FHA Requesting 100% of BPO?

Question

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
-Lenderâ€™s Title Insurance Fee"

Donovan R. · Answer

Well I called HUD, Faxed the authorization, told them the problem and gave them about a week.  Called back to check on the progress to which they told me there was none yet, call back later today. By the next day I had an email from the lender cancelling there rejection of the previous offer and requesting I send out a new one with a close date within 30 days.  Nice, thanks for the advice Minna.

Minna Reid · Answer

You could also try the negotiators supervisor if you havent already. Once in a while youll find a supervisor that gives a hoot.
The supervisors email is always at the very bottom of the secure email messages WF negotiators send.

Minna Reid · Answer

What they should do and what they do do arent always the same. Ive always found WF FHAs particularly cumbersome. Im not sure the WF folk got the best training on that one. Anyway - keep us posted.

Donovan R. · Answer

You're right the ATP states $48,400.  Waiting until tomorrow-the 48 hours it takes for a call back of course! Then going to try and take your advise on going to HUD.  I don't see how the negotiator could even screw it up.  Shouldn't they send it to HUD and come back with a YES or NO? I'll update on how this works out.

Minna Reid · Answer

The seller would already have the ATP - they have to sign it. FHA short sales follow a very specific process. They dont play those kind of games. They blatantly diclose the payoff every time.
Maybe the negotiator is an idiot...I would ask the seller for the ATP, or ask him to request it. They MUST give it to him. Maybe not to you - but him anyway. 
If Wells Fargo doesnt cooperate you (or the seller most likely) could go right to HUD. Its a PITA but I've had to do it a couple times.

Donovan R. · Answer

Thank you, I understand NET.

There are no commissions on the HUD only standard settlement ($745) and a judgement pay off which had been accepted.  With both of these the lender will NET right at $50k.

Usually they try to hide the acceptable pay off. Doesn't seem like they would be  willing to send out documents that spell out their bottom line.

The only thing I can come up with is that this exceeds maximum loss on a loan.  $130k on Dec 09 down to $55k (appraised) June 2011.   Trying to get an answer from them today.

Minna Reid · Answer

Ok - I think either you are confused by what net means - this is your purchase price MINUS all the costs of sale...or the negotiator is confused and doesnt understand an FHA short sale. Ask for the ATP. This will specify the acceptable net by number - which is 88% for the first 30 days, 86% for the second 3o days and 84% thereafter. The ATP very clearly spells out what they will accept and they HAVE TO ACCEPT THAT ( as long as your fees are "customary").

Donovan R. · Answer

I thought the language was confusing as well.  I got that same wording with every offer.  My offer is the only one on the table.

I can't understand why they would ask for 100% of appraisal.   
I thought getting FHA approval would be more clear and concise.  If the NET is over 88% and the bank approves why are they holding me back without an explanation!

Joel Owens · Answer

I read through the post too fast.

From what you typed it sounds like there are multiple offers on the property since they are asking for highest and best.

Donovan R. · Answer

Understood, the offer was 50K NET.