FHA Short Sales

[Larry Moore]

Hi, I am new to the forum. I am relatively new to short sales, having completed one so far with a conventional lender. I have been reading the new FHA guidelines for 2009 for the PFS program, and am somewhat unclear as to what the changes are. Here is what I am getting hung up on:

- It seems that the Application to Participate (HUD-90036) and the Counseling Cert (HUD-90038) are now obsolete/not required to be submitted with the package. It looks like they been replaced with the New Information/Disclosure form HUD-90035. However, looking at the new form, it looks like it is solely for informational purposes. So, are there no HUD forms needed for submission to the program?

- It looks like the 63% rule relating to FMV compared to Principal and Interest owed has been eliminated, as well as the 10% rule regarding repairs compared to ARV. But it seems that repairs are taken on a case by case basis based on catastrophic events that cause damage, and what they refer to as "mortgagee neglect", or the lender's neglect. Again, not clear on the ramifications. If a home has been neglected by the mortgagor, or homeowner, and has a lengthy list of repairs needed, what benchmark is used to determine if it will qualify?

Last, now that the 82% Net of Appraisal has been changed to a sliding scale of 88%, 86% and then 84% for 1, 2, then 3+ months listed, it seems more important to be clear on what "Net" really means. Net seems to mean after taxes and realtor commission have been paid, presumably by the buyer, that they must then net the appropriate amount. In my state, taxes are paid in arrears, so they could amount to up to a year and a half of taxes. Adding the realtor commission and closing costs, not much of a discount off appraised value. Am I missing something?

Sorry for the long initial post, but I have never been clear on FHA short sales/PFS program.

Thanks for any feedback.