Home Buying in 20852>Question Details

Radiosteve, Home Buyer in 20852

In process of buying short sale, now I find out it's an FHA short sale. Isn't APT done before listing? Are we in trouble?

Asked by Radiosteve, 20852 Fri Dec 9, 2011

So we made an offer on a short sale a couple of months ago. We submitted the completed contract, the seller submitted their full short sale package to Wells Fargo and they assigned a negotiator and ordered the BPO. Just got a message back via my realtor from the sellers settlement company saying the BPO had been received and was under review and upon completion they would send an Approval To Participatre as its an FHA loan. Now this is the first I've heard that it was an FHA loan and as far as I was aware the APT should be done before the property is even listed. Are we screwed?

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Hi Steve,

No I don't think you are screwed. In fact it sounds like everything is progressing nicely. Hoping that the asking and offer price as well as any seller concessions are within reasonable market value range & norms and then it's just a waiting game.
0 votes Thank Flag Link Thu Apr 26, 2012
Thanks for the answers everyone, very helpful.
0 votes Thank Flag Link Mon Dec 12, 2011
Turns out this is a good thing. The FHA short sale process is: (i) get a contract, (ii) order an appraisal, (iii) pull title, (iv) perform a thorough hardship analysis. Assuming the borrower passes the eligibility thresholds in the FHA guidelines and can convey clear title to the satisfaction of the servicer's title curative department, an ATP is issued. That ATP will disclose the value the bank has, and provide an 88% net the lender needs to approve a particular buyer/deal. Variances can be provided for down to 84% net to value. The fact that an ATP is being issued is a very good thing, since it means (i) you'll know exactly where you stand vis-a-vis value and approval status, (ii) the seller will be able to get a final approval from the servicer (many FHA shorts die in the pre-ATP stage), and (iii) you are very close in the overall process to obtaining a final approval.

Web Reference: http://capitolshortsale.com
0 votes Thank Flag Link Sat Dec 10, 2011
From what I have seen, the only catch would be if you are offering less than 84% of the Fair Market Value:
Are you?
Even if you are, the APT is designed to take care of that with a variance.

It would appear that this could not be done in advance, as they didn't know your offer and the FMV as determined by a BPO or Appraisal.

Hang in there.

Good luck and may God bless
0 votes Thank Flag Link Fri Dec 9, 2011
You are not screwed, in fact having the loan Freddie Mac or Fannie Mae insured in great news. The loan is insured and in most cases an easier approval. The FHA " MIP" (Mortgage insurance premium) wll be paying the loan holder (investor) for the short fall on the loan.
0 votes Thank Flag Link Fri Dec 9, 2011
Maybe. There are different rules. First question. Are the current owners late on their mortgage? They MUST be late or the sale will be derailed @ the end. Happened to me. All worked @ the end but it was tough. Hope this helps, let me know if you need more.
0 votes Thank Flag Link Fri Dec 9, 2011
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