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Financing of FHA Real Estate Owned (Update)

To: VHDA Originating Agents

From: Michele G. Watson Assistant Director of Single-Family Origination

Date: April 7, 2000

Re: Financing of FHA Real Estate Owned

I am pleased to notify you that the issue related to VHDA financing of FHA Real Estate Owned (REO's) has been resolved. Legal counsel from VHDA and the Philadelphia HUD office have created an Addendum to the Affidavit of Seller which addresses the concerns previously identified by HUD. It is the Originating Agent's responsibility to have this addendum executed and attached to the Affidavit of Seller.

Click here to download a copy of this addendum in PDF format (Requires Adobe Acrobat Reader).

Instructions related to this addendum's use are noted below.

Appraisal: An appraisal for all FHA REO's will be required as indicated in item 1 in the addendum. VHDA will accept a copy of the appraisal prepared for FHA foreclosure purposes on FHA financed loans for which a new appraisal is not required.
Discount Point: FHA will not be required to pay the discount point traditionally paid by the seller. The Originating Agent must have the applicant acknowledge by initialing this change in the Exhibit E. in the Lock-In Disclosure section and in Sec. B of the Loan Commitment.
Tax Service Fee: FHA will not be required to pay the tax service fee charged VHDA or other loan servicers. This fee must therefore be waived on all FHA and VA loans for which the purchasers if restricted from paying this fee. This fee will be waived on all VHDA serviced loans, however, the Originating Agent is responsible for addressing this issue with any other servicer or will be responsible for paying this fee.
Authorized Signature: As noted in the addendum the form may be executed by an authorized officer of HUD or its property disposition agent.
Should you have any questions regarding this issue, please do not hesitate to contact me.

Sincerely,
Michele G. Watson
Assistant Director of Single-Family Origination 

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