"New HUD Policy Could Give Short-Sale Investors a Huge New Advantage!"
by Cory Barnett
Everyone knows that the government doesn't like to lose money, and now the Federal Housing Association (FHA) has upped the ante for lenders that do not engage in loss mitigation efforts. The U.S. Housing and Urban Development (HUD) Department recently announced a program to reward lenders for trying harder to recoup their losses before declaring a loan in default.
Previously, HUD was able to assess fines up to $1.25 million per year against a lender that did not utilize mitigation programs. Now, these fines are uncapped, and the lenders can be assessed additional damages up to TRIPLE THE AMOUNT of any FHA mortgage insurance benefit claimed by the lender!
However, this dramatic step is coupled with a dramatic reward: lenders can claim additional benefits if they can show they’ve followed all suggested procedures.
Either way, this is great news for short-sale investors, because it makes it very worthwhile for a bank or lender to listen to your offer. The FHA's loss mitigation program lists pre-foreclosure sales as one of five options that lenders have the authority and responsibility to investigate when working with homeowners in financial difficulties with their mortgage.
This new policy came into effect in Summer of 2006.
