A week ago I posted a blog asking for help and advice from all you short sale experts out there regarding an unusual problem I ran into.
I was moving forward with preparing to close on an FHA short sale when the title company informed me that there was a second lien on the title report payable to HUD. Considering it was an FHA loan I didn't expect an additional mortgage lien. After some digging I found that is was a "Partial Claim" which, I've learned, is a loan from HUD to the homeowners given to them in a previous attempt to help them avoid a foreclosure.
I also found out, much to my distress, that HUD Never, Ever, EVER shorts these type of liens. As may of you know, an additional $8,800 needed to close the sale is a likely deal killer.
After my post, I got very few responses and since I have done short sales for years and never ran into it I figured I better tell you all the conclusion so you will know what to do if you are ever faced with this scenario.
For the first few days, I went through the ringer by calling HUD, the FHA help line, the HUD subcontractor (called them several times) and also had some emails and calls out to the lender.
I got dead ends everywhere except one place... our awesome closing negotiator with Bank of America (yes! I said Bank of America). Her name is Rebecca Brown and if you are lucky enough to be assigned to her then count your blessings.
Turns out that the only option in these scenarios is to request a variance from the usual FHA guidelines and get an approval allowing the entire 2nd lien to HUD to be paid at closing. Rebecca was so friendly, helpful, and responded quickly to communication. Today she called and told me the variance had been approved!
She did tell me that not all variance requests get approved and she was unable to say why some did approved and some don't get approved. However, it's great to know that there is at least some options beyond just throwing your hands in the air and watching the house go to foreclosure.
For me, that's one more house off the auction block, one more family saved from an looming foreclosure, one more neighborhood not suffering the depressed values caused by another REO on the street and one more new homeowner who is getting a great price on a new home.
Some agents say short sales are just too much trouble. That's fine. Send them my way. With great challenges come great rewards. If you are facing a foreclosure yourself, don't wait! Call me today so we can start working on your success story.
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