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How soon after a short sale can I get a mortgage loan to purchase a house?

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February 10 2012 - Royal Oak
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Answers (48)

VERY IMPORTANT - NEW FANNIE REGS AS OF 8-16-2014

https://www.fanniemae.com/content/guide/selling/b3/5.3/07.html#Deed-in-Lieu.20of.20Foreclosure.2C.20Preforeclosure.20Sale.2C.20and.20Charge-Off.20of.20a.20Mortgage.20Account

Makes a lot of sense. If it's extenuating circumstances, you can do 95LTV  two years after a short sale. Just be ready to document everything IE loss of job or income, divorce, illness, etc
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August 18
to verify what Jimmy was saying in regard to VA loans - I actually have a letter from the VA that I submit when I'm doing VA pre-approvals. To paraphrase, it basically says that the VA does not consider a short sale derogatory as long as the rest of the credit history is in line 
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August 17
Sam, in my opinion, it would benefit this and future posters if you would qualify your responses by saying something to the effect of, "I can't do this until", "The lenders I have available to me can" and so on. 

The correct answer to this question about how soon this person in Royal Oak can get a loan after a short sale is one day.

I think it may also benefit you to read the other 45 previous posts here as well.  You'll find a variety of answers and lending options that you may not have, but can learn do exist. 
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August 17
About 2 years.
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August 16
Hello, 

Thank you for your service to our great country. 

My name is Jimmy Vercellino and I am a USMC Vet and Mortgage Originator Specializing VA Loans. 

To answer your question VA does not actually have a written policy regarding short sales so therefore it's up to the Lender to apply prudent underwriting practices to the loan to determine why it happened and most importantly, why it won't happen again. 

[self promotion deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
 


Semper Fidelis, 
Jimmy Vercellino 

 

 
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August 16
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[Spam/Ad irrelevant content removed by Zillow moderator. Profile does not have valid lender credentials to be advertising loan services or soliciting business. See our Good Neighbor Policy
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June 18
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June 11
You can buy a home two years after short sale with a conventional loan and 20% down. If you wait three years you can buy with an FHA loan and only put 3.5% down.

Jared Leichliter
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June 05
Yes, we have a program that would allow you to buy again right away with no waiting period. It's an exclusive portfolio program here. All you would need is 20% down and a 660 mid FICO. It's available in AZ, CA, CO, DC, FL, HI, IL, MD, MT, NV, NJ, NY, NC, OR, SC, VA, & WA. Loan amounts up to $4 million. Good Luck! Craig Bosse
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January 30

 The Back to Work program is a great program we do offer and it works for a small portion of Consumers who fit in that box. However it does not fit to the majority of consumers who have unfortunately had a Foreclosure, Short sale or Deed in Lieu. 



Here is an Immediate Solid Solution for All Consumers that have had a Foreclosure, Short sale or Deed in Lieu, and Not resorting to using a hard money loan.
Introducing the "2nd Chance Loan" (AKA Expanded Criteria Loan) that has already been a game changer for thousands of consumers.

-Highlights of the "2nd Chance Loan" : 
There is No Seasoning Period for someone who has had a Foreclosure, Short Sale or Deed in Lieu. They can purchase or refinance a primary residence Now with no waiting period. 
Prior Mortgage Late payments are Acceptable! 
620 Min FICo Score, 20% Down payment up to 1-Million Loan Amount. 
5 or 7 Year ARM Fully Amortized.

No interest only option on this program.
No Prepayment Penalty. 



Consumers who have lost their homes are now renters or living with family or friends and deserve a 2nd Chance to achieve again the pride of homeownership. This program has provided hope to consumers and has made a Positive for the economy and communities they live and work in.



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January 30
New FHA guidelines will allow purchase after one year. You have to show lost wages, that wages are back up to speed, new credit and go to credit counseling
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September 16 2013
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September 15 2013
Work with a broker in your area. There are owners who have had a foreclosure or short sale years ago who just got approved to buy a new home. Nowadays, many lenders have flexible loan programs that you can take advantage of.
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August 10 2013
Profile picture for user65563157
RealtyTrac's quarterly report on the foreclosure industry indicated that more than a fourth of all domestic property sales during the first quarter of the year were bargains on foreclosure properties. Excessive foreclosures bring down the cost of houses, making industry recover more difficult. The news, considered with last week's grim jobs report, further supports the realization that the slow economic recovery is not picking up much steam right now.
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August 05 2013
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I live in California and short sold my house 2.5 years ago. I was unable to get approval for the short sale until I missed payments. The house was successfully short sold 2.5 years ago and part of the settlement was a stipulation where I had to pay over $10K (good faith payment) to get the approval...and I did it.

I recently went to get approval for a loan and was told that there is a new "score" instituted in Nov. of 2012 that assign's a score to the short sale. Our new loan agent stated that we cannot get a loan until we get a "reported in error letter" from our previous lender Wells Fargo. I called Wells Fargo and was told they will not change the score (9 - the highest) because I missed payments and the short sale is marked as a foreclosure for that reason. I was in negotiations with Wells on the short sale before I even missed payments and then they stated that they wouldn't approve a short sale unless I missed payments. In any case I feel that it is unjust for Wells to retain this score and stop me from getting a new loan when we legally settled our debit with them. On my credit report it shows as "settled for less than full amount". How do I proceed and get this cleared? PLEASE HELP CALI AGENTS! I've been told by my loan agent that there are many others in the same boat...what do we do? We settled our debit, we should not be further punished...

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April 02 2013
Conforming to Fannie/Freddie guideline loans have a two year waiting period, not 5. 80% ltv unless an extenuating circumstance exists then it's 90 ltv. 
______________________

Jumbo or non-conforming loans are going to vary from lender to lender. 
______________________

FHA can be immediate if no payments were missed, and three years if payments were not current for the past year prior to the sale. If it was an FHA loan that was short sold, then it's three years from when FHA paid the insurance claim. Now, you can do less than three with an extenuating circumstance BUT, FHA is much stricter on what they consider extenuating. 

from the FHA site:

"Exceptions: Lenders may make exceptions to this rule for borrowers in default on their mortgage at the time of the short sale if
The default was due to circumstances beyond the borrower's control (such as death of primary wage earner, long term un-insured illness, etc.), and
The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower's control that caused the default."

________________________
VA loans, it can be done immediately. An applicant of mine shared a letter direct from the VA where the VA asked lenders to consider the credit in it's entirety and not just the sale.

________________________

The links are listed in one of my other posts in this thread are direct to the Fannie and FHA sites.Keep in mind that with all this, it's still up to the lender to make a decision.  

_________________________

PS - regarding extenuating circumstances - Be prepared. Its not just a written explanation. It's going to require third party proof. e.g. - overwhelming medical bills - Be prepared to show the bills. Also try to put together a timeline that will make sense to the lender so they can understand your individual situation. 
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March 16 2013

Under certain circumstances such as no missed payments during shortsale and specific reasons for shortsale such as forced employment relocation, it is possible to get a loan if you meet all the qualifying requirements, immediately.

This of course is the rare exception. The general guidlines that we see under shortsale circumstances of short sale where payments are missed and hardship is not the perfect storm is 3 years under FHA and 5 years under conventional. Of course you have to meet all the requirements such as income, debt and fica scores.Remember things are always changing and evolving so it's always a good idea to create a livable budget and prepare yourself for opportunities in the future as they arise.

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March 16 2013
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March 16 2013
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@Marc Seligman -- We just went through the short sale process with absolutely no delinquency. We are military and we had PSC orders.  Our lender approved the sale very quickly requiring no delinquency due to the orders. 

www.makinghomesaffordable.gov has more information for military specific situations.  I just thought I'd add that incase there are other military families who come across this thread.

For those military families -- I think the only way you will know if you can buy a house before the two year VA wait period is up is to do as Marc suggested and get a pre-approval done after you have gone through the short-sale process.  I know that is awful to hear, but my personal opinion is that nobody really knows how it is going to affect you because the laws put in place are so new.   It is really going to vary by region and lender. 

One thing I can tell you is that it did NOT affect my husbands security clearance -- another concern most military families have with short sales.
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January 20 2013

Pretty black and white (well except for the gray areas :-) )

Here are the Fannie Mae Guidelines:

https://www.fanniemae.com/content/announcement/sel1005.pdf

 

FHA guidelines:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf

 

There are also USDA loans available in designated rural areas for folks that qualify with certain income restrictions:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

 

After that you're dealing with what banks refer to as non-conforming loans. In this situation the bank will make decisions based on their specific guidelines. That said, keep in mind that many banks will still not lend after short sales because of the risk involved. 

There are a couple of things I see time and time again when people approach me in this situation. First of all, I still have yet to meet a client who had no delinquency on their mortgage history prior to the short sale. The story is always the same. That the bank refused to negotiate without the homeowner being delinquent in the first place. Then the other issue usually takes place which is the lender starts foreclosure proceedings. When that happens, and the borrower goes to purchase another home, they are now in a much different credit situation with the foreclosure proceedings on their credit report. 

What you can do if the foreclosure proceedings are reported is contact the lender and go over what happened while the short sale was in progress. If they are willing to give you a letter stating that foreclosure proceedings never started then you can send copies of that letter to the three bureaus and they will update the tradeline. If the lender refuses, you can try contacting a credit repair agency. They usually know how to apply more leverage in this situation, although there will be (varied) costs involved. 

When approached by borrowers in these situations, what I always offer is a pre-approval loan application. It's free and usually takes about 10 minutes. I collect the usual income and asset docs. If the borrower is putting less than 20% down then I get a letter from them explaining the circumstances surrounding the sale. It should explain what happened, why it happened and why it shouldn't happen again. If they people sold short due to market conditions, that's usually not acceptable. However, people do have extenuating circumstances (ie: loss of income, unexpected one time expenses etc) so, that's what the underwriter is looking for. Be prepared to offer third party documentation to prove your case. 

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December 23 2012

Wetdawgs is 100% correct.  There is not a 1 size fits all answer to this question.  Also note that each lender can have overlays to the actual agency guidelines.  The answer may vary lender to lender.  Ask the lender you are working with if their guideline differs from the agency guideline and if they don't know what you are talking about, move on to another loan officer.

You don't know what you don't know applies to loan officers as well.

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December 23 2012
Profile picture for wetdawgs
There are different responses because the answer depends on the situation therefore needs to be customized to the situation.     Answers to questions such as the following will help your loan officer guide you:

Were there late payments?  
Current credit scores?
Down payment (%)?
Type of loan?  
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December 22 2012
Profile picture for DianeBockelman
Why are there so many conflicting responses...very confusing!
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December 22 2012
I work for a major national depository bank. I just had a loan approved with no issues. Conventional loan, 10% down, borrowers were two years removed from short sale. They were delinquent on their previous loan as the prior lender would not approve the short sale otherwise.

Rate was no different for them than any other applicant with their credit score and down payment. We're even giving them $500 off of closing costs because they opened an account with us. 
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November 08 2012
Profile picture for leodriven
OMG.... You guys are all over the place... reading all the response has just taken 15 minutes of my life i will never get back.. i am more confused then when i started.
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November 03 2012
I would say the average amount of time to purchase a home after going through the [website removed by Zillow moderator. Please see our Good Neighbor Policy.] would depend on a few factors.

1) Size of down payment?
2) Source of the home loan?
3) credit/payment history since short sale?

Addressing number one, (size of the down payment) you will generally need at least 30-40% down to purchase a home within the first couple of years after going through the short sale process. Generally, banks view short sale subjects as "more of a liability" than they would a Bankruptcy due to the fact of late payments.

Addressing number two (Source of the home loan) you are going to be more likely to qualify to purchase a home through any one of the following government agencies and government sponsored loans (FHA, Freddie Mac, Fannie Mae, Ginnie Mae) than you would a traditional bank.

Obtaining a home loan from a private bank (Wells Fargo, Bank of America, or Key Bank) after going through the short sale process within the first four years is going to be counterproductive in my opinion. The reason I use the word "Counterproductive" is because the interest rate is going to be so high, you may just find yourself unable to make the mortgage payments and back in short sale process.
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October 22 2012
Profile picture for user46072667
No answers, but many questions.  Our house was "foreclosed" on officially two years ago.  Now the bank has contacted us and asked if we would be willing to do a short sale.  Do we still have to wait another 2 years to purchase a home after the home sells?  
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October 22 2012
In summary, the home owner benefits from a Short Sale because:

The seller can avoid having a "foreclosure" on their credit report.
According to recent Fannie Mae guidelines, if you go through a short sale you can be eligible to buy a home with a Fannie Mae loan 2 years after the short sale is complete. After foreclosure, a homeowner must wait at least five years to be eligible for a Fannie Mae lo
an.
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October 05 2012
Profile picture for CharlieBaum
There is some bad information here, especially from Mark Barrett.  There is ABSOLUTELY no documented waiting period after short sale to be eligible for a USDA Direct or Guaranteed loan.  I am 2 years and 4 months out from a short sale and I am closing on a USDA Guaranteed loan early next week.  The key is to find a lender that doesn't have overlays.  If they will accept USDA guidelines, you will be good to go with a short sale less than three years out, as long as you meet all the other requirements.  
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October 05 2012
It does not mater how it" (shortsale or foreclosure)was reported on your credit report for FHA loans. We underwrite/guarantee them and have a clear record if you have had a short sale, forclosure or lates past 90 days,
We NEVER cover a loan with only a few months out and a score bellow say 675, NEVER, I used to be an auditor and now manage the tiltle approval. As of 8/2012 policy changes monthly and is driven by politics and market forces. Allways work with a well qualified morgate broker, seldome is an agent quilified to cover most FHA reqirements. That will anger some agents.. Agents, please save it.
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August 28 2012
Related Questions
How soon after a short sale can I get a mortgage loan to purchase a house?
Profile picture for Marc Seligman
Latest answer by Marc Seligman
August 18 | 48 answers
Mortgage Rates
 
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