FHA announces NEW GUIDELINES starting October 1, 2013
Good news for FHA homeowners struggling to sell. HUD has announced new guidelines that ease some of the burden for FHA homeowners. These guidelines do not go into effect until 10/1 but the announcement does stipulate that they can be instituted at the servicers discretion.
1) HUD has removed the MUST BE LATE stipulation, eg, the homeowner does NOT need to be in default in order to be approved for the program but does need to meet certain requirements.
- a) Loss of or reduction in income
b) Change in household financial circumstances
c) Death of co-mortgagor
d) long term illness or disability
f) employment transfer more than 50 miles away
2) HUD has increased their seller incentive to $3000 for a successful short sale. This can only be used on owner occupied properties. The money may be used to pay towards jr. lien holders, and only those mortgagors who are not required to make cash contributions are entitled the money.
3) HUD has reduced documentation. Lenders may approve a borrower for a streamlined short sale without verifying hardship or obtaining a complete borrower workout packet if a number of conditions are met. Some of these conditions include defaulting on a trial modification, having a specific credit score, and being more than 90 days late on mortgage payments among other things.Note that many borrowers that express interest in a short sale may be forced into a loan modification instead—purely because they do not meet the requirements noted above.
This is good news for FHA borrowers.
Maryann Little, VP Mitigation
Short Sale Mitigation, LLC
AA Premier Properties, LLC
THE SHORT SALE CLOSERS