Blog | HUD Announced Delay of the Preforeclosure Participation Requirement on Short Sales

30

Sep
2013

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

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