FHA Requesting 100% of BPO?

[Donovan R.]

I have been working on an FHA Wells Fargo short sale. Aprox. 130k owed, BPO came in at 55k which I thought would be perfect assuming I could get it at 88% of the appraisal. I have made three offers 42,46, & 50k. Each time they countered at 100% of appraisal value. At 50k I was told I got bank approval but not FHA. I thought FHA could take 88% of appraisal value. What's the deal?

There counter -
"The offer of $50k was forwarded to me. We need to counter all buyers to $55k (our appraised value) and ask for highest and best offer. If there are seller concessions, please counter to 0% concessions or 1% if buyer is obtaining a FHA loan. (This is what HUD allows on FHA short sales)
*****BUT if the buyer needs the concessions, we can ask HUD for an exception. *****

Please note that HUD does not allow the following fees to be paid by concessions:
-Repair reimbursements or allowances
-Home warranty
-Discount points or loan fees for non-FHA financing
-Lender’s Title Insurance Fee"