold within 60 days and 84 percent thereafter.
Increased Closing Costs on Short Sales. Although not a lot FHA will now allow up to 1 percent of closing costs rather than the former zero.
Increased Seller Incentives. Again, although not a lot this will at least allow sellers a reasonable down payment toward a rental home by putting up to $1,000 in their pocket at closing.
Increased Lien Allocations. Junior liens up to $2,500 are now allowed just one more tool that helps sweeten the pot for short sale investors interested in pursuing FHA/HUD homes.
Removal of Repair Limitations. This is one change that could potentially add up to thousands depending upon the required maintenance on the home. This opens the doors to many homes that would otherwise be ignored due to excessive damage.
Exceptions to Non-Owner Occupant Requirements. This is on a case by case basis but opens to the door to rental properties formerly excluded from the program.