HUD is Shooting Itself in the Foot In Light of Short Sale Policy
New HUD Rules For A Short Sale
There are new rules that took effect Oct. 1 that will prohibit brokers and agents from representing both buyers and sellers in FHA short sales, this will only make it harder for the government to get the most bang for its buck. The Department of Housing and Urban Development issued a letter to mortgage servicers in July detailing an array of new anti-fraud requirements for short sales and deeds-in-lieu of foreclosure.
The letter included the use of a “deficit income test” to prove that a homeowner is experiencing a hardship that may qualify them for a short sale or deed-in-lieu of foreclosure. It also stated the documentation requirements for verifying the homeowners assets, income and expenses. To guarantee that short-sale transactions are conducted at “arm’s length,” HUD said “brokers and their agents may only represent the buyer or the seller, but not both parties.