Short Sale CASE STUDY: 007

Form Letters and Red Tape

The seller received a notice from the Lender late last week acknowledging that they received the request and were processing the short sale.  The letter also directs him to have his agent upload his financial information into the Equator system to avoid the file being cancelled.

It has been over a week since I last uploaded information on this file and I am still not able to submit his financials until they generate a task for me to do so.

With other lenders, I am able to use something called The Library in the Equator system to upload miscellaneous documents that have no associated task assigned to them. Wells Fargo disables the Library for security reasons.

Appraisal Has Been Ordered

Because this is an FHA short sale, HUD requires an FHA Appraisal of the home to determine the net proceeds they will take. FHA appraisers are currently booked out at least a week in this area.  If this were a BPO (Broker’s Price Opinion) it would be completed in 48 hours.

This appraisal will make or break this short sale.  It sets the FMV (Fair Market Value) in the eyes of the lender and the net proceeds are locked in at 88% of that value for the first 30 days.  The lowest the investor will accept on an FHA short sale is 84% of FMV.

Thats NET PROCEEDS.  After commissions, closing costs, taxes, repairs, concessions, everything.

There are processes in place to dispute the appraisal but we want to avoid that if we can as it is filled with time delays and red tape.

STATUS = FHA Eligibility

The current status in the Equator system shows me that they are still reviewing the file to see if it meets FHA requirements.  The fact that they ordered the appraisal is encouraging.  It means that they are in fact working on the file and I should be able to upload financial documents soon.

Are you currently working on a FHA short sale?  Have any questions so far about the process or want me to cover something I haven’t? Feel free to comment below.

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