HUD SHORT SALE GUIDELINES

Directly from the HUD site. Hope this helps.

16.Page 12, Item G(4)(d) of Mortgagee Letter 94-45 indicates that

among the expenses deducted from the gross selling price to

obtain the net sales proceeds are "local/State transfer taxes/

stamps and other customary seller's closing costs.  This

apparently conflicts with language contained in Attachment D to

the Mortgagee Letter ("Approval to Participate/Property Sales

Information/Property Occupancy & Maintenance") which says that if

the seller negotiates to pay all or any portion of the discount

points or other buyer's closing costs as an incentive to the

purchaser, they will be considered a personal expense of the

seller and cannot be paid from sales proceeds.  It also says that

pro-rated real estate taxes must be paid by the seller

(personally) at closing.  Please explain.  Are there ever

exceptions in deducting these expenses from the proceeds of sale?

There is some flexibility in these matters.  The language in the

Mortgagee Letter was somewhat more accommodating by saying that

what might be a customary seller's cost in certain States or

localities would be a deductible expense, and that sales proceeds

could be used to pay them at closing.  The language in Attachment

D (a form to be circulated widely among PFS participants) is

deliberately restrictive, and was used to avoid creating the

impression among mortgagors, their sales agents, or prospective

buyers that HUD's position was always liberal in regard to seeing

expenses such as discount points paid from proceeds.  Points

and/or pro-rated taxes can be paid from gross sale proceeds, if

(a) they are considered reasonable seller's expenses to

facilitate the sale; and (b) the net sale proceeds are at least

87% of the as-is appraised value of the property.  Strongly

recommended is a third factor, that a "significant" cash

contribution is being made by the seller from the seller's own

incentive toward these or other expenses of the transaction.

There may be situations where points are very high because of

interest buy-downs, or where other costs drive the net sale

proceeds below 87%.  If it can be argued that a prospective sale

would not occur "but for" the payment of these additional

expenses from proceeds, and the seller is already contributing a

significant part of the seller's consideration toward repairs,

discharge of liens, and/or discount points/taxes, the local HUD

Office may decide to grant a variance from the 87% criterion, and

authorize an additional expense drawn from the sale proceeds to

achieve the sale.  (See below.)

Evan, I highly recommend you contact an attorney immediately.  

Denise -  Does your bank offer any other options,such as loan modification,  forbearance, etc?  Otherwise, seek the advice of an attorney.

Jonathan - Thank you much!

Gene - Thank you, sir!

Thanks, Kathy. 

Hi Jeff!  I don't know Ginnie Mae guidelines at all!  Sorry, I need to update this info here, too.  Thanks for stopping in.

Sue - I bet they will not contact you about any deficiency.  What a nightmare.  Who was the lender?