HUD Announces New Short Sale Requirements

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This is a long overdue set of changes. One question that comes to mind is who’s going to check on these short sales to ensure compliance? If this is another case of self checking it will not do much good in regarding to those people that want to cheat. Please read the article below.

The FHA Condos Approval Company, Inc.

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Effective October 1, 2013, HUD has announced the following changes to their Federal Housing Administration (FHA) short sale requirements.

To be eligible, one must successfully complete a short sale under the FHA short sale program. The borrowers must meet the following requirements:

1) They cannot list the property with or sell it to anyone with whom they are related or have a close personal or business relationship. In legal terms, it must be an “arm’s-length” transaction.

2) Any knowing violation of the arm’s-length requirement may be a violation of federal law.

3) Your mortgage must be in default, on the date the short sale transaction closes.

Before closing, any additional liens against the property must be released. A lien holder who demands a payment to release its lien must submit a written statement, and an agreement to release the lien if that amount is paid.

For a standard preforeclosure sale, servicers must use a Deficit Income Test (DIT) to determine a homeowner’s financial hardship. The IRS Collection Financial Standards is used to verify homeowners expenses not reflected in their credit report. Only owner-occupied properties are eligible for the standard preforeclosure sale.

To read the complete article please use the link below.

New Short Sale Requirements

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