Thanks to a heads up from the Ginny Gorman, I realized that I might have spoken too soon when I wrote an article in August about the FHA Mortgagee Letter 2013-23.
Borrower Benefits - Mortgagee Letter 2013-23
According to my previous article, in July, the Department of Housing and Urban Development (HUD) created a new Mortgagee Letter 2013-23 (which came out on July 9th) with positive changes that will take effect on October 1, 2013 (or sooner depending upon the discretion of the mortgage servicer). Some of the positive changes to the processing of FHA short sales that are included in the Mortgagee Letter 2013-23 are:
- Imminent Default – Borrowers do not need to be 30 days behind on mortgage payments to begin the FHA short sale process, just as long as they can demonstrate hardship.
- Reduced Documentation – There is now something called streamlined Pre-foreclosure sale (PFS) for borrowers that meet certain hardship parameters.
- Up to $3,000 Financial Incentive – Owner-occupant borrowers who successfully sell their properties using this option are relieved of their mortgage obligation and are entitled to a consideration of up to $3,000.
FHA Short Sale May Now Suck for Agents
Here’s the one little ditty that I missed when I wrote my August 5, 2013 article on the benefits of the FHA short sale come October 1, 2013. And… it’s a good one. Apparently, come October 1, 2013, there will be no more dual agency on FHA short sales. The letter states,
“No party that is a signatory on the sales contract, including addenda, can serve in more than one capacity. To meet the PFS Addendum requirements, brokers and their agents may only represent the buyer or the seller, but not both parties.”
This means that a single agent cannot represent both parties, and another agent in the brokerage may NOT represent the other party either.
This particular sentence above has some agents raging—especially those agents that work for large brokerages with upwards of two hundred agents under a single license. The National Association of Realtors® is blowing a gasket as well. In a letter written by the President of the National Association of Realtors® to the Assistant Secretary for Housing, President Thomas points out the sheer lunacy of such a regulation. Additionally, he suggests that HUD opt for an alternative policy similar to that employed on Fannie Mae short sales whereby dual agency is permitted but the property must be listed on the MLS for a certain number of days in order to discourage pocket listings and transaction manipulation.
I haven’t met too many agents that love to work the FHA short sale. One man that I know is on his sixteenth month working the same FHA short sale transaction. Wait till he hears that dual agency isn’t permitted. If he represents both sides, I have a feeling that they may hear him screaming all the way in Washington, DC.
Comments(5)