HUD Announced Delay of the Preforeclosure Participation Requirement on Short Sales
Delay of The Dual Agency
The U.S. Department of Housing and Urban Development (HUD) has announced that they are delaying, until further notice, a portion of the preforeclosure participation requirement on FHA Short Sales.
Key preforeclosure participation requirement that is now delayed:
- The FHA is delaying the prohibition on dual agency/brokerage that was included in Mortgagee Letter 2013-23. As revised by the FHA’s new announcement, brokers and their agents may continue to represent both the buyer and the seller in FHA short sale transactions, but the existing arm’s-length requirements remain in effect.
New requirements that will continue to go into effect October 1, 2013:
- New or different documentation requirements for verifying assets, income, and expenses
- Deficit Income Test (DIT) will be used to determine a homeowner’s financial hardship
- Possible elimination of the financial hardship/deficit income preforeclosure sale requirement for:
- service members who have received Permanent Change of Station (PCS) Orders, or
- homeowners who are deemed eligible for a streamlined preforeclosure sale option
- New validation requirements for appraisals