HUD-1 question......Could use help from shortsalepro or other expert
It is my understanding that I need to include a completed hud-1 form in my short sale package. On the form there are questions about the financing the buyer (me) will receive. Does this mean I have to have my financing in place before sending my short sale package?
Since my offer can be rejected or countered that leads me to believe that I won't know what the actual sale price will be prior to sending package. So how can I arrange the financing for a transaction that I don't know the price of or even if it will happen?
Thanks in advance!
I could really use a response for the above question. I am attempting to complete my first shortsale and this is a sticking point in my planning process. Please advise!
Just estimate. I'm fairly certain that they are just trying to get a clear understanding of what you are offering. The idea of getting that from you is just to estimate their 'net'. A Hud-1 is a settlement statement. It's impossible to have a settlement statement that is fully correct, without an agreed upon price. There is another term for this...GFE...Good Faith Estimate. GFE is an estimated hud-1...see if they are looking for this.
Let me know if you need one emailed...
hope this helps,
clear2close
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Assistant Vice President (Senior Loan Officer) / REI Millionaire Wanna Be
[ Edited by clear2close on Date 06/03/2003 ]
What the mortgagee wants is a realistic, guestimate of their anticipated net recovery. Your title or closing agent can help you with estimating transfer taxes, attorney's fees, and any other Seller related costs.
Be sure to know if there are any liens that must be paid from the proceeds. Again, your title agent can help with that.
I usually ask that the Seller provide a credit report early on in the process which can give an indication if there will be problems later on.
I'm sorry guys but I still don't completely understand. What's in the hud-1 that tells the mortgagee what they will net?
What I mean is, what other costs would be projected on the hud-1 that the mortgagee would have to pay? I assume that they will net whatever price we agree upon during shortsale. Aren't all the other costs paid by me the buyer?
I'm really sorry, I just need more detail to fully understand.
What do you learn from the credit report and what problems can be avoided?
This is a forum for learning, and all questions have merit. Were it not for asking questions, there would be no transfer of knowledge.
The "mortgagee" is the foreclosing lender. The lender will not be paying anything in a short sale transaction.
They will be accepting less than they are contractually due.
For an insight to the short sale (and other realty transaction) process, I suggest that you read what's been posted on this, and other REI boards. If that's not enough, or too time consuming, there are courses, seminars, and, yes, even Primers on the subject.
Going into a short sale transaction without an understanding of the process may result in casualities... not unlike an army marching into war without weapons and not knowing where the 'booby-traps' have been placed.
Could not have said it better myself!
How a hud is written up is no small question. I would not know where to begin. Don't get caught up in too much reading before going after your dream, but you'll at least need to know the basics. I would be on Google.com searching for every website, like this one, that offer free REI advise and reading til I understood...
hope this helps,
clear2close
[addsig]
I was wondering when I was going to get the "You better study up first" reply.
It is quite true that learning the process is important. But I have done that. I have been reading material for about 4 months. This just happens to be my first attempt at a shortsale. So I need some clarification and detail.
What I wanted to know is what is the detailed purpose of a hud-1, if the mortgagee is just gonna receive whatever the agreement on price is. Why do they need to see those other costs laid out. How does it effect their decision if what they receive is only based on the price negotiated?
I have an excellent grasp on what needs to be done, but I'm looking for details. I'm also still wondering about the credit question posted above.
The mortgagee needs to know how the proceeds from sale will be distributed.
For example, if you indicate a 6% real estate commission, they'll laugh their asses off as they strike it down to 5%. And roll on the floor as they revise that to 4%.
If you fail to include applicable transfer taxes, you'll end up paying for it out of your own pocket.
If you fail to include any liens that must be paid before title can pass, you'll also find yourself writing a check at closing.
If the HUD 1 indicates to a superior lieholder that a junior lienholder is getting paid 100% of face value, they'll (not so politely) ask that you rethink your Proposal.
If the HUD 1 indicates that the Seller is getting a nickel from the proceeds... they reject your Proposal immediately.
The mortgagee will devise a letter of approval based upon the info provided in the HUD 1.
If you carelessly misstate the net proceeds to the mortgagee on the HUD1, and they agree to accept that specific sum by a specific date (usually within 30 days...) but the actual proceeds from sale fall short of the approved payoff... it's very tough to go back to the well.
The HUD 1 is the mortgagee's blueprint. It indicates whether you've done your homework.
A credit report can indicate judgments or liens that may have attached to the real estate and must be paid before passing of title.... Paid from proceeds of sale. Which will impact the HUD 1' s estimated net recovery to the mortgagee.
The preliminary credit report is just that. Part of the prequalification process. If I were serious about pursuing a prequalified short sale candidate, I'd make sure that I had a title search done, too.