Anyone ever been successful shorting FHA? - Posted by Jim

Posted by Carmen_FL on September 23, 2002 at 19:11:06:

Now, why didn’t I think to look on the web, and instead relied on live human beings? It seems this is much more reliable.

Anyone ever been successful shorting FHA? - Posted by Jim

Posted by Jim on September 23, 2002 at 09:10:42:

Have a house with a 1st and 2nd. The second is ready to go with a short but I haven’t received the total payoff for the 1st. However, it is FHA and yes I’ve heard how difficult it is to short. Are there any success stories for shorting these?

Thanks for everyone’s responses - Posted by Jim

Posted by Jim on September 24, 2002 at 08:40:15:


FHA pre-foreclosure link - Posted by Bob H

Posted by Bob H on September 23, 2002 at 18:54:58:

Scroll down to 94-95 procedures - this will give you all the info you need

Re: Anyone ever been successful shorting FHA? - Posted by Carmen_FL

Posted by Carmen_FL on September 23, 2002 at 11:58:38:

FHA has a lot of rules, and they all have to be followed before a lender can accept a short sale. Hank is right, it does take quite a bit of time. And, basically, the lenders I’ve worked with said “we don’t care if they take the short sale or not, we’re getting our money out …” which means the lenders may be less than enthused about doing all the work necessary.

But, it is possible. They do have rules … i’ll have to look, but they will allow the short sale to be somewhere around 82 or 87% of the Fair Market Value (they do their own appraisal). The ones I’m doing now, the owner must have lived in the property; if rented it must be for less than a year during the time owned. It should not be vacant; if it is, they need a good reason outside of their control for which they “vacated” the property. I’m told FHA rarely gives “variances” on this rule; in fact, I’m working with a loan officer who told me that, in the 5 years he’s been working with FHA, he hasn’t seen many variances at all. I called FHA, and they said that they are understaffed and overworked, and it would take 24-48 hours to get a variance … and that leads me to believe they don’t want to take the time to actually consider anything that doesn’t fit their little boxes. They also told me that, if there is a secondary lien, they would be less likely to consider it at all.

So, is it possible? Yes. Is it probable? Not really. I’ve done only 1 of them successfully so far, which turned out to be my charity work for the year, considering the number of hours spent vs the amount of money received at closing.

Re: Anyone ever been successful shorting FHA? - Posted by Hank

Posted by Hank on September 23, 2002 at 11:42:31:

I know a little bit of this.

It’s quite a bit of paperwork.

You’ll have to list it for something like a month to show that you’ve tried to get something for it.

Repairs can’t be more than 10% of the value of the house. If it’s more FHA thinks the borrower beat the snot out of the house and to heck with 'em.

On the bright side, if FHA aproves the short offer, there will be no 1099 to IRS and the seller may even get something like $1000.00 in moving money.

The key here is that you are going to need at least 2.5 to 3 months before the auction to do a FHA short sale.

Even after you’ve jumped through their hoops it can take a month of waiting to get the final OK.