Here are the steps required in order to successfully complete an FHA short sale:

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The borrower, with the help of a Handle With Care Specialist, contacts the Servicer and informs them that they are interested in pursuing a Pre-Foreclosure Sale.

Owner-occupant mortgagors may be considered for a standard PFS if they are current or less than 30 days past due on the mortgage obligation and can clearly demonstrate that they are at risk of imminent default due to one or more of the following hardships:

• A loss of or reduction in income that was supporting the mortgage loan
• A change in household financial circumstances
• Death of a co-mortgagor
• Long-term/permanent illness or disability of a mortgagor or dependent family member
• Divorce or legal separation of a mortgagor
• Distant employment transfer/relocation greater than 50 miles one-way from the mortgagor’s current primary residence to be closer to employment

Supporting documentation that is needed for review of a PFS:

• Hardship letter signed and dated outlining the above circumstances
• At least two of the mortgagor’s most recent pay stubs or, if self-employed, the most recent quarterly or year-to-date profit and loss statement, compiled by a Certified Public Accountant (CPA)
• Social Security Income (SSI) statements, retirement statements, pension statements, and/or disability payment statements, if applicable
• Most recent 3 months bank statements (All Pages)
• Most recent Form W-2, Form 1099, and Federal Tax Return signed with all schedules.
• Servicers Financial Sheet and/or short sale packet
• Vacancy Letter explaining when and why home was vacated signed and dated, if applicable
• Current utility bill if residing in property

1. The Servicer reviews the borrower for home retention options. If the borrower is denied home retention options then the Servicer reviews the documentation and requests any missing information to make sure that the borrower qualifies for the FHA’s Pre-Foreclosure Sale Program (PFS).

2. The Servicer orders an FHA appraisal on the property to determine current market value.

3. If the property is owner occupied then the Approval To Participate (ATP) is issued outlining the listing price, marketing time period, net proceeds to Servicer, and borrower incentive. If the property is vacant then a variance is submitted to Housing Urban Development (HUD) for approval into the PFS program. If approved, then the ATP is issued.

4. The borrower then hires a Handle With Care Specialist to list the property. That Specialist will market the property for a buyer.

5. Receive an offer and then the offer gets submitted to the Servicer. As long as the buyer does not ask for more than 1% seller paid closing costs and the offer falls in line with the minimum net proceeds then the borrower receives an approval letter. If the above is not met then a variance is submitted to HUD for approval.

6. In the event, that the borrower fails to secure a buyer within the marketing time period and does not qualify for an extension, the borrower will be reviewed for a Deed-In-Lieu. If the borrower does not qualify for a Deed-In-Lieu then the house could go to foreclosure.

Contact us today to for a free and confidential short sale consultation and we will take you through the short sale process, step-by-step, until a successful completion.

Here are a few additional points dealing with the FHA short sale process:

• FHA offers borrower a seller incentive of $750 and $1,000 for completing the PFS program. It depends on how quickly the sale takes place.

• FHA will pay junior liens up to $2,500. The borrower may use their seller incentive towards payment of junior liens. The ATP will not be issued until the junior lien has agreed to accept the payment and release their lien on the property.

• Some rental properties do qualify for the PFS program. The property must have been purchased as a primary residence and not as an investment and cannot have been rented for more than 18 months. A variance will need to be submitted for rental properties and if the property has been vacant for more than 18 months.

• Although HUD controls FHA short sales, the process can be lengthy and unexpected circumstances can complicate the short sale process.

The process can be complicated and confusing so you want to make sure you are working with a Handle With Care Specialist who understands the process and has proven results.

To learn more about the PFS process and for a free short sale consultation, contact us today and let our Handle With Care Specialists with proven results help you with your short sale.