All Forum Posts by: Larry Moore

I believe the system basically revolves around contacting homeowners who have had their bankruptcy, Chpt 7 or 13, recently discharged or dismissed. If they were in pre-foreclosure, the bankruptcy gave them temporary protection and the foreclosure was suspended. The discharge or dismissal releases that suspension, and the foreclosure continues from where it left off. They are now prime candidates to contact for a short sale, particularly since they are now under the radar, having, in a sense, been out of circulation for a while.

Since the Dec letter that changed the FHA Pre Foreclosure Sale program, has anyone found that lenders are no longer requiring the Application to Participate and Homeowner Counseling Cert HUD Forms? The letter made them obsolete, but I don't know if lenders are up to speed yet. Also, I heard on a webinar that lenders are still accepting 82% net of appraisal, even though there is a new schedule based on time listed. I haven't done an FHA short sale this year, and am wondering if I should just get the old documents as before if I run across one.

Anyone else notice a slowdown in their pre-foreclosure marketing since the announcement of the mortgage bailout program? Seems things have slowed down quite a bit. Had a prospective short sale home that I looked at on Monday, and on Wednesday received a call that they were going to work with their bank again (had already qualified for a forebearance and were in arrears) on the new Obama plan. Their bank doesn't know what it is yet, but are going to put the foreclosure on hold again while they wait for details. Hope they are not getting false hope.

How would this effect short sales on pre-foreclosures that are upside down on their mortgage? If the BPO determines that the property is worth a certain amount (FMV), and the bank is willing to accept 90% of that number, how would that be a violation, particularly when there was no equity to purchase to begin with?

Thanks, Ryan, I had already downloaded your contract and plan on using it. Thank you as well, Nick. If I understand you both correctly, if I assign the option to my end buyer rather than doing a double close (and making sure that the seller's lender in the short sale goes along with it by changing the demand letter if necessary), I can be cashed out by their lender on the end buyer's side of the Hud? Are most conventional, or even FHA lenders going along with substantial option assignment fees as part of the purchase price? Or do you call it something else? It has been my understanding that in order to facilitate an assignment, you would have to find either a cash buyer or a buyer who can cash you out without their lender's funds. Based on your experience, is this not the case? thanks again, as another investor and I have been struggling over this issue and we want to make sure we don't screw up our first double close or assignment.

Trying to decide which is the best method for double closing: using an option contract, or warranty deed transfer. Seems like there are a lot of advocates for using and recording options, but, also some who have issues with their use, such as they do not provide true equitable interest to market the property (vs marketing the option) for an end buyer, and a nominal consideration (such as $10) not being true consideration (one lawyer has suggested at least $500). Transfer of warranty deed seems to be a no-no here in IL; the same lawyer has suggested that the title company hold the deed in escrow until closing. Up until now I have been using a standard sale and purchase contract without a double close. What is everyone else doing?

Thanks

Then the follow up question is, how do you establish that equitable interest so that as an investor you can enter into a second contract to re-sell the property to an end buyer before closing on the first, enabling a double closing? Do you record a copy of the purchase contract at the Count Clerk's office, similar to a Notice of Option (seems unlikely), or, do you just show the title company and end buyer's lender a copy of your pending purchase contract to show there is equitable interest to re-sell?

Sorry for all the questions, but I am considering going from outright purchases of short sales to double closings using either the option contract or a purchase contract, whichever will keep me out of trouble. thanks

If I understand their position and your explanation, if a purchase contract is used in a short sale, that creates equitable interest, even though the purchase has not been completed and is pending approval of the short sale offer? It seems that a purchase contract would work as well as an option, since the initial offer to purchase is generally lower than the MAO, and is rarely accepted by the lender anyway. If the bank's final counter is too high, then the contract is voided due to non-approval of the offer by the bank. Did I misunderstand, and/or is there a hole in my logic?

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.