Dealing With Delinquency

The FHA Pre-foreclosure Sale Program.

Homeowners whose mortgage is insured by the Federal Housing Administration (FHA) may process their short sale through this program. Recent changes to the FHA program open it up to owners of rental properties or second homes, too.

Cash incentive payments.

Occupant homeowners may receive a cash incentive payment of up to $3,000 for completing the short sale, or a payment of up to $1,000 for non-occupant owners. FHA also provides up to $1,500 towards settling junior liens.

Deficiency waiver.

The first lender is required to forgive the deficiency balance on the loan. There is no clear wording that second lenders are required to waive the deficiency - however, most homes purchased through FHA do not have second mortgages.