Skip to content
ClosingCodeClosingCode
ENES

Loans · Fannie Mae Selling GuideBuying a short sale: which seller fees the buyer may pay, and how

When a home is sold as a short sale or preforeclosure, the seller's lender often asks for more than the price covers. Fannie Mae's Selling Guide (B2-1.3-01, Purchase Transactions) lets a buyer with a Fannie Mae loan pay fees, assessments or payments that are typically the seller's or another party's responsibility – for example short sale processing fees (also called negotiation, buyer discount or short sale buyer fees), a payment to a subordinate lienholder, or delinquent property taxes or HOA assessments. Four conditions apply: the buyer gets written details of the extra amounts and the additional funds to close are documented; the servicer approving the short sale gets the same written details and may renegotiate the payoff it accepts to release its lien; buyer, seller and servicer all agree in writing to the final details, including the extra amounts – for example on the U.S. Treasury's Request for Approval of Short Sale form or another form or addendum; and the settlement statement shows every one of those fees, assessments and payments. A short sale processing fee isn't a common and customary charge, so if an interested party reimburses any part of it, it counts as a sales concession.

What the buyer may pay (examples from the Guide)

  1. Short sale processing fee

    Also called a negotiation, buyer discount or short sale buyer fee.

  2. Second lienholder

    A payment to a subordinate lienholder to release its lien.

  3. Delinquent taxes or HOA dues

    Past-due property taxes or HOA assessments.

The four conditions

  1. 1. Buyer informed

    Written details of the extra amounts; the extra funds to close are documented.

  2. 2. Servicer informed

    The approving servicer gets the details and may renegotiate its payoff.

  3. 3. Everyone agrees in writing

    Buyer, seller and servicer sign the final details – e.g. the Treasury's Request for Approval of Short Sale form or an addendum.

  4. 4. On the settlement statement

    Every fee, assessment and payment appears there.

Watch out

  • A processing fee reimbursed by an interested party counts as a sales concession.
  • The buyer needs documented funds for the extra amounts – tell the lender early.

What the TC can do

  • Get the short sale approval letter and every addendum with buyer-paid amounts into the file.
  • Send the lender and the closing agent the agreed amounts so they appear on the settlement statement.
  • Track the approval letter's expiration date against the closing date.

Questions buyers ask

Can the buyer pay the short sale negotiation fee with a conventional loan?

With a Fannie Mae loan, yes, if the buyer gets written details, the funds are documented, buyer, seller and servicer agree in writing, and the fee is on the settlement statement (Selling Guide B2-1.3-01).

Can a buyer pay off the second mortgage in a short sale?

Fannie Mae lists a payment to a subordinate lienholder as an allowable buyer-paid amount, under the same written-agreement and settlement statement conditions.

Is a short sale fee a seller concession?

It isn't a common and customary charge, so if an interested party reimburses any portion of it, it is treated as a sales concession.

Related guides

Add the short sale approval letter as a document on the deal in ClosingCode and set its expiration as a task with an owner and due date.

Start free trial

Source: Fannie Mae Selling Guide B2-1.3-01, Purchase Transactions (November 5, 2025), read at selling-guide.fanniemae.com on October 26, 2026.

General information, not legal or financial advice. The lender decides eligibility. ClosingCode is software; it is not a lender or law firm. This guide is not a substitute for the advice or services of an attorney.