FHA Short Sales Policy Update
The Department of Housing and Urban Development (HUD) will delay its proposal to prevent dual agency agreements in FHA pre-foreclosure transactions. Under the proposed policy, HUD wanted to exclude dual agency agreements in short sale transactions starting October 1, 2013. Dual agency includes transactions in which two agents are working for the same broker and one agent represents the seller and the other agent represents the buyer. Dual agency also applies to a single agent who represents both the buyer and the seller in a short sale transaction.
Letters sent to HUD by NAR President Gary Thomas as well as by State and Local Association Presidents highlighted NAR’s concerns about the policy and the disruptive effect its implementation would have on communities across the nation. As a result, HUD has agreed to work with NAR to arrive at a policy that better addresses concerns that pre-foreclosure sales are not meeting HUD’s minimum net sales proceeds requirements.
HUD will reissue Mortgagee Letter 2013-23 and remove all dual agency language until further notice. Some members have received communications from servicers, such as Bank of America, about changes in dual agency starting October 1st. HUD will notify servicers of the change when the new Mortgagee Letter is issued.