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Elizabeth Weintraub

Two Drawbacks to an FHA Short Sale

By October 22, 2012

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There are 2 things that really bug me about an FHA short sale. The first one is the double standards at HUD. All FHA buyers are not treated the same by HUD. If an FHA buyer is buying a home from a seller with equity, FHA will approve a seller contribution of at least 3% toward the buyer's closing costs. However, if an FHA buyer is buying an FHA short sale, FHA standard policy is to approve only a 1% contribution. FHA penalizes FHA buyers on an FHA short sale.

The second thing that bugs me about an FHA short sale is why does Bank of America take sooooo long to approve an FHA short sale? Other banks such as Wells Fargo and Chase can manage to approve an FHA short sale in record time. But a Bank of America FHA short sale drags on and on and on. Bank of America does a fairly good job at traditional short sales, but FHA short sales get the short end of the stick.

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At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

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