1. First, the program is targeted for individuals who have mortgages held and serviced by the Department of Housing and Urban Development (HUD). Properties that you have in inventory for protective custody (P&P) fall into this category. As a rule, the mortgagors are unable to make their mortgage payments because of financial hardship and they owe more than the current appraised value.
    2. You are contacted by the mortgagor (seller) requesting your
       assistance in selling their property under the Compromise
       Offer Program.  How should you proceed?
      Pre-qualify your seller before costs are incurred.  Obtain a written release
       from the seller authorizing you to contact HUD regarding their
       eligibility for the Compromise Offer Program.  Secure the phone
       number of the HUD Asset Manager from the seller and fax or mail the
       release form to the AM, then call to discuss the seller's eligibility.  HUD
       will generally be able to determine eligibility after receiving and
       reviewing:
    a. A detailed written statement from the seller as to the reasons
       why they can no longer fulfill their mortgage obligation and,
    b. A current HUD Form 92068F, Request for Financial
       Information, and supporting evidence of the seller's financial status (ie. pay stubs).
    * Hud will not consider a compromise for properties in foreclosure after
       the sheriff sale ad is placed.
    * A secondary lien or judgment may preclude selling the property under
       the Compromise Offer Program.  Thus, obtain a title search before
       listing the property or obtaining an appraisal.  If a secondary lien or
       judgment surfaces, and the seller cannot obtain a release, contact with
       the AM at HUD before proceeding with the appraisal or listing.  HUD
       may, under some circumstances, accept a negotiated settlement with a
       junior lien holder.
3. The appraisal should not be ordered until you have pre-qualified your seller. The buyer or seller may pay for the appraisal. The appraisal must, however, be a Uniform Residential Appraisal Report (URAR) performed by a HUD approved appraiser or, a VA certificate or Reasonable Value (ACRV), Avoid the cost of having a second appraisal done by obtaining a list of acceptable appraisers for the LS at HUD.
4. You have pre-qualified your seller, handled any problems with secondary liens, obtained an appraisal, and have an acceptable offer to purchase the property. HUD should already have the hardship letter from the seller and financial documentation to support the hardship position.
   5. What does HUD need from the broker for final approval?
   a. Original Appraisal or ACRV
   b. Original executed sales agreement in which the purchase
     price is at least equal to the appraised value with a statement
     that the acceptance is contingent upon HUD's approval.
   c. Itemized list of estimated closing costs (marked-up 
settlement statement), forecast to date of closing.
   d. A statement signed by the seller that the purchaser is not
     related.
   6. What does HUD consider acceptable charges?
   a. HUD will pay reasonable and customary seller closing costs.
   b. Sales commission up to 6 percent.
   c. Pro-rated RE taxes up to the date of settlement.
   d. Termite inspection fee.
   e. Escrow closing fee, if required by sales agreement.
   f. Attorney fees if contained in the sales agreement.
   g. Flood and property certifications.
   h. State/county transfer fees/tax/stamps.
   i. Discount point not to exceed 1% of the mortgage amount.
   7. What does HUD consider as unacceptable fees and charges?
   a. Discount points or loan origination fees exceeding 1% of the
     amount to be financed.
   b. Home warranty fees, wire transfer fees, tax service fees.
   c. Courier services or express mail services.
   d. Repairs not stipulated by the appraisal.
   e. Any items identified only by the term miscellaneous.
Should you have further questions or need assistance in completing the process, feel free to contact Ken Corr of the Asset