Short Sale and HUD subordinate loan.

[Dana King]

We have a contract to buy a home for the payoff amount. The title search found a Subordinate loan with HUD for 52000.00 (aka: HUD partial claim). The house is not currently in foreclosure. The loan was recently caught up, but the sellers are in their 80's and are downsizing, have health issues and may require nursing care. It will soon be in foreclosure again. How do we do a short sale? 1st mortgage is with Ocwen Loan servicing, LLC and 2nd with NOVAD ( HUD's loan servicing contractor company). Will HUD consider a short sale? Any help would be appreciated. It is sad but it seems that these people had no idea what they were really agreeing to when they signed the modification.