Updated Requirements For Pre-Foreclosure Sale Procedures Issued By The U.S. Department Of Housing And Urban Development

On July 10, 2014, HUD issued Mortgagee Letter 2014-15, which updates requirements for pre-foreclosure sales (“PFS”) and deeds-in-lieu (“DIL”) of foreclosure for all mortgagees servicing FHA single-family mortgages.

The letter indicates that if none of FHA’s loss mitigation home retention options are available or appropriate, the mortgagee must evaluate the borrower for a non-home retention option. Mortgagors in default or at imminent risk of default must be evaluated first for a PFS transaction before being evaluated for a DIL transaction.

The letter details eligibility and documentation requirements for standard PFS, streamlined PFS, and DILs, as well as rules for calculating cash reserve contributions for standard PFS transactions. In addition, the letter advises mortgage holders that they may, under certain conditions, approve a service member for a streamlined PFS or DIL without verifying hardship or obtaining a complete mortgagor workout packet.

The letter also addresses numerous other topics, including: (i) requirements for real estate agents and brokers participating in PFS transactions; (ii) an initial listing period requirement for PFS transactions; (iii) updated sample language for the PFS Addendum; (iv) documentation requirements for verifying assets, income, and expenses; (v) validation requirements for appraisals; (vi) the criteria under which the HUD will permit non-arms-length PFS transactions; and (vii) minimum marketing period for all PFS transactions; and other detailed requirements for handling distressed home loans.

None the less, a very complicated process if you are not adverse to the procedures or don’t have an Agent. For further information or details pertaining this process or any Real Estate transaction. I’m here to assist.

*GOD Speed*


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