All Forum Posts by: Maurice George

Yes, RM’s are insured by fha....fha reimburses the lender, as long as they follow the guidelines. Not sure why that distinction makes any difference.

@Maurice George, whether you're right or not doesn't affect the original Owners.  If the Lender is unhappy because their golden goose stopped laying eggs, too bad for them, right?  But as with any short sale, it's the Owners (and particularly their heirs) who end up with no cash in their pockets from the sale. 

[This adapted from a Wizard of Id cartoon: If the Owner while alive received more from their Lender than they have to give back after they die - then the Owner won!]  Cheers...

@Keren Adaki No realtor needed. Get authorization to speak with the loan servicer, explain that you are helping family sell the house but the property is worth less than the payoff, they will send an appraiser and once appraisal comes back they will accept 95% of the appraised value.

You will have to go through their short sale process which is a pain in the you know what but thats generally how it works. It works in your favor if the house is in bad shape.

@Bill Gulley

Each servicer has their own short sale forms and packages. The link below is to HUD FAQ pdf that addresses requirements for reimbursement to servicers. It covers shorts, DIL's and resale after foreclosure. As long as the servicer follows the procedures, along with only allowing customary closing costs, and the property is sold for 95% of appraisal, whether by short sale or sale by the servicer following a foreclosure/DIL, the servicer gets paid in full and everybody else(including the mortgagee) gets a free pass (except for the rest of us tax payers of course).

http://portal.hud.gov/hudportal/documents/huddoc?id=hecm-svg_faqs.pdf

Usually the "short sale" is after the mortgagor dies, and done by the heirs. But apparently, the mortgagor can do it at any time and still get a free pass. I assume the shortage is most attributable to large upfront lump sums, then a smaller annuity stream, at the bubble valuations of course. A system set up to surely bleed huge amounts of money.

From my experience with HUD deals (regular, not a reverse mortgage), you as the buyer are allowed to choose the closing agent. Unless there is a deed restriction or you have signed an affidavit stating you won't resell within a set time frame, HUD has no say what you do with the property after you have the purchase closing (the A to B transaction). Then, you immediately resell to a new buyer in a sale closing (the B to C transaction).

Update for those who followed this thread. I negotiated to split the estimated cost of a quiet title action ($3,000/2 = $1,500) with the seller, and purchased the property subject to the old lien. I will try to clear it on my own, sent an email to the lien release department of the successor bank already. Unfortunately the picking is very slim in my market, otherwise I would have passed on this one and moved on to the next one. I hope I don't end up regretting it...

@Maurice George - You need to read more of my posts to re-align your gut. lol

Update on this guy. Now administrator has put property on MLS. Three weeks and not a single offer. Asked if he would submit my offer now and he says "No, it is too low."

I kindly requested him to please inform me at what offer price would he be willing to submit to bank.

Feels silly to me to be negotiating with an attorney assigned to an insolvent estate on a shortsale before I even can even make an offer to the lender.