Is an FHA Short Sale right for me?
Program goal
Homeowners with loans insured by the Federal Housing Administration (FHA) may be approved to participate in an FHA Short Sale as an alternative to foreclosure.
If you are facing financial hardship and do not qualify for a loan modification or other FHA home retention option, a short sale could allow you to settle your debt without going through foreclosure.
Eligibility
You may be approved to participate in an FHA Short Sale if you meet all of the following criteria:
You do not qualify for a loan modification or other FHA home retention option
You are experiencing a permanent financial hardship such as a job loss, divorce, medical emergency, or a death, and are unable to afford your current mortgage
You have only one FHA-insured loan
Your property is owner-occupied, unless the following apply:
- your reason for leaving the property is the same reason you could not make your mortgage payments
- the property was not purchased as rental investment or used as a rental unit for more than 18 months
You are able to offer a clear title to the property
If the FHA does not approve you to participate in a short sale and you cannot maintain ownership through an FHA home retention option, normal servicing of your loan will continue and may include foreclosure.
Program at a glance
Step 1: Call us so we can review your options and provide next steps.
Step 2: If we agree that a short sale is right for you, we will work to get FHA approval. If you have any other liens on the property such as a home equity loan or line of credit with another servicer, you will need to negotiate the lien release before we can pursue a short sale.
Step 3: Once you have FHA approval to participate in a short sale, you must work with a licensed real estate professional and will typically receive 120 calendar days to market your house.
Step 4: When you receive an offer, your real estate agent must submit it to us with all required documents. We will work with your agent to help get a decision on the short sale offer.
Search for a real estate professional to help you with your short sale.
Get more details on the steps of an FHA Short Sale.
How do I get started with an FHA Short Sale?
Before we begin
To start the process, we need to determine if you are eligible for a short sale. If we have not done so already, we will first check to see if you are eligible for assistance that keeps you in your home. We need to make sure that we have your updated financial information.
The sooner you contact us, the sooner we can help you move forward.
Let us help you
Call us today:
1.800.669.6650
8am-12am ET Mon-Fri
8am-8pm ET Sat
Call Information Sheet Opens a New Window.
This document was created to help you keep track of important deadlines and take notes during the call.
Now that I am in the process, what is next?
If you are in the process of selling your house under the FHA’s Short Sale program, we can help you understand what you need to do next.
I am interested in selling my house under the FHA’s Short Sale program.
If you meet certain criteria, you may be able to start the short sale process right away. In most cases, however, FHA requires that we check to see if you are eligible for a loan modification or other home retention option. During this process, we will probably ask you for updated financial information and additional documents.
If we approve a short sale, at no charge to you, we will arrange an appraisal of your house to determine its current fair market value. During this process, the FHA-certified appraiser will consider the sale price of other houses of similar size in your area to help determine the FHA’s sales price for your house.
We strongly recommend working with a licensed real estate agent who has experience with short sales. They can help you through the process, and you will not have to pay the cost of the real estate agent since they will be paid from the sale of the house.
I am pursuing approval for an FHA Short Sale.
If approved, you will receive the "Authorization to Participate" letter from FHA, with the minimum sale price for the property. You then must list the property for sale within 7 days.
We strongly recommend working with an agent who has experience with short sales. You may choose to work with a real estate agent who has successfully completed short sales with us in the past, or you may decide to work with another agent. They can help you through the process, and you will not have to pay the cost of the real estate agent since they will be paid from the sale of the house.
There are thousands of non-profit groups and government agencies across the country ready to assist you with everything from finding rental housing or employment assistance, to saving money and more. Because these organizations are focused on the unique needs of your community, the resources you find are better able to help with your circumstances and challenges.
I am trying to find a buyer.
You will have 120 calendar days to market your house. During this time, it is important to work with your agent and show your house to as many buyers as possible.
To make sure your short sale is successfully completed, your agent must submit all requested documents on time. Your agent must respond quickly to any counteroffers. If your home equity loan or home equity line of credit is with another loan servicer, you must contact that servicer and request a Second-Lien Release.
As a reminder, you cannot sell the house to a family member or anyone else you have a personal connection with. This is known as an arm’s-length market transaction.
If your house is unable to be shown or sold because of an unexpected circumstance, such as damage from a tornado or flood, please call us immediately.
If you are unable to sell your house within 120 days, you may be eligible for a deed in lieu of foreclosure.
There are benefits to a deed in lieu over a foreclosure. A deed in lieu spares you from having to go through the public auction of your house. The deed in lieu process generally takes less time to complete than a foreclosure, so your reported delinquency could be shorter. As a result, your credit may improve faster than it would if your house goes to foreclosure.
There are thousands of non-profit groups and government agencies across the country ready to assist you with everything from finding rental housing or employment assistance, to saving money and more. Because these organizations are focused on the unique needs of your community, the resources you find are better able to help with your circumstances and challenges.
I have received an offer on my house.
Once you receive an offer, your real estate agent will submit a copy of the executed sales contract and all additional documents.
After we have received the request to approve the short sale offer from the real estate agent, we will review the information with your agent and help get a decision on the short sale offer.
To make sure your short sale is completed successfully, your agent must submit any requested documents on time. It is also important that your agent responds quickly to any counteroffers you receive.
Call us today to determine if you meet the FHA’s requirements for a short sale. If your property is eligible, you can work with your real estate agent and our FHA short sale specialist.
There are thousands of non-profit groups and government agencies across the country ready to assist you with everything from finding rental housing or employment assistance, to saving money and more. Because these organizations are focused on the unique needs of your community, the resources you find are better able to help with your circumstances and challenges.
The offer on my house was accepted.
Once we accept the offer, we will provide you with an approval letter releasing the house for purchase. With everything in order, final documents will be prepared for closing. You will receive a letter outlining the details of the sale of your house and a set of documents that must be signed, notarized and returned to us before your FHA Short Sale can be completed.
The sale of your house is finalized, and your mortgage and any other loans against the house are settled from the proceeds of the sale. As with the sale of any house, unless otherwise negotiated, you will need to move out by the closing date.
There are thousands of non-profit groups and government agencies across the country ready to assist you with everything from finding rental housing or employment assistance, to saving money and more. Because these organizations are focused on the unique needs of your community, the resources you find are better able to help with your circumstances and challenges.
FHA Short Sale Frequently Asked Questions
Please call us to discuss your options. Together, we will review your loan according to FHA guidelines to determine if you are eligible for a short sale. In most situations, you must be reviewed for a loan modification or other FHA home retention options before you can be eligible for a short sale. Once we have FHA approval to pursue a short sale, we will determine the minimum sale price and work with a real estate agent of your choice to market and sell the property.
You may still be eligible, depending on your loan and circumstances. Please call us to discuss your options.
Once you have the FHA’s approval to start a short sale and you have signed the Short Sale Agreement, the foreclosure process is halted while you are pursuing the sale.
The property must generally be owner occupied. You may be allowed to proceed with a short sale if you had to move out because of the adverse financial circumstances (typically caused by job loss, transfer, divorce or a death) that prevented you from making your mortgage payments. In addition, your property must not have been purchased as a rental investment or used as a rental unit for more than 18 months.
You may search a list of real estate agents who have successfully completed short sales with us in the past, or you may decide to work with another agent.
If you are unable to sell your house within 120 days, you may be eligible for a deed in lieu of foreclosure.
There are benefits to a deed in lieu over a foreclosure. A deed in lieu spares you from having to go through the public auction of your house. The deed in lieu process generally takes less time to complete than a foreclosure, so your reported delinquency could be shorter. As a result, your credit may improve faster than it would if your house goes to foreclosure.
No. A short sale means that you are selling your property for less than the loan amount, so there cannot be money left over for you. However, you may qualify to receive up to $1,000 in relocation assistance.
A loan can be transferred to a different servicer while in the process of a short sale. You may hear this referred to as a service release. A loan servicer sends your loan statements, collects your monthly payments (principal, interest, taxes and insurance) and handles other aspects of your loan. You will be notified at least 15 calendar days in advance if your loan is going to be transferred. Your new servicer will be aware of your short sale status and should have received all of your documents from us. You should continue to work with the new servicer to complete the process you have started or to determine which programs may be most helpful in your current situation.
There are thousands of non-profit groups and government agencies across the country ready to assist you with everything from finding rental housing or employment assistance, to saving money and more. Because these organizations are focused on the unique needs of your community, the resources you find are better able to help with your circumstances and challenges.
