The US Housing and Urban Development Administration term for an FHA short sale is Pre-Foreclosure Sale. There are specific guidelines and documents required for an FHA pre-foreclosure sale. The basic guidelines as well as the short sale approval come from the HUD administration.
The Key Benefits to a Homeowner of an FHA Pre-Foreclosure Sale:
- No Deficiency Judgement
- Up to $1,000 Relocation Assistance
The following is an overview of the sequence of events and tasks in the FHA Pre-Foreclosure process for Bank of America and the Short Sale Specialist Real Estate Agent:
1. Agent – Have the distressed homeowner call the Customer Relations Manager number (1.800.669.6650) to request the FHA pre-foreclosure program.
2. Bank of America – Reviews the request to determine if the borrower is eligible for the program.
3. Bank of America – Assigns a short sale specialist to the file and sends out a welcome package to the borrower and the short sale specialist realtor.
4. Agent – Review the welcome package and supply requested documentation.
5. Bank of America – Orders title, appraisal, and issue (ATP) Approval to Participate.
6. Agent – Facilitate access for appraiser. Review appraisal and dispute if necessary.
7. Agent – Send executed Listing Agreement and MLS sheet to short sale specialist. Market property and update MLS sheet every 30 days.
8. Agent – Once an offer is received on the property, send executed contract, HUD-1, and Buyer Disclosure to short sale specialist.
9. Bank of America – Verify accuracy of all documents and issue closing instructions.
10. Agent – Email preliminary HUD-1 and closing docs on close of escrow.
11. Bank of America – Confirm closing date and issue Approval letter.
The following Documents will be required:
- Bank of America Third Party Authorization form
- Recent 30 days consecutive pay stubs for all borrowers
- Recent 60 days bank statements
- Hardship letter explaining the reason for default
- Occupancy certification
Very important to make sure all documents requiring a signature are signed and dated.
NOTE: Beginning in the second quarter of 2013 Bank of America short sales will be processed online on the Equator system. The short sale specialist realtor must have an account set up on Equator to process the FHA short sale.