A borrower who purchased their property with a FHA loan, but wants to short sale will be reviewed for a program called the Pre Foreclosure Sale Program (PFS ) which people commonly refer to as a FHA short sale. This program has guidelines for all aspects of the review, but some of the most important guidelines are in regards to the status of the occupancy of the property. Per the HUD website it states that the Borrower must occupy the property as a principal residence to be eligible to be reviewed for a short sale. Lenders are authorized to grant reasonable exceptions to non-occupant borrowers seeking relief through the PFS Program when it is clear that the subject property was not purchased as a rental investment, or used as a rental for more than 18 months. If the property is non-owner occupied or if any of the numerous guidelines aren’t being met fully a variance request may be placed. A variance is a request the bank will place to HUD for approval review. For example a variance can be placed for one of the following reasons:
- The property is vacant, but you want to be reviewed for a short sale
- The Approval To Participate has expired and you want to extend it.
- The appraisal has expired and you want to extend it
- There is a partial claim on title and you want to see if HUD will pay it.
Variances are extremely important when processing a file through the PFS program and you need to know when to advise the banks to request one as many times they are not placed when needed without being requested.