Posted by Gerald-DC on February 09, 2003 at 01:05:56:
You pay PMI on a conventional loan when you have less than 20% equity in the property. On an FHA loan, you pay extra each month to cover your FHA premium. In effect, if you have an FHA loan you are paying PMI but you are correct that the insurance is known by a different term.
FHA SHORT SALE - NOT WORTH THE EFFORT? - Posted by jerry-IL
Posted by jerry-IL on February 06, 2003 at 21:27:21:
I have a short sale package in the hands of a lender. They said it’s an FHA and that the property will have to be listed in the MLS for 90 days (if I understood them right) before they’ll let it go as a short sale. Does that cut my chances of success by 95 percent as it appears?
Is it in my best interest to have it priced higher or lower than RIGHT AT FMV? Are there any strategies that will enhance my chances? Is there something about the process that I’m missing? I seem to be able to bring it a long distance, but short of that final inch where I make money.
Jerry-IL
SURE IS. - Posted by Ben (Oh)
Posted by Ben (Oh) on February 07, 2003 at 08:35:12:
I have done FHA Deals, I guess about 6 or 7 of them. They were actually my best short pays. I believe the lender is required by FHA policy to list in the MLS. So, get your favorite REaltor to list the property. What price? It’s not up to you as you are the potential buyer. Have your Realtor handle that. Your job is to submit the offer through the Realtor.
Now there are techniques that will increase your chance of success. However, as someone else mentioned a boot camp or classes is your best bet as there is a a lot of material to cover.
E-me if you have any more questions.
Re: FHA SHORT SALE - NOT WORTH THE EFFORT? - Posted by Barry (FL)
Posted by Barry (FL) on February 07, 2003 at 08:13:11:
The listing is not really necessary just make them an offer with a quick closing. I’ve been told by lenders that they will take 82 to 88% of appraised value for FHA loans but you will need to payoff the second as they usually won’t do anything until the other liens are released.
Hope this helps.
Barry (FL)
I am no expert!!! - Posted by jim
Posted by jim on February 07, 2003 at 07:52:52:
Jerry–
Late 2002, I was working on a short sale and it was on an FHA loan. Maybe there are more sophisticated ways to negotiate these FHA loans but when the lender and I got to the point of an initial agreement there wasn’t much margin for profit (along with the repairs needed). Now there was a 2nd mortg that was $40K and they agreed to settle for $4,500 which was good but I just couldn’t get anywhere on the 1st.
From here on out I’m only going to focus on conventional and VA loans unless I learn some unique way of handling the FHA loans to make more profit.
Good luck—Let us know if you uncover an ancient secret—Jim
Re: FHA SHORT SALE - NOT WORTH THE EFFORT? - Posted by ronald rye
Posted by ronald rye on February 06, 2003 at 23:18:05:
You might want to check out LeGrand’s new boot camp. It’s supposed to be all about short sales. I haven’t seen it on creo but look around and you might find it. I know it’s offered at reiwealth.com if you can’t find it.
Good Luck
Some thing that confuses me - Posted by osirus
Posted by osirus on February 07, 2003 at 10:50:59:
“”““I have done FHA Deals, I guess about 6 or 7 of them””"
Correct me if I am wrong, but it is my understanding that a FHA loan, by definition, is 100% insured by the federal government. Assuming this is true, what incentive would there ever be for a lender to short sale to a investor, at a discount, if they can always recieved all monies owed to them by the government?
Precisely - Posted by Ben (OH)
Posted by Ben (OH) on February 07, 2003 at 11:08:01:
The lender has to follow HUD guidelines for short sale. They are reimbursed by the FHA insurance, though I can’t say for sure it is 100%. If the lender is guaranteed his investment what differnce would it be to him if he took a low offer realizing the FHA pays the difference?
In addition, the lenders are required by the feds to offer counseling and some other “feel good” options for homeowners.
Re: Precisely - Posted by Dave T
Posted by Dave T on February 07, 2003 at 13:13:02:
When I took out an FHA loan, I was required to purchase Private Mortgage Insurance (PMI). In my case, the buyer pays for PMI to cover the lender’s loss up to 20% of the original purchase price. If the loan is “privately” insured, how does HUD (FHA) end up reimbursing the lender?
Is there a federally subsidized mortgage insurance program (perhaps with different initials) in play here instead of PMI? Maybe my lender just told me I was getting PMI when I really got this other insurance.
I see where… - Posted by osirus
Posted by osirus on February 07, 2003 at 12:32:08:
“”“If the lender is guaranteed his investment what differnce would it be to him if he took a low offer realizing the FHA pays the difference?”“”
I see where my ignorance was. I did not know that FHA makes up the differnce. I wrongly thought that the lender could either accept a short sale or be compensated by FHA; but not both.