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FHA Borrowers Liable for Balance on Short Sales?
Video of Dave Ramsey
June 16, 2010
On a call-in show, an FHA borrower who is attempting to obtain a short sale asked whether the bank can sue him for the deficiency balance.
The Georgia borrower said his mortgage is with Wells Fargo, and he was attempting to sell the home for less than the mortgage balance. Lenders sometimes consider reducing the balance, known as a short sale, when the home is worth less than the mortgage balance because they can avoid having to foreclose on the home and being stuck trying to sell a vacant property in a market already saturated with foreclosure listings.
"Financial guru" Dave Ramsey was on hand as a guest on FOX NEWS to answer the consumer's question, "Can I be sued for the difference?"
"Technically you could," Ramsey responded. "But the good news is on an FHA loan, that is a government-insured loan, HUD would have to approve the short sale -- and HUD won't chase you for the difference.