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Pre Foreclosure Listings

Quick Guide to Pre Foreclosure Listings

Pre Foreclosure Listings Information

There are many resources to help a person or family find pre foreclosure listings.  A simple search on the internet often proves reliable—as long as the website is accredited and well known.  The best resource for finding pre foreclosure listings is the official website of the U.S. Department of Housing and Urban Development (HUD), but other websites are great options as well.

Apart from simply searching for pre foreclosure listings, it’s equally imperative to know laws surrounding foreclosure.  If a borrower in default wants to sell and place their home on pre foreclosure listings, there are a number of steps the person or family must take.  

PFS Variance Form and Attachments

There are a number of items a person must submit in order to officially list their home under pre foreclosure listings.  Depending on the type of Variance, the lender must submit the following items and possibly more:

• HUD-1 Settlement Sheet

• The first three pages of the FHA “As Is” Appraisal

• A hardship letter

The HUD-1 settlement sheet should be completely filled out and provide both the buyer’s and seller’s costs and fees.  The HUD-1 settlement sheet is extremely important because the form details all costs associated with a sale of the pre foreclosed home, and after a sale, neither the buyer nor seller should end the closing with cash.  The point of pre foreclosure listings and sales is to protect the person or family within the home who have fallen behind on their mortgage payments and need to let go of the house in order to avoid foreclosure.  

Validity of Appraisal 

Pre foreclosure listings and their appraisal value are only valid for so long.  Under the Mortgagee Letter 2010-8, an appraisal is only valid for 120 days.  The appraisal is thoroughly prepared by using the HUD Handbook 4150.2 (Valuation Analysis for Single Family One-to-Four Unit Dwellings).  

Minimum Net Sales Proceeds

Under the Housing and Urban Development guidelines, there are minimum net sales proceeds in correlation with how long the pre foreclosure listings have been posted.  In order to follow proper guidelines under HUD, the borrower must absolutely make a commitment to market their home for four months.  Each month under the four month time period carries different degrees of minimum sales proceeds for a listing that is appraised at an “As Is” Fair Market Value (FMV).  The following list contains the guidelines for the minimum proceeds that must be meant from pre foreclosed listings:

• For the first 30 days, lenders can only approve an official offer that results in minimum net sale proceeds of at least 88% of the FMV. 

• Within the next 30 days, lenders can only approve offers that result in minimum proceeds of at least 86% of the FMV.  

• For the next 30 days and throughout the rest of the pre foreclosure listings process, a lender may only approve offers that meet at least 84% of the FMV.  If you have any questions about pre foreclosure listings, you should research the U.S. Department of Housing and Urban Development.  This resource qualifies as the best and most reliable resource for researching foreclosure matters. 

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