The FHA 1 Year Waiting Period After Short Sale, Bankruptcy or Foreclosure – Back to Work

Where was this three years ago?  Better late than never I suppose.  FHA is now insuring loans to homebuyers who have experienced an Economic Event (Short Sale, Bankruptcy, Deed in Lieu of Foreclosure or Foreclosure) in the past and can document that (1) their certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control, (2) the homebuyer has demonstrated full Recovery from the event and, (3) the homebuyer has completed housing counseling. FYI, in the event of a short sale, this is for buyers who DID have late …

Tell a Veteran to Miss a Payment to Qualify for a Short Sale and You May be Up Against the CFPB

Statistically, over half of the Consumer Finance Protection Bureau (CFPB) complaints to the Office of Servicemember Affairs (OSA) have to do with mortgages.  Of these, 58 percent of them had to do with loan modification, mortgage collection practices or foreclosure . . . and yes . . . short sales would fall under this category.  While this is a broad range of complaints, I’d like to focus on servicemembers with Permanent Change of Station (PCS) orders and how they relate to short sales. For Realtors processing short sales on behalf of servicemembers, they’ll want to know that the CFPB is …

Refinancing When You’re Upside Down

This episode of the Twin Cities Real Estate Radio Show covers different mortgage options for borrowers who are upside down on their homes. Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, …

Short Sales Gaining on REO – Mortgage News Daily

This article,  Short Sales Gaining on REO Sales as “Change is Afoot”, by BY JANN SWANSON does the best job of any article I’ve seen like it of defining and documenting an emerging trend.  Realtors and buyers would do well to adjust their searching, shopping and negotiating habits to conform to Jann’s observations. “A change is afoot when it comes to short sales,” RealtyTrac said on Thursday, releasing new data which indicate, based on January’s numbers, that pre-foreclosure sales (most of which are so-called short sales) in the first quarter were the highest since the first quarter of 2009. In theory, the company said, a short …

Buying a Home After a Short Sale using a VA Mortgage

I have had a lot of people ask me about how to buy a home after a short sale using FHA financing but it’s becoming more and more common that people are considering buying a home after a short sale using financing insured by the Veteran’s Administration.  These guidelines use to be murky but the issues concerning waiting periods after a short sale and underwriting guidelines are coalescing around an interesting blend FHA guidelines and Fannie Mae guidelines. There are six unique stipulations and they are as follows: The borrower must have made all mortgage and installment payments within the …

Why a Home Buyer Should Set Up 3 Search Criteria When Buying a Home

A prospective home buyer or investor might have a clear idea of what he or she wants in the property they’ll buy but the current market brings complexities that make setting up search criteria for this purchase a little more complicated. The difference between bank-owned, short sales and person-to-person transactions bring unique elements to this search process that cannot be dealt with by search criteria alone but that’s where preparation and planning should begin. There are different negotiating tactics, condition of properties and buyer timelines that must be taken into consideration with each of these types of transactions and they …

Do I Need to be Late on My Mortgage to Qualify for a Short Sale? – Don’t Take Yes for an Answer!

I have a lot of people call me to get pre-qualified to purchase a home using FHA financing after a short sale. Early on, not a lot of these scenarios panned out but these days, more and more of them do. When they don’t, the number one reason is because they took bad advice from a party to their short sale transaction. That advice? “Mr. and Mrs. Short Seller, you need to be late on your mortgage to qualify for a short sale.” This is often false and has devastating consequences. In many cases, proving imminent danger of default is …

FHA’s Short Refi Program

The FHA Short Refinance Program has always existed in an unofficial form but became a formal program on December 16, 2009 with Mortgagee Letter 09-52.  It was “refined” on August 6th of 2010 with Mortgagee Letter 2010-23.  It was designed to provide more mortgage options to those that owe more than their house is worth.  There are many requirements for this loan but for most borrowers who are upside down on their home and have good credit; these criteria are likely to be met with the cooperation of the existing lenders about to be paid off. For these transactions to …

Buying After a Short Sale is an Excellent Mortgage Credit Risk

While lenders will admit that it’s technically possible to provide mortgages to homebuyers who recently had a short sale without a waiting period, most lenders are not offering this product (for the record, we are offering it).  Because of the complexities of the process involved with closing these loans that creates perceived risk, most lenders elect not to do them and fail to ask the more important question. . .  “Are they a good credit risk?”  The principles of underwriting mortgages and loans in general are outlined in the Four C’s (Credit, Collateral, Character and Capacity).  By these measurements, borrowers …

Short Sales DO NOT Require a Delinquent Mortgage – “Imminent Danger of Default”

Clearly, many if not most short sales involve a loan presently in default. As well, many times a short sale might involve a current borrower who can currently afford the payment. In several other situations, a seller may be “just hanging on” and the smallest thing could put them irreparably behind on their loan. Welcome to “eminent danger of default.” In a hardship letter for a short sale (also known as short payoff), if a borrower/seller is currently not in default but can justifiably make the case that it is nearly unavoidable despite their willingness if circumstances were otherwise, they …

What’s the difference between pursuing bank-owned properties vs. short sale properties?

Understanding the differences between these two forms of distressed sales is critical to writing winning offers and paving the road to a successful closing. Perhaps more importantly, understanding their differences will mean that you’ll get the best deal possible on your purchase. A bank-owned property (often referred to as a “foreclosure” or “REO”) is a home which has been taken by the bank. In this case, the foreclosure process has concluded and the property is now owned “free and clear” by the lender. Making an offer on a on a bank-owned property is relatively simple in that response times are …

What are extenuating circumstances?

Many people trying to buy a home after a short sale find it difficult to navigate through loan programs that they may be eligible for and various waiting periods that may be applicable.  If late payments occur, most people are told that the waiting period for buying a home after a short sale is 3 years because that’s what FHA requires if late payments occur.  Then they learn that Fannie Mae will back a loan for someone after a short sale after 2 years with a 10 percent down payment if there are “extenuating circumstances.”  But what are extenuating circumstances? Fannie …

C’Mon Minnesota Legislature, . . Just Ban Deficiency Judgments

In some regards, the MN legislature was ahead of the curve on the mortgage and housing crisis. They regulated non-bank lenders and brokers in ways that other states hadn’t even considered. They got ahead of abusive practices towards distressed homeowners and shady loan modification companies. What they have unequivocally failed at is aiding homeowners who are upside down on their homes. Their greatest impact could be with those contemplating a short sale. Other states have already taken steps. Perhaps the best example would be those taken in California. For some time now, CA has not allowed deficiency judgments in the …

What Does SB931 Mean to Your Seller? . . . It Means That They’re a FHA Buyer!

California has taken, barring the stupidest veto ever, a clever step towards opening doors for homeownership. A primary intention of this bill no doubt was to flush the market of negative equity and aid struggling homeowners. It has an added benefit of streamlining continued homeownership for those who will do a short sale after January 1, 2011 by making a difficult FHA loan approval that much easier to get done. Buying a home after a short sale has been possible through FHA for some time now. While many investors are willing to purchase and securitize these loans, few have been …

Waiting Periods on Bankruptcy, Foreclosure and Short Sales for Mortgages

Since late 2007 and the MORTGAGE MELTDOWN started we’ve had many “inquiries” from prospective MN & WI buyers who’ve wanted to get into a new home or BACKinto home ownership.  The last couple years have been hard on many people even though the Federal Government says that the recession is behind us.  People have had their incomes cut back, lost jobs, bankruptcies, foreclosures and short sales. What I wanted to share with you is a current (as of today) crib sheet of how long certain negative things need to be “seasoned” before different types of mortgage financing can be offered. Let’s …

Make That Foreclosed Home your Dream Home with an FHA 203k Loan.

You have spent the last 3 months dreaming of buying your new home.  You have been saving for a year for the down payment and you are ready.  You have your dream home in your mind.  You want that 2 story, 3 bedrooms/ 2 bathrooms home that fits the needs of your family.  You want that nice yard for the kids so they can play.  You start working with a Realtor to help you find this new home and you consult with an experienced loan officer to see what you can afford. You are excited because this is going to …

Buying a Home after a Short Sale – Don’t Believe the Naysayers

I’ve written on this subject before but I want to be more thorough this time. There have been too many articles put out lately that discourage people from contemplating a home purchase after doing a short sale. These articles express cynicism about home sellers’ financial habits and cynicism from Realtors as well. Most Realtors doing short sales know how to cover the bases for their client to make sure they’re in a good position to buy a home down the road. Further, in my area (Saint Paul, MN), nearly 1 in 10 homeowners in the twin cities are upside down on their …

Upside Down on Your Home? – Here’s Your Playbook

In my home state of Minnesota, Minneapolis and Saint Paul have nearly 39 percent of homeowners under water. I’ve had the question, “I’m upside down on my home, what are my options?” so many times that I wanted to prepare a menu of options for people to reference. This article briefly outlines 9 potential solutions that may serve you well. The target audience here is not necessarily someone who’s in default on their loan but simply one who owes more than the home is worth. All too often, when one is upside down on their home and/or struggling with their …