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Qualifying For A New Loan After A Short Sale

I'm in CA although I don't think that makes a difference at all.  My wife and I went through a short sale starting in 2009 and the sale was finally approved and recorded in 3/10. 

I understand that we can qualify for a FHA loan after 3 years.  However, I have heard varying things when it comes to a conventional loan ranging from 2-7 years.  I would like to go the conventional route if at all possible to prevent the need for PMI, assuming 20% down.

However, I have heard that although the bank never took back possesion of our house that qualifying for a conventional will be tough because the desktop underwriter will not approve the loan because it lists the delinquency on my credit report, and it treats it just like a foreclosure, even though foreclosure is not mentioned anywhere on the report.

The bank took almost 9 months to approve the short sale.  From what I hear now if my short sale is treated the same as a foreclosure in terms of a FHA loan, it seems it may have made sense to let the home sell at a foreclosure sale and I could have already been past the 3 year window and could get a FHA loan today.

Any advice or help is appreciated...
  • November 18 2012 - US
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Answers (4)

I have financing for 1 day after a short sale or foreclosure. [deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
  • April 16 2013
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Getting the approval through Fannie Mae can be difficult since the bank reported your short sale as a pre foreclosure or foreclosure. Most of the time when you have several late payments the bank will put you into pre foreclosure status and not go back and update the reporting. This can make it difficult to get the approval from Fannie Mae becuase of the way their approval system works. We would have to work on the conventional approval and see what happens at the 3 year anniversary of the short sale. I am confident you will qualify for FHA then but I understand not wanting to pay mortgage insurance. I would try and get the conventional approval at 3 years and use FHA as a backup if you really want to purchase now. Let me know if you would like to discuss your situation.
  • January 17 2013
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Fannie Mae will allow 2 years after a short sale with 20% down to avoid the MI.  I should be able to help you
  • December 20 2012
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Two years from completion of short sale and 20% down is indeed eligible for Fannie Mae financing. If Desktop Underwriter rejects due to the coding as foreclosure (very common issue) you will need to locate a lender willing to do a "Manual Underwrite". This is easier said than done very few lenders are willing to use this permissible method.
  • November 18 2012
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