Selling Guide

Published December 16, 2020

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What are the allowable fees, assessments, and payments associated with purchases of short sale or preforeclosure properties?

Purchase of Preforeclosure or Short Sale Properties — Allowable Fees, Assessments, and Payments

Borrowers may pay additional fees, assessments, or payments in connection with acquiring a property that is a preforeclosure or short sale that are typically the responsibility of the seller or another party. Examples of additional fees, assessments, or payments include, but are not limited to, the following: 

  • short sale processing fees (also referred to as short sale negotiation fees, buyer discount fees, short sale buyer fees); 
  • Note: This fee does not represent a common and customary charge and therefore must be treated as a sales concession if any portion is reimbursed by an interested party to the transaction. 

  • payment to a subordinate lienholder; and
  • payment of delinquent taxes or delinquent HOA assessments.

The following requirements apply:

  • The borrower (buyer) must be provided with written details of the additional fees, assessments, or payments and the additional necessary funds to complete the transaction must be documented. 
  • The servicer that is agreeing to the preforeclosure or short sale must be provided with written details of the fees, assessments, or payments and has the option of renegotiating the payoff amount to release its lien. 
  • All parties (buyer, seller, and servicer) must provide their written agreement of the final details of the transaction which must include the additional fees, assessments, or payments. This can be accomplished by using the “Request for Approval of Short Sale” or “Alternative Request for the Approval of Short Sale” forms published by the U.S. Treasury or any alternative form or addendum. 
  • The settlement statement must include all fees, assessments, and payments included in the transaction. 

For additional information, see B2-1.3-01, Purchase Transactions.

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