Please see this internet link re Pre-foreclosure FHA sales: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/2008ml.cfm
Refer to publication 08-43. HUD guidelines do allow concessions but they are limited to 1% of sales price and only if borrower is financing FHA. So, while FHA underwriting guidelines allow for up to 6% seller concessions, this does not apply to a short sale or pre-foreclosure sale. There is much confusion surrounding this issue. There are exceptions and we can request a variance from HUD to allow more; however, they are getting tougher on this! Usually they won't allow anything over 3% and only if the offer is at or very near the appraised value.
Every deal is looked at on a case by case basis...so it is difficult to be any more specific.
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