Wednesday, October 15, 2008

12 Keys to HUD Short Sales

Since writing my post on HUD Short Sale Guidelines I have received numerous calls and comments requesting more information. I am providing the following points directly from the Department of Housing and Urban Development, along with my discussion of items of note.


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.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.


Search Destin Florida real estate


Short Sale Pre Foreclosure Help.


Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com


Wendy Rulnick has been selling real estate for almost 20 years. She has won numerous awards, including the coveted ADDY for advertising design. An expert marketer of real estate listings, she negotiates successfully to her clients' advantage. She is supported by a team of top buyer agents. Wendy specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.


All Rights Reserved. *12 Keys to HUD Short Sales* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2008 by Wendy Rulnick.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.


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