What is a HUD partial claim and how will it affect my Florida home sale?

hud partial claim

You may have a HUD partial claim against your Florida home if you have a mortgage backed by FHA and you’ve ever had any type of loan workout – including a forbearance or loan modification.

What is a HUD partial claim?

A partial claim is an interest-free loan from HUD to help make a loan modification possible, or to get you caught up on overdue payments on an FHA loan. The partial claim does not need to be paid off until the property is sold or the first mortgage is paid off.

What happens if I sell my Florida home and I can’t sell for enough to satisfy the mortgage and the partial claim?

If the proceeds of the home sale are insufficient to pay off both loans, you will need to pay the remainder out of pocket or pursue a short sale. FHA has their own short sale process (FHA PFS Program). If you qualify for the program, you can sell the property for less than you owe and have the remainder of the debt forgiven.

The problem with partial claims is that they frequently end up being far larger than expected by the homeowner, and usually this additional debt against the home lands the homeowner in a position where they are underwater and must consider a short sale.

Minna has been a fantastic partner in selling our home. She was patient with us in explaining the differences between a short sale and conventional sale and helped us think through the pros and cons of each. During the process of the sale she was strategic and got us the best price for our sale. The process was painless and quick and every step of the way she managed each and every detail flawlessly.

Dan Ling


Last Updated on May 25, 2021 by Minna Reid

Minna Reid

Minna Reid is a Broker Associate at Killebrew & Company Realty Inc, serving Jacksonville, Florida.

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