All Forum Posts by: Larry Moore

The guidelines have increased the allowable discount factor on the appraisal from 82% to an initial 88%, which then decreases depending on how long it is listed. I have heard that lenders are still abiding by the old rules. But my main issues with FHA, and particularly Countrywide, have been that they take forever, and that it has been much harder to influence the FHA appraisal/appraisor than a realtor doing a BPO. Then, when the appraisal came in, they routinely wanted the property listed at that price for 3 months before they would consider discounting it. As they more than once responded to my protests, they do not have to accept 82% of appraisal (or higher now). It may have just been my luck of the draw, which is what prompted my question.

Just got a call from a pre-forclosure that has an FHA loan with Countrywide/BoA. Said the property is in great condition, just needs a new roof. The last Countrywide FHA short sale I attempted was a complete waiste of time, and overall, no success with FHA shorts at all, so I took a pass. Particularly with the new guidelines, is anyone finding that FHA shorts are worth pursuing?

Hi Jon,

I went through an FHA appraisal earlier in the year on an older home (37 years), actually 2 FHA appraisals were required since I only owned it for 60 days on a short sale/rehab flip. I was really worried they were going to nitpick everything in the house, but they were in and out with only a cursory look. If the house is in decent shape, even though it is dated they probably won't be any harder than a conventional appraisal. There is always the exception, but I was pleasantly surprised. As the buyer's lender told me, they get a lot of not so nice homes through FHA in our area.

Instead of an appraisal, you can pay an agent that actively works in that area to do a BPO for you: much cheaper (probably $50 to $75) and will tell you want you want to know. Just give them the parameters, i.e. realistic 30 day quick sale, etc. Also, with the husband, you can emphasize that the wife will not get one dime out of the deal, maybe that will appeal to him (of course he won't either). But even if you get him on board to start the process, he may bug out on you later if he starts fighting with the wife. Had that happen and won't deal with divorces on shorts any longer.

It is best to be in control of the deal and negotiations, so try to find realtors that will step aside and let you negotiate with the lender, in which case you are the initial buyer making an offer. If you do not know how to do a short sale, you can either learn, engage a negotiator, or be at the mercy of a realtor that may or may not know what he/she is doing. Double closings are typically done with transactional funding. Do a Forum search and you will find lots of info on the subject.

My response was more directed to Randal's question. As mentioned, I don't often deal with 2nds, but what I would do is stress to Chase that WF will only pay $5K (provide documentation), the home owner does not have the other $10K (provide documentation, even if already provided in initial package), and show that the homeowner could not handle the payments on a note for the balance (again, provide documentation showing how that would play out based on current income and monthly obligations). Documenting that they can't get blood out of a stone. I would then stress that $5K is better than the alternative, which is nothing, and that the home owner is trying to satisfy the debt to the best of his financial ability without resorting to the obvious option to eliminate his debt after foreclosure. All you can do is play hardball back, and if that fails, try to get to a supervisor who may be more interested in the concept that something is better than nothing.

Short answer is that bankruptcy will halt a foreclosure proceeding. It is not only an end result, but also a tactic some homeowners use just for that purpose. Once the bankruptcy is discharged or dismissed, the foreclosure resumes, unless, obviously, the debt has been settled.

When I am looking at a substantial 2nd, if paying it off at a discount does not create equity, then I will walk in most cases. In my area, homes with 2nds usually are not worth what is owed on the first, and the 2nds are just additional burdens that make the deal that much harder to negotiate. And even if the first is willing to see reason, the 2nd often then wants to play hard ball. Frustrating. Too many fish to deal with that.

Don't forget Craigslist, although they are getting a lot of bad press right now. In my area, Craigslist often outpulls newspaper advertising and brought me my last buyer.

Thanks, Lorri. Basically just looking for a program to assist buyers with the down payment to purchase my properties. I checked out their website, and it looks like they have a similar program to dpfunder, although I don't know how the dp is looked at by the buyer's lender with this program. With dpfunder, it was earned income and not subject to seasoning. Also, their $30,000 minimum makes them hard to work with in my area.