All Short Sales are not the Same: Understanding FHA's Procedures


All short sales are not alike-especially when an FHA-insured mortgage is involved. FHA short sales must advance through a very exact and systemized process.  


Here's what you need to know:

Before a Short Sale Can Be Initiated

The U.S. Department of Housing and Urban Development (HUD) requires that the homeowner be reviewed for all home retention options (modification) before a short sale is pursued. This 30- to 90-day process seeks to determine whether a legitimate hardship exists and if a short sale is appropriate. The review also will certify that the home has not been rented for more than 18 months and is being maintained, that there is a marketable title and that the property has only one FHA-insured loan.


A listing agreement or offer is not required in order to be approved. Once the homeowner is approved to short sell their home, foreclosure is put on hold and the homeowner receives an Approval to Participate (ATP) letter. Bank of America does not begin negotiating the purchase contract until after the homeowner is approved to participate and has returned a signed "wet ink" copy of the ATP within seven days of the date of issuance. If the ATP is not returned within seven days, the agreement will be canceled.


Homeowner Involvement


FHA short sales must be initiated by the homeowner, not an agent. At Bank of America, homeowners are asked to contact their assigned Customer Relationship Manager (CRM). If no CRM is assigned, they should call 1.800.669.6650. Homeowners are also required to actively participate in the short sale process, including returning documents within the required time frames and maintaining contact with the mortgage servicer.

Agent Involvement


The seller's agent needs to work with the homeowner to make sure the following items are organized and completed once the ATP has been executed and returned to Bank of America. First, thoroughly review the Welcome Package with the homeowner. Then, begin gathering the documents necessary for the process, being sure they are signed and dated where necessary. Those include:


- Pay stubs (dates, amounts, names, institutions)
- Hardship letter
- Marketable title
- Bank statements (all pages, accounts and borrowers)
- Occupancy certificate


Next, schedule a home appraisal with the homeowner (if the property is occupied) and the assigned appraiser. It is the agent's responsibility to coordinate the appraiser's access to the property and to inform the short sale specialist of any appraisal issues. The appraisal determines the listing price and allows you to execute a listing agreement. Provide the short sale specialist with the listing agreement, proof that the utilities are on and a current Multiple Listing Service (MLS) sheet. You must provide the short sale specialist with a MLS sheet every 30 days until the property is sold.


For more information regarding the many different processes involved with short sales, please do not hesitate to contact me.




With over 7 years in the business I offer my clients the most comprehensive representation in Maryland.  Not only am I a REALTOR, but I also hold a Broker's license, which is the highest and most specialized license a REALTOR can hold.  Customer Service is my Priority, Selling Houses is My Goal!  Contact me for any and all of your Real Estate Needs.  Proudly Serving Baltimore County (Perry Hall Farms, Kingsville, Glenside Farms, Honeygo Village, White Marsh, Middle River, Essex, Timonium, Dundalk, Pikesville, etc.), Harford County (Amyclae Estates, Bel Air, Bel Air South, Brentwood, Brentwood Manor, Brentwood Park, Bright Oaks, Brook Hill Manor, Cedarday, Country Walk, Fountain Glen, Foxborough Farms, Glenangus, Glenwood, Greenbrier Hills, Hickory Hills, Homestead Village, Irwins Choice, Marywood, Stoneridge Point, The Estates at Cedarday, Todd Lakes, Forest Hill, Monmouth Meadows, etc.) and Baltimore City (Canton, Fells Point, Bayview, Highlandtown, Patterson Park, Hamilton, Hampden, etc.)