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Federal Housing Administration (FHA) Short Sale

A Preapproved Price Short Sale program for FHA loans. If you have an FHA loan, are struggling to make your monthly home loan payment and are worried that you may be heading toward foreclosure, this program offers alternatives for settling your mortgage debt.

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're facing financial hardship and don't 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 don't qualify for a loan modification or other FHA home retention option

You're 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 couldn't make your mortgage payments
- The property wasn't purchased as rental investment or used as a rental unit for more than 18 months

You're able to offer a clear title to the property

If the FHA doesn't approve your request for an FHA Short Sale and you can't maintain ownership through an FHA home retention option, normal servicing of your loan will continue and may include foreclosure, subject to applicable law.

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 haven't done so already, we'll first check to see if you are eligible for assistance that keeps you in your home.

Call us today:
1.800.669.6650

Mon-Fri 8 a.m.-12 a.m. ET
Sat 8 a.m.-8 p.m. ET

Now that I am in the process, what is next?

I'm 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'll probably ask you for updated financial information and additional documents.

If we approve a short sale, we'll arrange an appraisal of your house at no cost to you 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.

I'm pursuing approval for an FHA Short Sale.

If approved, you'll 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 won't have to pay the cost of the real estate agent since they'll be paid from the sale of the house.

I'm trying to find a buyer.

Typically, you'll have 120 calendar days to market your house. During this time, it's important to work with your real estate agent and show your house to as many potential buyers as possible. You're required to provide proof of the current listing every 21 to 30 calendar days during this participation period. You're also required to maintain the property in ready-to-show condition at all times.

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 can't 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're 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.

I've 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've received the request to approve the short sale offer from the real estate agent, we'll 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's 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.

The offer on my house was accepted.

Once we accept the offer, we'll provide you with an approval letter releasing the house for purchase. With everything in order, final documents will be prepared for closing. You'll 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.

FHA Short Sale Frequently Asked Questions

Please call us to discuss your options. Together, we'll 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'll 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 submitted all of the required documents, have a valid offer on the property, and signed and returned FHA's Approval to Participate, the foreclosure process is halted while you are pursuing the sale, subject to applicable law.

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're 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're selling your property for less than the loan amount, so there can't 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.

If the FHA doesn't approve your request for an FHA Short Sale and you can't maintain ownership through an FHA home retention option, normal servicing of your loan will continue and may include foreclosure, subject to applicable law.