Strategic Real Estate Coach Members

This is from directly from HUD

Is HUD approval required on short sales when the sale is for the full, appraised
value, but is less than the debt owed?

There are two scenarios for short sales, the first involves a sale by the mortgagor, or
their estate, and the other is the sale of an acquired property by the servicer or
investor.

In instances when the property is being sold by the mortgagor or their estate, whether
or not the mortgage is due and payable, the regulations are specific: mortgagors, or
their estates, may sell the property for the lesser of the mortgage balance or the current appraised value. If the mortgage is due and payable at the time the contract of sale is executed, the mortgagor may sell the property for the lesser of the full mortgage debt or 95% of the current appraised value. Reasonable and customary closing costs may be paid from the sales proceeds. Servicers must obtain documentation for closings costs that appear excessive or abnormal and retain in their file for use in any subsequent post claim audits.

Following foreclosure, the asset may not be sold for an amount less than the current
appraised value unless written permission is obtained from the Secretary. HUD’s Claims Division will require either the short sale approval document, when the
short sale is after foreclosure, or the signed HUD-1 to verify the closing costs are
acceptable when the mortgagor or their estate was the seller