On December 24th, 2008 HUD released the Mortgagee Letter 2008-43 detailing changes to come for FHA pre-foreclosures. Some of the significant changes include:
*Elimination of the eligibility requirement that the property appraise for at least 63% of what is owed.
*Increase in the required net proceeds. If the property is sold within 30 days, the net proceeds must be at least 88% of the appraised value, within 60 days the requirement drops to 86%, and thereafter the requirement is set at 84%. Prior to this mortgagee letter, the net proceeds had to be at least 82% of the property’s appraised value.
*FHA will now allow up to 1% in buyer’s closing costs.
*Up to $2,500 in Funds Available for Discharge of Subordinate Liens.
*Removal of repair limitation.
*Some exceptions to the non-owner occupant requirements.
For details, visit Mortgagee Letter 2008-43