Regardless of the Property’s sale price, a Mortgagee may only approve a PFS Contract for Sale if the Tiered Net Sale Proceeds are at or above HUD’s minimum allowable thresholds. HUD’s requirements for minimum Tiered Net Sale Proceeds, as based on the length of time a Property has been competitively marketed for sale under an Approval to Participate, are as follows:
- First 30 Days of marketing: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 88 percent of the “as-is” appraised Fair Market Value (FMV).
- Next 30 Days of marketing: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 86 percent of the “as-is” appraised FMV.
- For the remaining duration of the PFS marketing period: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 84 percent of the “as-is” appraised FMV.
The Mortgagee is liable for any FHA Insurance Claim Overpayment on a PFS transaction that closes with less than the required Tiered Net Sale Proceeds, unless a variance has been granted by HUD.
Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (800) CALLFHA (225-5342) or by email to answers@hud.gov. Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339. .
For policy information see Handbook 4000.1 III.A.2.l.ii(K)(3)(a)-(b) at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh