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Answers (14)
- user778592
- Contributions:1
I have a similar question. We had a short sale that was reported "paid in full" to the credit bureau. Our short sale was also due to documented "extenuating circumstance" since it was necessary due to medical/health reasons (had to be closer to pertinent physicians). The short sale closed in December of 2010, however, we were told by our bank that we were not allowed to make mortgage payments during the process, or they would cancel the short sale. (Have evidence in the form of letter from the bank to prove this) Due to this we missed two payments. How long would we have to wait to get a loan? Our credit scores are impeccable, and other than the two missed payments required by the bank, we have never been late on anything. We also have 20% to put down on a home. Advice?
- Michael Weissman, "Broker Attorney"
- Contributions:35
A "short payoff", in most cases will affect your credit, but it depends largely on how your lender will report the settlement to the credit bureaus.
I am seeing "settled for less then full obligation" with increasing frequency and other professionals I speak with are reporting the same.
If your lender agrees to satisfy your mortgage in exchange for the net proceeds from the sale of your home and you agree to sign a new Note for less then remaining balance of your debt, then your lender is in fact forgiving a portion of your debt and will likely report the deal as "settled for less then full obligation".
When negotiating a short sale I always ask the lenders representative how the settlement will be reported to the credit bureaus - Very often the representative has no idea or furnishes misinformation, but I am finding that many lenders are including lanaguage in their final written short sale approval letter which spells out how the settlement will be reported to the credit bureaus.
I am seeing "settled for less then full obligation" with increasing frequency and other professionals I speak with are reporting the same.
If your lender agrees to satisfy your mortgage in exchange for the net proceeds from the sale of your home and you agree to sign a new Note for less then remaining balance of your debt, then your lender is in fact forgiving a portion of your debt and will likely report the deal as "settled for less then full obligation".
When negotiating a short sale I always ask the lenders representative how the settlement will be reported to the credit bureaus - Very often the representative has no idea or furnishes misinformation, but I am finding that many lenders are including lanaguage in their final written short sale approval letter which spells out how the settlement will be reported to the credit bureaus.
- user341102
- Contributions:2
Thanks! I found it after I had posted my reply. :)
I am also looking into a "short pay-off", which the bank will take a lesser payoff with a new buyer but have me sign a note (unsecured) for some or all of the difference. This shouldn't affect my credit and I will be able to buy a new home; as long as the bank says the mortgage is paid in full.
and oh yes, I am planning on downsizing: payment and square footage.
Opinions on short pay-off?
I am also looking into a "short pay-off", which the bank will take a lesser payoff with a new buyer but have me sign a note (unsecured) for some or all of the difference. This shouldn't affect my credit and I will be able to buy a new home; as long as the bank says the mortgage is paid in full.
and oh yes, I am planning on downsizing: payment and square footage.
Opinions on short pay-off?
" I would like to know where you found your information so that I may present it to several lenders to make my argument. "
----
Presenting the argument to a lender will be a waste of your breath unless they offer the program. Not everyone that does FHA has to do FHA to guideline, they can have their own overlays and many do.
" I found one lender who had no wait period but of course there were stipulations (significant downsize criteria) "
----
Most lenders that do this will also have this criteria since the guideline prohibits gaming the market to get a similar or superior house at a reduced price. Be prepared to downsize.
----
Presenting the argument to a lender will be a waste of your breath unless they offer the program. Not everyone that does FHA has to do FHA to guideline, they can have their own overlays and many do.
" I found one lender who had no wait period but of course there were stipulations (significant downsize criteria) "
----
Most lenders that do this will also have this criteria since the guideline prohibits gaming the market to get a similar or superior house at a reduced price. Be prepared to downsize.
The information can be found in the "Bible" of FHA.
Search the following link for this section
4155.1 4.C.2.l
Search the following link for this section
4155.1 4.C.2.l
Short Sales
Also note that these are not a walk in the park. Although the guideline requires no hardship to be proven to repurchase, most will expect a detailed and written explanation as to why you did the short sale. They will ask as proof that your motivation is not to;
Also note that these are not a walk in the park. Although the guideline requires no hardship to be proven to repurchase, most will expect a detailed and written explanation as to why you did the short sale. They will ask as proof that your motivation is not to;
• take advantage of declining market conditions, and
• purchase a similar or superior property within a reasonable commuting
distance at a reduced price as compared to current market value.
- user341102
- Contributions:2
To ShirLee
"Deed-in-Lieu/Short Sale: No waiting Period
If the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the subject property is not in the same geographical area as the short sale ad the short sale lender accepted the short sale as payment in full."
What two gov't agencies are you referring to? I'm trying to sell my home, but of course, in today's market, it's not selling. I'm even offering the FHA assumption. I've spoke with investors, but the loan balance is just too high for them to invest (which I figured as much). I don't have a lot of wiggle room as far as price goes since I've only been in the home for 2 years, and it needs a little work. I've considered short sale, but I MUST be able to purchase a new home. I refuse to waste money on a rental. I found one lender who had no wait period but of course there were stipulations (significant downsize criteria), but she switched banks so she can't offer than program anymore.
I would like to know where you found your information so that I may present it to several lenders to make my argument. I am current on ALL my debt but I just can't afford to stay in this home for much longer. I lost my job less than 6 months after buying this home. The new job is less money and more travel. And now I'm having health issues. I've held out about as long as I can. It's stressful to say the least. Not really sure how I'm keeping up.
I would appreciate any guidance anyone could offer.
Thanks
"Deed-in-Lieu/Short Sale: No waiting Period
If the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the subject property is not in the same geographical area as the short sale ad the short sale lender accepted the short sale as payment in full."
What two gov't agencies are you referring to? I'm trying to sell my home, but of course, in today's market, it's not selling. I'm even offering the FHA assumption. I've spoke with investors, but the loan balance is just too high for them to invest (which I figured as much). I don't have a lot of wiggle room as far as price goes since I've only been in the home for 2 years, and it needs a little work. I've considered short sale, but I MUST be able to purchase a new home. I refuse to waste money on a rental. I found one lender who had no wait period but of course there were stipulations (significant downsize criteria), but she switched banks so she can't offer than program anymore.
I would like to know where you found your information so that I may present it to several lenders to make my argument. I am current on ALL my debt but I just can't afford to stay in this home for much longer. I lost my job less than 6 months after buying this home. The new job is less money and more travel. And now I'm having health issues. I've held out about as long as I can. It's stressful to say the least. Not really sure how I'm keeping up.
I would appreciate any guidance anyone could offer.
Thanks
- Mark Barrett, "Mark R Barrett"
- Contributions:3
Fannie Mae guidelines are posted online and do allow for divorce and job loss as Extenuating Circumstances (FHA does not count the same)
Extenuating circumstances are nonrecurring events that are beyond the borrower's controlthat result in a sudden, significant, and prolonged reductionin income or a catastrophic increasein financial obligations.
Examples of documentation that can be used to support extenuating circumstances includedocuments that confirmthe event (suchas a copy of a divorce decree,medical reports or bills, notice of job layoff, job severance papers,etc.)
- ShirLee McGarry, "ShirLee McGarry"
- Contributions:9
Depending on which lending institution you ask you will receive different time-frames allowed to purchase again after a short sale or foreclosure. The reason is some lenders have credit overlays, which translates into stricter underwriting guidelines than Fannie Mae and FHA have published.
There are lesser time-frames allowed if there are documented Extenuating Circumstances involved beyond the control of the borrower, such as serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.
PLEASE NOTE: Divorce, loss of employment, inability to sell the property and job transfer or relocation does not qualify for extenuating circumstances. All other events are known as Financial Mismanagement.
Fannie Mae - Foreclosure - 7 years
Deed-in-lie/Short Sale: 2 years with 80% LTV/4 Years with 90% LTV
FHA - Foreclosure: 3 years
Deed-in-Lieu/Short Sale: No waiting Period
If the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the subject property is not in the same geographical area as the short sale ad the short sale lender accepted the short sale as payment in full.
Deed-in-Lieu/Sort Sale: 3 Years*
I* It is treated as a foreclosure if the borrower was late on the mortgage and other installment debt for the 12 months preceding and at the time of the short sale. In addition, if the borrower pursued the short sale to take advantage of the declining market or purchased at a reduced price a similar or superior property within a reasonable commuting distance.
These are the most current guidelines published by the two government agencies without credit overlays attached. These guidelines are also what Prime-Lending follows. Laws and guidelines change and new policies and packages are introduced, so check with your local lenders for current updates on federal laws.
There are lesser time-frames allowed if there are documented Extenuating Circumstances involved beyond the control of the borrower, such as serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.
PLEASE NOTE: Divorce, loss of employment, inability to sell the property and job transfer or relocation does not qualify for extenuating circumstances. All other events are known as Financial Mismanagement.
Fannie Mae - Foreclosure - 7 years
Deed-in-lie/Short Sale: 2 years with 80% LTV/4 Years with 90% LTV
FHA - Foreclosure: 3 years
Deed-in-Lieu/Short Sale: No waiting Period
If the borrower was current on their mortgage and all other installment debt for the 12 months preceding the short sale, the subject property is not in the same geographical area as the short sale ad the short sale lender accepted the short sale as payment in full.
Deed-in-Lieu/Sort Sale: 3 Years*
I* It is treated as a foreclosure if the borrower was late on the mortgage and other installment debt for the 12 months preceding and at the time of the short sale. In addition, if the borrower pursued the short sale to take advantage of the declining market or purchased at a reduced price a similar or superior property within a reasonable commuting distance.
These are the most current guidelines published by the two government agencies without credit overlays attached. These guidelines are also what Prime-Lending follows. Laws and guidelines change and new policies and packages are introduced, so check with your local lenders for current updates on federal laws.
- Mark Barrett, "Mark R Barrett"
- Contributions:3
FHA 3 years*, USDA 3 years, VA 2 years, conventional 2-7 years: 2 years with 20% down, 4 years with 10% down(2 years/10% with extenuating Circumstance**) and 7 years with less than 10% down. I am using the current Fannie Mae conventional guidelines to close loans for Short Sale as of 1/31/2012.
- Dan Howitt, "Westmoore Group"
- Contributions:7
I think it is typically two years and maybe less if you were never late. Depending on income and down payment, you may able to find a private lender that will make you a bridge loan before that period is up. Try Googling "private lender" and make sure the company is licensed for lending on owner occupied loans as a primary residence. Also make sure there is no prepayment penalty. My company makes loans like this.
Good luck!
Dan Howitt
The Westmoore Group, LLC
Good luck!
Dan Howitt
The Westmoore Group, LLC
- Karen Paytas, "Karen. Paytas"
- Contributions:77
The easy answer would most likely be for an FHA mortgage 3 years.
Good Luck!!
Good Luck!!
- David Stein, "Military Loan Expert"
- Contributions:315
It depends, did you have any late payments? Makes a huge difference
- Geofrey Merino, "GMerino"
- Contributions:445
For FHA loans:
- borrower must have made all mortgage and installment payments within the month due for the 12 months period prior to the short sale
- The servicer must not have required the borrower to pay the difference between the mortgage balance and the short payoff
- Borrowers in default on the mortgage at the time of the short sale are ineligible for FHA financing for at least three years from the date of the short sale
- user245188
- Contributions:2
thank you. I was denied a loan last July at the 2 yr anniversary of the short sale and was hoping I could apply again soon. I have a solid income and job and good credit otherwise. I will check again Thanks!
- Karen Paytas, "Karen. Paytas"
- Contributions:77
User,
Below are some of the guidelines I've been given. I would recommend speaking with a mortgage lender in the area you wish to purchase.
CONVENTIONAL :♦ Short Sale ~ 2 years from completion date
FHA:♦ Short Sale ~ 1 year from completion date if the borrower was current at the time of the short sale and all installment payments for a 12 month period ~ 3 years from completion date if in default at time of short sale
VA:
♦ Short Sale ~ No specific information on this yet, assume foreclosure rule of 2 years
How soon after a short sale can I get a mortgage loan to purchase a house?
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