\n
The Preforeclosure Sale (PFS) Program allows the defaulted\u00a0Borrower to sell his\/her home and use the Net Sale Proceeds to satisfy the mortgage debt even though the Proceeds are less than the amount owed.<\/p>\n
NOTE:<\/b>\u00a0NSC and Post Claims Division have developed a listing of\u00a0PFS Allowable and Disallowable fees. To print out a listing of these fees, please click on the following:\u00a0PFS Allowable and Disallowable Fees<\/strong>. If the fee the Lender wants to verify is not on the list, the Lender will need to submit a Variance via HUD’s\u00a0Extension and Variance Automated Requests System (EVARS).<\/p>\nQuestion 1<\/b>: May a buyer or seller receive cash at a PFS closing?<\/p>\nAnswer<\/b>:\u00a0\u00a0No. The HUD-1 Settlement Sheet is to be completely filled out, providing both the buyer’s and seller’s costs and fees.\u00a0 Neither the buyer nor seller is to receive cash at closing.\u00a0 The seller, if applicable, may be eligible for the Seller Incentive, but this Incentive is to be reflected on the HUD-1 as a disbursement or credit to the seller, rather than\u00a0cash. ML 2008-43.<\/p><\/blockquote>\n
Question 2<\/b>: What are the minimum Net Sales Proceeds requirements for Preforeclosure Sales?<\/p>\nAnswer<\/b>:\u00a0The borrower must be willing to actively market his\/her property for at least three months.<\/p>\n\n- For the first 30 days of marketing, lenders may only approve offers that will result in minimum Net Sale Proceeds of 88% of the as-is appraised Fair Market Value (FMV).<\/li>\n
- During the next 30 days of marketing, lenders may only approve offers that will result in minimum Net Sale Proceeds of 86% of the as-is appraised FMV.<\/li>\n
- For the remaining duration of the marketing period, lenders may only approve offers that will result in minimum Net Sale Proceeds of 84% of the as-is appraised FMV.<\/li>\n<\/ol>\n
See ML 2008-43.<\/p><\/blockquote>\n
Question 3<\/b>: The borrower is deceased and his father has been making the monthly mortgage payments.\u00a0 May the father acquire the property under the PFS Program?<\/p>\nAnswer<\/b>:\u00a0 No. Preforeclosure sales must be between two unrelated parties and be characterized by a selling price and other conditions that would prevail in a typical real estate sales transaction.\u00a0 Any conflict of interest, appearance of a conflict, or self-dealing by any of the parties to a transaction (borrower, lender, appraiser, purchaser, etc.) is strictly prohibited.\u00a0 See ML 2008-43.<\/p><\/blockquote>\n
Question 4<\/b>: A lender is the holder of both the first and second mortgages.\u00a0 When completing a Preforeclosure Sale, may the lender utilize the $1,500 that is available to pay towards the settlement of its second mortgage?<\/p>\nAnswer<\/b>:\u00a0 Yes. Up to $2,500 is available for the discharge of junior liens in a Preforeclosure Sale.\u00a0 If closing occurs within 90 days of the issuance of the Approval to Participate in the PFS program, the first $1,000 represents the borrower’s consideration and the remaining $1,500 is FHA’s consideration, for a total of $2,500. If settlement occurs after 90 days, the first $750 represents the borrower’s consideration and the remaining $1,500 represents FHA’s consideration, for a total of $2,250.\u00a0 See ML 2008-43.<\/p><\/blockquote>\n
Question 5<\/b>:\u00a0 May lender offer a PFS after a Partial Claim has been completed?<\/p>\nAnswer<\/b>:\u00a0 Yes. \u00a0A PFS may follow a Partial Claim if there is a new reason for default and if the borrower lacks the financial ability to cure this present default. The Partial Claim amount must be added to the Unpaid Principal Balance and the Accrued Interest amount to correctly calculate total outstanding mortgage indebtedness.\u00a0 See ML 2008-43.<\/p><\/blockquote>\n
Question 6<\/b>:\u00a0Is it the responsibility of the Lender to acquire marketable title?<\/p>\nAnswer<\/b>:\u00a0 Yes.\u00a0All properties sold under the PFS Program must have marketable title.\u00a0 See ML 2008-43.<\/p><\/blockquote>\n<\/div>\n<\/span>\u00a0<\/strong><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"This post is one of the many \u201cUseful Links\u201d you will find on this website\u2019s\u00a0\u201cUseful Links\u201d\u00a0 page.\u00a0Links on the \u201cUseful Links\u201d page are in a […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts\/629"}],"collection":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/comments?post=629"}],"version-history":[{"count":3,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts\/629\/revisions"}],"predecessor-version":[{"id":12089,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts\/629\/revisions\/12089"}],"wp:attachment":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/media?parent=629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/categories?post=629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/tags?post=629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}