The listing agent did not give to much information about the litigation. However, based on the fact that there is any litigation at all, that is an FHA showstopper. Using FHA or VA to get through short sales is a little more challenging because these loan vehicles will impose requirements on the condition of the property that many short sale lenders will not want to cope with when they are reviewing offers. The same is true for REO properties as well. So you need to be selective with what you are looking at and definitely make sure you update your lender with the condition of the home AND that you call the listing agent to check with them about the seller being okay with FHA or VA. It will save you time in the long run.
