Woodkirk Stone
In recently published Letter to mortgagee 2022-08, the FHA has established an exclusive post-lockdown sales period for certain homeowner buyers, HUD-approved nonprofits, and government entities. Although the provisions of the mortgagee letter can be implemented immediately, the provisions must be implemented for all post-foreclosure sales associated with FHA-insured mortgages that are scheduled to occur on May 5, 2022 or 90 days from this date.
Specifically, if a foreclosed property secured by an FHA-insured mortgage is not sold to a third party at its foreclosure sale, the mortgagee may pursue “post-foreclosure sales efforts.” If using post-foreclosure sales efforts, the mortgagee must list the property for an initial 30-day period exclusively for the following types of buyers: owner-occupied buyers, HUD-approved non-profit organizations, and government entities. If the property does not sell during the exclusive 30-day period, then the mortgagee must offer the property for sale on a non-exclusive basis to all third parties for 60 days. If the property does not sell as part of post-foreclosure sales efforts, the mortgagee must convey the property to HUD within 30 days of the end of the post-foreclosure sale period.
The mortgagee letter also provides additional requirements for third-party vendors of mortgagees making these sales, including indicating that the property is sold “as is” and occupied, if applicable; and provide buyers with the ability to perform tests, surveys, etc., on the property and order a search for title deeds and other property-related documents. In addition, the third-party supplier must provide the buyer with at least 15 days after ratification of the contract of sale to cancel the contract due to the condition of the property and must allow the buyer to cancel due to problems of title at least seven days before closing. In addition, the mortgagee letter requires mortgagees to report the status codes that apply to a foreclosure sale and ensure that successful bidders meet exclusivity requirements, if any, by providing captures website screenshots of HUD-approved nonprofit organizations or signed owner statements. buyer occupants and government entities.