There is a lot of misinformation going around about what the impact of a Short Sale is on your credit and whether you can get a new mortgage after short selling a home. Below are the current Guidelines for FHA, and Fannie Mae.
FHA has recently changed their rule so that if a short sale occurred and all of the borrowers payments were made on time (no late payments) then they may be eligible for a new mortgage as long as the short sale was due to extenuating circumstances and not to simply take advantage of market conditions (see below). As you can imagine, this may be difficult to demonstrate. Otherwise, if any payments were made late or you cannot demonstrate extenuating circumstances, then it is a 3 year period before new FHA financing can be considered.
Fannie Mae policy is pretty straight forward – It is a minimum of 2 years to re-establish credit after a short sale.
It is very difficult to predict how a short sale will affect an individual’s credit score because there are so many different factors involved; How good was the credit to begin with? How many house payments were made late? Did they pay all of their other bills on time? Etc, The short sale will most likely be reported as a settled account paid for less than the amount owed and will have a dramatic impact on credit score even under the best of circumstances.
Here is the excerpt straight from FHA:
Borrowers are not eligible for a new FHA- insured mortgage if they pursued a short sale agreement on his or her principal residence simply to
•take advantage of declining market conditions, and
• purchase at a reduced price a similar or superior property within a reasonable commuting distance.
Reference: For detailed information on converting existing principal residences into rental properties, see 4155.1 4.E.4.g
Borrowers Current at the time of Short Sale
Borrowers are considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage
•All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and
• All installment debt payments for the same time period were also made within the month due.
Borrowers in Default at the time of Short Sale
Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
Note: Borrowers who sold their property under FHA’s pre-foreclosure sale program are not eligible for a new FHA-insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale.
This is Fannie Mae’s Guideline:Preforeclosure Sale
A two-year period is required to re-establish credit, measured from the completion date.
Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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mon 01.07.10 at 1:30 pm
I was wondering if you had some extra clarity on short sale issues as there’s a lot of opinions out there and I wonder if they are legit.
Being stuck underwater in a house I bought before I married can I do a short sale and have it only affect my credit and thus get a new house right away with my husband as the main buyer?
Also people have advised to buy a new house, then do a short sale on the old one, it seems like a scam and is it even possible?
Thanks.
Ken Mascia 01.07.10 at 1:49 pm
Hi Mon,
If you are the only one on the loan for the existing home then a short sale of it would not impact your husbands credit and he could buy a new home using only his income and credit.
In order to purchase a new house while keeping the old home you would have to qualify for all of the debt on the old house and the new house.
If you are in Michigan and would buy in Michigan you can call me to discuss possible options at 248-644-1200. Thanks
marianne 01.16.10 at 7:26 pm
I’ve just been told this week by my real estate agent that Fannie Mae is the WORST with short sales, because they have a MANDATORY default rule before they will even consider you for a short sale. Meaning, that you have to be delinquent at least one month before they will let you start the short sale process. This sucks, because we’ve NEVER been late on a payment, and by their stupid rules, we are now going to have to be delinquent in order to sell our condo. And beware, because we had a Countrywide loan, bought out by BofA, and we discovered that most of their loans are backed by Fannie Mae. Which means that even if you try to be a good homeowner, and create a good credit score, THEY WON’T LET YOU!! They MAKE you default on the mortgage, then because it takes at least 6mo to complete the short sale, you are forced to be delinquent the WHOLE TIME. Bastards.
Ken Mascia 01.18.10 at 3:55 pm
Hi Marianne,
It is a tough spot to be in and I understand your position. You have to try to maintain on-time payments as much as is possible to limit the impact to your credit score. From the banks point of view – they are losing the money on the short sale and have a right, and obligation, to ensure that people who are taking advantage of short-selling a property are in fact in financial distress and not just being opportunistic.
Stephanie 01.25.10 at 12:09 pm
Hi Ken,. I just dont understand one thing, what does it mean : ‘borrower didn’t miss any payments prior to doing the short sale’. I havent missed any payments on my home in 3 years but I need to relocate to another city in the next few weeks . I am considering a short sale on my current home since I am upside down and there is no way it will sell for what I originally purchased., but does that mean I have to keep paying my current mortgage until the short sale closes? or is it until I list my house with an agent for short sale? Also, isn’t it true that for banks to even consider you for a short sale, you MUST be behind on payments? I am confused. Do I purposely stop paying to be eligible to short sale and if so, will that affect me from qualifying for this new FHA loan program? please help, I am not sure what they mean by this. When is the last payment I need to make to qualify for this program?
Ken Mascia 01.25.10 at 12:25 pm
Stephanie,
If you miss ANY payments on the home before or during the shortsale process you will not be eligible for mortgage financing for a minimum of 2 years for conventional loan and 3 years for FHA financing based on current guidelines. You must continue to make the payments on the home until the sale closes and the loan is paid off if you want to have the possibility of buying a new home in the near future. I don’t know that a bank will not consider the short sale unless you are behind on payments. The first step is to contact your bank and start working with them. It is a slow process to be sure, so you’ll need patience.
Amy 02.08.10 at 3:48 pm
I’m in the same boat as Marianne…
I’ve owned my home for over ten years, never been late on my payments, excellent credit.. yadda yadda.. I’ve had a for sale sign in my yard for almost 5 years, lowered the price to the point where I’m over-mortgaged (Originally listed for $114, I owe $66k, and now a realtor wants to try to short sale at $30k).
The problem is now that my husband and I are both unemployed, contracted as self-employed making just enough to pay our bills – BUT, my daughter needs a surgery that will be performed in another state (within a year) and I can’t wait out this mortgage crisis. I don’t know what I should do.. I’m literally unable to sell. My hands are tied.
My mortgage company will not allow a short sale (tried with a buyer who was able to get financing for $60k, just $8k under what my mortgage balance was at the time) and they still said no. Found a couple willing to pay $90k (appraised value) with a land contract and they still said no and threatened to foreclose. I don’t know what to do!
It appears the only option I have is to just stop paying and foreclose? I really hate that as the only option because I have EXCELLENT credit (790 score).
Anyone have any advice to possibly avoid this trap?
drew 02.17.10 at 1:57 pm
Ken,
FNMA is actually similar to FHA on a “short sale”, can get a mortgage immediately if no lates.
FNMA is the only agency that recognizes a “pre-foreclosure sale” separately. For that, there is a minimum 2 year waiting period.
Ken Mascia 02.17.10 at 2:12 pm
Hi Drew,
FNMA and the mortgage industry define a Pre-Foreclosure sale and a Short Sale as the same thing. If there is a deficiency, meaning the loan was not paid in full (short sale), then it’s my understanding that Fannie Mae will require 2 years before an applicant is eligible for purchase by FNMA. The truth of the matter is that Fannie does not approve loans, it just sets the rules for loans that it will purchase from banks and wholesalers. Banks and wholesalers, who actually approve mortgage loans, are currently requiring a minimum 2 year waiting period for any short sale. So regardless of what FNMA’s rule is it will be difficult to obtain a loan immediately after a short sale.
Robb 02.24.10 at 10:00 pm
There is a lot of usefull information here. Unfortunately I have found
myself in the same situation after twelve years in my home. Hopefully
Fannie and Freddie will come up with better alternatives for people like us in the near future. It is not like a few people. There are millions of effected homeowners that were on track until risky behavior began
on wallstreet and in the banking industry. Hard working, tax paying,
law abiding citizens have been put at risk because of greed and then we bailed them out so their bounuses could stay intact. I did not want to rant
but I as well as many more have lost a lot. It will get better. Thanks!
Robb
Julie 04.16.10 at 11:14 am
I sold my home as a short sale 2yrs ago, my husband and I were going through a divorce and I couldnt make the payments on my own. I was advised to stop making payments in order to get approval for my short sale. At the time of closing they said I would have to wait for 2 yrs before I could buy a home again. In the mean time i’ve paid off all my debt and my credit score is great, but when I went to get a new mortgage the lender said that there is now a 3yr wait after a short sale. So I guess I just want to know does that 3yr wait apply to everyone regardless of when you sold your home?
thanks for you time,
Julie
Ken Mascia 04.16.10 at 11:58 am
Julie,
The guidelines are a bit fluid this year because changes are occuring constantly, but, right now 3 years is what you’re going to be held to. Keep your credit strong and you should end up in good shape.
Lora 04.24.10 at 2:52 pm
Me and my husband need to move due to a job transfer. We have a FHA loan, and are in the process of a shortsale. FHA states that you have to be 31 days late in order for a shortsale to be approved, so here we are never missed a payment in our lofe, have great credit, and now we have to be late on our home loan, and thus cannot get another FHA loan for 3 years due to the fact that you have to be late on a FHA loan inorder to shortsale. We have done everything right paid ours bills on time, have great credit, but need to shortsale due to the upside down market. Please let us know if there is anything missing that could get us into a loan faster. Thanks so much!!
Chris 05.09.10 at 2:40 pm
I have a virtually identical situation as Julie above and am at the two year mark now. My credit score is back over 710, I have good income and little debt and read in various places on the internet (and earlier in this thread) that Fannie Mae is a 2 year guideline after a short sale in which the borrower was delinquent. In your reply to Ken on 02/17/10 you said “Fannie Mae will require 2 years before an applicant is eligible for purchase by FNMA” yet in your reply to Julie on 04/16/10 “right now 3 years is what you’re going to be held to”. Is it two years or three years? Did regulations change between February and April? If so I can’t find anything about it on the internet. I have no problem waiting three years if that’s what it is but if I may be eligible after two and wait three, and prices go up, I’m going to feel like an idiot. Can you shed any light on this? Both BOA and Wells have told me three years with them but the loan officers didn’t seem real certain about the guidelines.
Ken Mascia 05.10.10 at 10:01 am
Chris, the bottom line here is that FHA, FNMA and FHLMC do not make rules for what is approvable and what is not and they are not lenders. They issue “guidelines” under which loans made by lenders will be purchased by them. Lenders (banks and mortgage companies) can make loans under any terms that they want, so each individual lender makes the rules for loans that they will make. As a result there can be differences between what one lender may find acceptable and another won’t. I am seeing most banks requiring a minimum of 3 years after a foreclosure or shortsale but as mentioned that is not an umbrella requirement.
Susan@Short Sale Process 07.28.10 at 7:54 pm
Nice clarification on new mortgage loans…. This needs to be broadcasted to all Realtors
.-= Susan@Short Sale Process´s last blog ..Short Sale Loss Mitigation Process =-.
Ron Arbogast 09.30.10 at 4:35 pm
Has the ‘rule’ changed currently for securing a new mortgage? For example, you stated that “…I am seeing most banks requiring a minimum of 3 years after a foreclosure or shortsale but as mentioned that is not an umbrella requirement….”. You updated comments would be very appreciative.
Thank You,
Ron Arbogast
Ken Mascia 10.01.10 at 10:00 am
Ron, there has been no change in underwriting standards for people who have had a shortsale or foreclosure.
Shellie 10.29.10 at 12:43 am
We are in the same boat – perfect credit up til now. And being told we had to be late on our payments to do a short sale. (Due to job loss, we had to stop paying anyway.) Now we are moving and can afford to start over in a much less expensive area. Yet, you can’t take out another loan under 2 years, or apply for FHA unless you were current on your payments?? I’d like to know WHO has been approved a short sale with perfect payments when everyone I have seen (everywhere I have looked over the last 9 months) was required to be late or in default! It’s a catch 22. Definitely contradicting and unfair.
Bill 11.11.10 at 4:02 pm
Hi Ken, My situation is a bit different but all the same in the banks eyes. December 08 I have been paying on my secind house for about 10 years. Never had a late and made an extra payment every year. My wife and I had a credit score of around 805. Our 13 yr old son passed away at our home tradjectly. We coould no longer stay in the house for the well being of ourselves and or 10 yr old daughter. We also had a second home equity loan. We contacted both banks numerous times with a hardship case. The heartless people at the bank could care less. They wouldn’t work with us at all. We left the house because it was the right thing to do for us. Not caring about a foreclosure. After we were late a couple of months all of a sudden they wanted to work with us. We wound up short selling the home. What a nightmare, if you go through this you will see how completely incompitent the banks are. Our shortsale took forever due to the banks constant mistakes with paperwork. When we finally closed 7-09 it killed our credit to about 675. My credit card limits were reduced to about 300.00. I have been monitoring our credit and it is about 730 now and our credit limits are up to a whooping 700.00. The thing is I just applied for a Spirit airline rewards card and was denied. When will I be able to get a mortgage with reasonable rates? I get a different answer from every person I talk to.
P.S. if I could do it again I would have let the house go into foreclosure and never answered anything from the bank.
Ken Mascia 11.11.10 at 4:13 pm
Bill,
So sorry about the loss of your son. I can’t imagine how hard that must be on you and your wife. The way the mortgage industry stands right now it appears that 3 years is the amount of time after a shortsale before you can obtain new financing for a home. Be vigilant about paying your bills on time and your credit will continue to improve. Opening some new credit may be difficult but you should continue to try. Also, try to maintain a low balance on whatever cards you do have.
jen 11.11.10 at 6:12 pm
Has anyone out there gotten into a new mortgage?I am in the process of doing a short sale and I have not heard about anyone getting a new mortgage and what it took to get one.Also,because there are millions of people going through the same thing do you think they will change the guidelines?If people can only rent and not buy how does that effect the economy?
Donna Herrlinger 11.14.10 at 8:32 pm
My husband and I have been in our home for 5 years and have NEVER been late on a mortgage payments or any other payments for that matter. I tried 3 or 4 times to apply for a loan modification and was told “no” because you have to be behind in your payments to be considered. We had no choice but to do a short sale. Our home sold in 8 months, and we were told we would be able to get a mortgage right away since our credit scores are well over 700. However, then the government changed the rules and now we have to rent for at least 2- 3 years. So much for trying to do the right thing and play by the rules. Thanks President Obama….. you will never get my vote.
TJ Perry 12.14.10 at 5:29 pm
My husband has a new assignment in Jacksonville Florida. We have to leave in March. My concern is that I purchased a home prior to us marrying in 2007. Can we apply for a VA loan with him as the primary, and either let the house I have the mortgage on in my name go? I don’t want to keep the house and it has only been on the market a few weeks with no hits. Any help is appreciated…
Ken Mascia 12.14.10 at 6:08 pm
TJ,
I don’t encourage people to just “let the house go”. I suggest working on a sale of the home. That will be better for you, your bank and the real estate market in general.
Mea 01.11.11 at 2:42 pm
About 2 yrs ago we had a situation where our family (myself, husband, and young son) were living in AZ. My mother started having a string of serious health issues and we decided it was time to move back east and be within driving distance to our aging parents. This was exactly at a time when the AZ RE market had gone about as low as it could. Our home had decreased in value by 40% (approx $140k underwater) and we knew we were facing some hard decisions if we were to make our move back east possible. I was making decent money at the time and knew we could qualify for a small home in addition to our current pymts on the AZ house. We tried to plan it so we could start and hopefully complete the short sale without missing pymts by the time we closed on the new house, or shortly thereafter to avoid too many double mtg pymts. However, everything and anything that could go wrong with the shortsale did. To make a long story short, we just settled our short sale less than 1 month ago. (2 yrs and 2 mos from the start date). Not long after we closed on our new home we recognized that the banks were not cooperating with us AND that we were nowhere near a resolution so heavy heartedly we decided to stop making pymts on the AZ home hoping the banks would be more willing to resolve our sale. I’m now seeking employment in the mtg industry and am suddenly nervous that our actions may be construed as fraudulent somehow. What is your opinion? Any advice would be very appreciated!!
Ken Mascia 01.11.11 at 3:01 pm
Mea, I’m not in a position to make judgements on whether what you have done is legal or if anyone would construe it as fraudulant in some way. Sorry. Good luck with the job search though.
Carolyn 01.13.11 at 9:52 am
Hi Ken..We had tried to request for a loan mod from our lender and they denied us immediately stating ” put your house up for short sale” after speaking to them for the first time.There was not an option to remain current in payments offered. I had explained to them our situation regarding my husband going to lose his job. We had a short sale finalized on May 2010 after not having been able to make a mortgage payment for 3mos only..My husband lost his job but then immediately got a new job. We recently paid off all of our credit card debt. Our scores have come up 100 points since then and not in the high 600′s.We have the down payment. Do we qualify for a mortgage sometime soon? Are there any options at this point? We appreciate any advise!!!
William gipson 01.16.11 at 11:03 am
i purchased a loan for buying a home the home was appraised for $10.000 dollars more than what the projected sale price was so I was ahead of the market. I never had experience in buying or realestate purchases but I honestly expected down to earth honesty and that I could walk away with a home as long as everything was approved and all my terms were met as far as 30 year fix rate, What I never was explained was that I could get a loan with no assurances that I would get what I asked for because I ended up using WellsFargo and at the very begining I thought all was running smooth upuntil 1.5 years after paying up to date with payments I found my home morgage was a predatory loan and that all houses had gone down at least $20.000 dollars and to reestablish a 80/20 loan was not at all possible and if you had a 80/20 loan which is 100% financing you was in trouble. And once you sign a contract your liable. But it is ok for Fanny Mae and WellsFargo and other companies choose or place in with Uncle sam a loan to reestablish all losses and rebuild to protect their interest etc. But a customer he or she will be short sale/ or have a home foreclosed on because of some circumstances or loss of job or death etc. But in my case I was tetermined to fight and possible get refinanced even after I found out I was being foreclosed on or for which ever way I ended up it was a short sale in my case. But even after the fact that I was late reading my disclosure on my morgage agreement and contract it took me 1.5 years to find out I was given a predatory loan and after I found out I had no legs to stand on everytime I read and tryed to ask about refinancing or I did not get the loan I applied for I was baited and switched over to a predatory loan and russhed out of the office by fast and untruthfull lenders who made promices and answered my questions with lie after lie. Then even after I found out I had no legs to stand on as long as I crossed the t`s and dotted the i`s. So litterally they could dictate to me place me in the wrong and find fault and then tell me there was nothing they could do. And after I analysed the complete story I found out I was in the middle of a world wide market crash with millions of others who were given loans which came out to more money than what they could pay on. But in my case I did not have a money issue for paying my morgage and that my morgage would climb and even that I was not even considered for refinancing because I was upside down because of the crash and if AI wanted my home AI would have to put down another $20.000 dollars before this would happen. Then who could you trust as people gave money and they signed their bank savings over to the morgage companies so they could get direct deposit even at this point in time they only scamed the people to sign the morgage company over to their accounts because the banks or morgage company could with draw any money owed or monies forwarded to the morgage company each month. I was denied refinancing and I was not given a 80/20 loan on a 30 year fix rate at 6.75% which was a bit high but manageable for me at that time. How coy and cute they were by taking my 80/20 loan converting it over to a two year adjustable rate and give me a 30 year fix rate which was supposed to be given to me on the original process the primary loan for the first morgage of $150.000 dollars was made over to 2nd morgage at 2 years for a fix and then the 2nd morgage was suppose to be higher at 12% for fifty 50.000 dollars loan was put into the primary note for 30 years at almost 13% when they were writing loans for 5% to 6% but instead the first words were you can get the house now but if you lose the house because the interest is to high you can refinance and after 6 mos why should you care because once you get into the home the refinincing is easy. Believe in me they crossed the loans up they switched the paper work to where my entire loan was the opposite of what I asked and wanted and they had the gaul to say to me YOU WILL GET YOUR EXACT LOAN REQUEST AT 100% FINANCING AND YOU WILL GET A 30 YEAR MORGAGE FIX RATE BUT? THEY NEW DEEP INSIDE IF i DIDN`T HAVE A LAWYER AT THE CLOSING AND IF i DIDN`T READ THE CONTRACT THEY WOULD NAIL ME TO THE CROSS AND THEY DID EXACTLY THAT. And I never thought banks would even venture to take advantage of one`s credit and switch around papers on individual contracts to gain as much money during a closing and the greed was staring me in the face . I couldn`t believe this would happen to me right from the begining when I was called into close on the home their excuse was I am sorry we do not have the papers for you to sign , you will have to come back Monday? So instead of closing when I was supposed to they switched the loans because when the next two days went by as soon as I walked through the doors the morgage company WellsFargo SAID we helped you by underlining in a majic marker any thing with yellow marking is where you have to sign and once you sign we are done and you will get the keys etc, If I was smart and read the contract I could have walked away. But in stead I listened to my broker and placed the paper work away into a safe fire box and I threw away the key and for 16 mos I never read the contract all I did was pay my morgage all the time. And once television and all millions of people were going to lose their homes because of interest and bad loans I said wow thats not me and then and only then it gave me a chance to read and find I was a victim alsoand even though I was on time with payments the bank would not even consider me for refinancing because the home was up side down and they wanted more money up front to even consider refinancing. I called 100 times fighting to the point I said thats it take the house. I even waited for President Osbama on the bail out to see if he could help us out as they did but they gave the stimilus money out to the banks to bail them out and also give them first picking on short sales leaving out home morgages that were late and people going out on the street. All I got was did you sign the papers if so your liable they wouldn`t care about anything yet the banks got away with predatory loans and beating up on veterans like my self. So push came to shove even after I threatened about court all they did was make a promice to me to refinance even if I was up side down and if I signed their papers to give them the key to my savings account they would get direct deposit every month with out any issues what so ever they promised me and so I filled and filled the papers and yet they went along with the short sale or would be auction which they said don`t worry no one came by next month you will be all set, next month comes no money was taken from my bank account AS IT WAS O PAY ON THE MORGAGE AND ALSO BRING IT UP TO DATE. tHEY TOLD ME IT WAS SOLD LAST MONTH ON A SHORT SALE TO THE BANK. So this tells me they can spit shit and do what they want and even though they ruin your credit to where you get no credit because of their greed and they ruin it to where you have to reestablish your self over to even be considered to buy a home all over again, Why can they have the power to ruin your credit when all along you did everything humainly possible and yet your the bad guy. I am still able to pay for a morgage and I haven`t been able to re purchase and I have the 10% down and I can do better with this market than the market before. Tell me is their any way I can still get lucky to buy a home as I make enough money and income to pay as I have a fix income until I die? Quiry need help.
Ken Mascia 01.17.11 at 11:17 am
Carolyn and William,
Unfortunately, It’s going to be a couple of years minimum for you to get anyone to give you a new mortgage. The rules regarding previous short sales and foreclosure’s are getting more strict. Many lenders are now requiring 5 years after a short sale to obtain a new conventional mortgage. Keep working on getting your credit score back in the 700′s and start saving for a down payment.
Arthur 01.28.11 at 2:01 am
I did a short sale my wife wasn’t on the loan. She has good credit but is a stay at home mom. So my income has to be used could we still aplly for a new loan?
Ken Mascia 01.28.11 at 11:08 am
Arthur,
Unfortunately, you can’t use one persons income and someone elses credit. If using your income, then your credit has to be considered, so, it doesn’t sound like you could get new financing.
Janet 02.09.11 at 12:46 am
Since the banks took the lions share of the ‘Bama bucks, I would personally like to see them get a two to seven year butt spank. I almost hope that there is a second drop in housing as predicted. By then I will be at the two year mark. With banks lobbying so heavily, and joe public trying to do the right thing? You cannot tell me this system is working as intended. Do banks intend to stick it to joe public and walk away themselves? Yep. Ironically, that’s just what we short sellers are being penalized for. I have been paying careful attention and I will be much more selective in the future.
Marjorie 02.09.11 at 8:05 pm
I was in a car accident over a year ago and am still going through surgeries on my knee. As a result I was let go from my job. The mortgage is in my husband’s name and we called the bank about hardship and they say because we are still current an all payments, they can’t do anything. They are sending us information on a short sale because they said we would probably be able to do that instead. My question is would we be able to get another mortgage before the three years due to extenuating circumstances. Our mortgage is through Fifth Third bank and Fannie Mae.
Ken Mascia 02.10.11 at 10:50 am
Marjorie,
The current guidelines do make allowance for extenuating circumstances (in theory). However, my experience with this is that it is very difficult to get approved before at least 2 years has gone by. In this case it may be difficult to use your accident as extenuating circumstances as you are not even obligated on the loan in question (the loan was made based on your husbands income only). Nobody can stop you from making a loan application though and you may try buying a new home in your name only once you are employed again.
Andrea 02.11.11 at 5:00 pm
Hi Ken, we closed on a short sale in CA in nov 09. We both had awesome credit and had never missed a payment or anything until the short sale. My husband had been in school and upon graduation, was unable to find a job in CA and I am an at home mom. He did find a great job in GA and so we had to move. We were underwater on the house so we tried to get a short sale but the bank wouldn’t respond to us for like 6 months as we continued to pay the mortgage payment on time. We were advised to stop paying the payment so the bank would work with us and so we did and the bank finally approved the short sale. Now we have a great income, a down payment of 20% and credit scores back up to 790 or higher. Being that it has only been about 14 months since the short sale, is there any possibility we could get a home loan? Thank you for having this forum!
Ken Mascia 02.11.11 at 5:09 pm
Andrea, as previously mentioned the rules require a minimum of 2 years after a shortsale.
tom 02.15.11 at 1:12 pm
My question is what happens in a divorce situation? We have a home in bloomfield hills that is approx. 70K under water. Jointly we can comfortably afford the house. However, alone, neither one can. I assume this would allow “us” to qualify for a short sale. Would the divorce have to be finalized before “we” could even qualify for a short sale? By the way, we have two mortgages, both owned by Bank of America. And finally, from everything I have read so far, why is a short sale superior to a foreclosure. It seems both hurt the credit approximately the same although there may be a longer waiting period to qualify for a home loan under foreclosure scenario.
Ken Mascia 02.15.11 at 1:26 pm
Hello Tom,
Only your lender can determine under what circumstances you qualify for a short sale, so you’ll need to contact them to determine that. As far as credit damage – a shortsale is going to be significantly less damaging to your credit if you continue to make all house payments on time during the entire process. After a successfull short sale, with no late payments, you may be eligible for a new mortgage within 2 to 3 years, however, after a foreclosure it will be a minimum of 7 years and the foreclosure will have devastating effects on your credit.
jman 02.20.11 at 1:06 am
I lost my job and my wife works, we want to short sale our house because we can no longer afford it, a real estate agent told us that if we continue to make the payments and not be late that my wife would qualify for another loan immediately no waiting. But if we miss the payments during the short sale that we would have to wait 2 to 3 years for another loan…Is that really true that if we keep making the payments my wife can get another loan immediately? Our current home is an FHA loan that we bought in 2008
Ken Mascia 02.21.11 at 12:38 pm
Jman, FHA has an exception to the 2 year waiting period IF you have documented extenuating circumstances and never made late payments. This is difficult to get approved however and I am not sure if your circumstances will allow it. For sure, it’s going to be very difficult for a lender to approve you for a new FHA loan when FHA has just lost money on your existing loan.
Andre 02.26.11 at 12:51 pm
Hi Ken,
My wife and I are trying to get approved for a loan and we have the following situation. We had a chapter 7 bankruptcy in September of 07. In January 09 the company I worked for closed and I spent most of the year in school. I did some consulting work at the end of 09 and in January of 2010 I started working as a contractor for a Canadian company. I have pay stubs but they do not issue a 1099. I filed my taxes this year and counted the income as general revenue. Two weeks ago the Canadian company opened a US office and hired me direct. How difficult will it be for me to qualify for a mortgage? Our credit scores are about 690. We have over 20k to put toward a down payment and closing costs. Any advice would be greatly appreciated. I’d like to start looking for a house. Thanks…
Ken Mascia 02.28.11 at 11:03 am
Andre,
We may be able to help you. I have recently gotten someone approved with somehwhat similar circumstances. You can contact me at my office at 248-644-1200 if you are buying in Michigan. If you are looking in some other State then you’ll need to find a local lender. Thanks
Gary 03.05.11 at 12:22 pm
Ken,
In 2009 I was laid off in California and could not find work for a number of months. This depleted our savings and ended up causing me to have to file chapter 7. I was notified by my new job that with the economic conditions in California not getting much better the potential for a layoff or salary cuts to happen were very likely. Right about this time I was offered a position with a major company in Texas, and decided it best to move my family here and leave the uncertainty of California. I was able to complete a short sale on our home in California but did go past due. We have leased a home here in Texas for 2 years and are saving our money for a down payment and working on credit repair. In your opinion with a down payment and increased scores in 2 years will we be able to buy again here in Texas ? I guess I am looking for a game plan now that the bad stuff is hopefully behind us. We lived in that home for 10 years in California and untill the downturn in my industry never had any problems whatsoever.
Jeff 03.14.11 at 5:41 pm
Ken –
I moved out of state for a job, and sold my primary residence via a lender-approved short sale. I was current on payments up to and including the closing of the short sale. The short sale was done in a state that bars the recovery of principal following approval of a short sale, and the lender had agreed to not seek recovery of the balance.
Unfortunately, the lender coded the sale incorrectly such that its records showed I still owned the home. I received a payment invoice the month following the sale, and I was told not to worry as the sale was still working through the system. Same thing next month, and in the third month the lender discovered the error and fixed the problem. Unfortunately, the lender did not fix the problem retroactively, so my credit report reflects several late payments AFTER closing. The lender agrees that I should not have any late payments, but due to ineptitude or some other reason, they have been unable to fix the reporting with the credit bureaus. This dance has been going on for 9 months, and I continue to fight. I’d rather not sue the credit bureaus, but it looks like I’m headed down this path.
The guidance on this site indicates that one needs to be current through closing to obtain financing within 2 years of the closing. I was, but I have separately been told that late payments AFTER closing are also a bar (even when I never technically owed those payments…). Any thoughts on this?
I have a 20% down payment, a credit score in the high 700s, no other term debt (except for $5,000 left on a car, which will be paid off this year) and a fairly high income. The auto-ban is the only thing holding me back, and I have not been able to get any good answers. Thoughts on whether someone like me might have financing options?
Ken Mascia 03.14.11 at 6:04 pm
Jeff,
Unfortunately, what’s on your credit report is going to be the driver behind an approval decision and it sounds like there are late mortgage payments being reported. You will have to get that corrected before anyone will be able to help you.
Gary 03.15.11 at 7:14 pm
Ken,
Any thoughts on my earlier post?
Ken Mascia 03.16.11 at 9:48 am
Gary,
These situations are all unique. Seems like there is some chance that you might possibly get a mortgage after the two years but it depends on a lot of variables. I suggest after the two years is up that you find a lender in your area and make an application and see what happens. This will give you a more clear idea of what you may need to do to get approved.
G.C. 03.16.11 at 7:48 pm
Hi Ken,
Same problem here: perfect credit history, great salary, credit score in mid-700s, but did a short sale based on encouragement by the mortgage company to not pay to qualify and now cannot get approval for a new mortgage. The only difference is that I’m with one of the Uniformed Services and was required to undergo a permanent change of station (PCS). The Servicemembers Civil Relief Act does not specifically grant me any special priveleges regarding a short sale, as far as I can tell.
One question:
Are you aware of any class action suits against lending institutions that advised people to not pay their mortgage in order to qualify for a short sale? Do you think it’s possible to get such a thing started?
There are so many people, it seems, who have worked hard to be good borrowers and homeowners just to be completely disrespected and harmed by all the greedy CEOs and misguided liberal politicians that there seems there should be some avenue by which we can be made whole.
What do you think?
jason 04.21.11 at 7:05 pm
i did a short sale about a year and half ago. was behind on payments but was due to loss of income. I have a decent credit score right now. Is there any other kind of home loan where I can get a morrgage other than fha. If so where can I get this info
ryan 05.12.11 at 4:48 pm
There is no blanket rules as Ken suggests. His advise has been very good and I appreciate the fact that he is here advising people in a possitive way. I have been in the home retention side of a major lender for years. Throughout this entire housing crisis. The simple fact is the investor dictates what the lender is able to do in regards to short sales and modifications. On the other hand the lender can and sometimes (rare circumstances) will lend money to potential buyers regardless of a time line from a short sale or foreclose. If you have an FHA loan, rules are set by the departement of housing and urban developement. HUD. They will prevent you from obtaining another FHA loan withing specified time periods. Convential loans can be given out the day after a short sale if the lender determines your credit worthy. For example, and I understand this isn’t relavent to most but for the sake of making a clear point. If you want to secure a $200k loan for a mortgage after short selling your previous property and you have $120k to put down. Someone will finance you……..I guarantee it.
Neil 06.15.11 at 5:00 pm
None of this information was provided to us during our time. We had never missed a payment or were late with our mortgage but were instructed by the lender to not pay our mortgage for 4 consecutive months or else they could not help us with any programs they had. I even called the lender when I was working to let them know that I was going to be laid off but since we weren’t behind, again, they couldn’t offer assistance. My wife and I had both lost our jobs within weeks of each other. In the end, we followed the plan the lender laid out for us, followed their instructions to the letter because “our credit wouldn’t be nearly as damaged and we could get a new mortgage sooner.” This was a lie. We took our mortgage payments that we didn’t apply and paid off all other debt. Take it from the guy who caught the short end: take all of your appliances, fixtures such as lights, ceiling fans, HVAC systems, fireplace, sheds (if possible) with you or sell them for cash (you will need it.) Lenders are liars and bad people. Don’t do the short sale at all as it has NO benefit for you what-so-ever. Let it go in foreclosure and recoup as much of your belongs as possible and give the lender the structure and the keys back when the time comes. I don’t advocate destroying a home or being vandalous but take what is rightfully yours and leave them the balance.
ken 06.20.11 at 10:45 am
In my situation I declared bankruptcy three years ago and did not reaffirm the mortgage. I have been late alot and would like to do a short sale or deed handover and then get into a new mortgage. I was wondering if the short sale or do a deed handover would even show on my credit report and if does I would believe I could have it removed and the mortgage just show as discharged in bankruptcy three years ago. Do you think I could get a mortgage? If I do a foreclosure it would show up in public records so I wouldn’t want to go that route. Thoughts?
damien 06.24.11 at 4:47 pm
I’m sorry if this was covered above and I missed it. I had a short sale about a year ago and I’m looking at conventional financing instead of FHA. I believe the waiting period is two years with 20% down, but with the recent changes, I’m not sure what the regulations are. Any help would be appreciated and if you could provide a link that you are aware, that would be great.
liz mathews 07.11.11 at 9:31 pm
I have clients that call me all the time asking if they can short sale their home, and buy a new one immediately after. I know FHA has a program for that, but I am afraid to tell my clients to go ahead wtih their plans of a short sale and purchase after. Does anyone know the guidelines on this? What is they have a FHA loan went into a short sale, can they get another FHA loan if the house that they did the short sale on was a FHA loan??
Ken Mascia 07.12.11 at 9:30 am
Liz,
I don’t know of a single case where a lender has approved a new mortgage loan immediately after a short sale. Some guidelines say if there were documentable extenuating circumstances then the waiting period may be waived or reduced. However, in practice, this is rarely done. Generally speaking, a homeowner who short sells their home is going to have to wait a couple years to buy a new house.
Bill Stanley 07.20.11 at 10:44 am
Mr. Mascia, I would appreciate your advice concerning the following situation: After a 25 yr marriage my friend was divorced in Oct ’08. For all those years she paid all bills on time and her and her husband had a good credit history. In the divorce decree, her husband assumed $20,000 of personal debt that was entirely attributable to him. She assumed the debt of one credit card with a $2,000 balance, which she immediately paid off. Except for the home mortgage, her name was removed from all her husband’s debts. Since he retained the home he agreed (per the divorce decree) to refinance the home within 6 months and remove her name. At that point his credit was excellent and his income was more than adequate to refinance the home. She moved out of the home in April 2008 and as soon as the divorce was final in Oct ’08 he stopped making mortgage payments for 5 months causing him to be unable to obtain a new mortgage. Eventually the home was sold on a short sale in July 2010 (with, unfortunately, the wife’s name still on the deed).
In July 2011, my friend found a modest ranch home she would like to buy for $80,000. She has been employed at the same firm for 13 years, annual income of $30,000, has NO debt and, has personal savings of $28,000 (not including her IRA, which is over $100,000). She is prepared to make at least a 20% down payment for a conventional home loan. By the way, the monthly P&I (incl taxes and ins) on a $64,000 mortgage will be half her current monthly rent. To top it off, her current credit score is 740 (even with 5 missed mortgage payments in 2008 on the credit report)! Nonetheless, she’s been told she will have to wait 2 yrs after the short sale before she can apply. This is a person who has played by the rules. If a mortgage company would perform some ‘real’ underwriting, consider this person’s divorce decree as a genuine “compensating document” coupled with her impeccable personal credit history, and a substantial down payment, she should be viewed as an acceptable risk. I would appreciate your thoughts. Regards, Bill Stanley
Ken Mascia 07.20.11 at 2:14 pm
Bill,
Unfortunately, divorce is not considered an extenuating circumstance, so, she would be subject to the rules regarding time after a shortsale before obtaining a new mortgage. The ex-husband is the culprit here. Regardless of what a divorce judgment states once you agree to be obligated on any type of loan you continue to be liable for the debt and the payments until the loan is paid off.
Mark 08.07.11 at 8:31 pm
Ken –
We’ve got a situation – No late payments, and the bank has agreed to take deed in lieu of payment if the house doesn’t short-sell (which it won’t, at the price they are asking.)
In January, 2010, you said:
“if a short sale occurred and all of the borrowers payments were made on time (no late payments) then they may be eligible for a new mortgage as long as the short sale was due to extenuating circumstances and not to simply take advantage of market conditions…”
Then in July, 2011 you said:
I don’t know of a single case where a lender has approved a new mortgage loan immediately after a short sale.
Have things gone from bad to worse, have the rules changed, or is it just impossible to reason with lenders?
Thom 08.17.11 at 3:54 am
Hi Ken,
We are in the short-sale process with our home that my wife purchased prior to us getting married and is only in her maiden name. I was told recently that even if we try to buy a new home under just my name, that we have to wait the FNMA guidlined 3 years because they have to look at her credit even though we will not use her’s to qualify. Have you heard of this rule? I have not been able to find anything on it anywhere.
Maria 08.25.11 at 12:07 pm
Discharged Bk two yrs ago, in the process of short sale right now with a posiible buyer who is waiting to see if the bank will accept their offer. Pulled my credit yesterday and all 3 are between 697- 685. Tried everything to get a modification because of demotion and loss in income, was not able to get it. I do have several payments that were not made because my income is half of what it was.Since Bk shows zero balance for the first and second and it has been 2 years if the short sale completes soon, also the credit score being close to 700. Do you think we can purchase another home without having to go into a rental in between.Trying to get some guidance because this may happen very quickly for us now. Called Chase bank and they said we had to wait 3 yrs from bk discharge however if we find a smaler bank or try with a mort broker that it is very possible.
Appreciate your thoughts on the matter.
Ken Mascia 08.25.11 at 12:22 pm
Maria,
The final disposition date of your short sale is going to be the determining factor on when you could obtain a new loan. Once the short sale is completed it will be a minimum of 3 years before you can obtain new mortgage financing.
Bill Stanley 08.28.11 at 12:17 pm
Ken,
I have an additional question. As indicated (in my previous comments written on 7-20-11) we were told my friend would have a 2-yr wait after the short sale of her home before she would be eligible. We assumed (since she will make a 20% down payment) that this meant she would be eligible for a conventional mortgage. Now we are told she must wait 5 years to be eligible for a conventional loan.
Yet, apparently, she will still be eligible in 2 yrs for an FHA loan (with a 5% down payment), but will have to pay the FHA insurance premium. In fact, she was told, even if she puts down 20%, she cannot avoid the FHA insurance costs.
So, she is eligible for a loan with 5% down in 2-yrs, but must wait 5-yrs to be eligible for a loan with 20% down! In 5 years, at the rate she’s saving, she may be able to pay cash. Surely, there is no rule against that!
Seriously, does any of this make sense? How can we make plans when we keep getting differing information regarding her eligibility?
Ken Mascia 08.29.11 at 10:33 am
Bill,
She may be able to obtain a conventional loan with a 20% down payment after a 2 year waiting period (these are Fannie Mae’s and Freddie Mac’s current rules, which could change between now and when her 2 years comes up). However, approval of the loan is subject to the individual lenders rules and underwriting standards, which can and do differ from one lender to another. It is true that ALL FHA loans require FHA mortgage insurance. The FHA loan is not geared towards people who want to make a 20% down payment.
G.C. 09.04.11 at 10:24 pm
There are lenders out there who will loan you the money. I did a short sell a little over a year before I was given a new mortgage. Try DELTA CREDIT UNION. There are others.
Bill Stanley 09.05.11 at 4:43 am
G.C.
Can you give us more info about the DELTA CREDIT UNION? We live in Indianapolis and don’t know if this credit union would operate in our area. We’ve found the Delta “Community” Credit Union and the Delta “County” Credit Union online, but not the Delta Credit Union.
Doug 09.10.11 at 3:43 pm
I had a job loss and haven’t made a mortgage payment in over five years. Tried a couple of times, even the obama thing, but they ended up not accepting/sending it back. Lots of faxing “hardhsip letters” in between. My house is way underwater – at least 100K, and now I got good job making over 100K and want to relocate over 300 miles away and just freekin start over. My mortage was at the height of crookedness – I still have “payoff” checks to creditors that never worked….from 5 years ago. Is there any hope.
Todd 09.24.11 at 1:13 pm
I have to relocate for a new job. We’re about $40-$50K underwater in our mortgage. What are the options for a short sale for relocating for a job? Also, if the house sells for $40-$50k less and we choose NOT to do a short sale, then what options are there for for paying off the remaining amount, ie. restructuring the loan? Would the payments remain the same as they currently are? Just trying to weigh all the options.
Ken Mascia 09.26.11 at 9:35 am
DOUG – doesn’t seem like there is any hope. No payments made on house for 5 years is not going to make anyone excited about giving you a new mortgage
TODD – These are all questions you need to direct to your mortgage lender. Only they can decide what can be done or is possible. There is no rule book or law that relates to loan modification and only the lender decides what they are or are not willing to do
TJ 09.28.11 at 2:23 am
MY HUSBAND I FEEL USED THE DIVORCE TO PUT OUR HOUSE IN SHORT SALE AND THEN GOT IN A BRAND NEW OTHER HOUSE, THEN RUN UP 20,000 WORTH OF DEBT, THIS IS A BIG QUESTION OF MINE ?I FEEL HE DID IT INTENTIONALLY, TO GET OUT OF MARRIAGE AFTER 24 YEARS OF MARRIAGE , AND THEN BUY ANOTHER HOUSE , SO UNFAIR >>>
AND THEN GOT 20,000 MORE IN DEBT , WE NOW HAVE TO GO TO MEDIATION FOR THE MORTGAGE AND HAVE A LWSUITE WITH WELLS FARGO BECAUSE HE DIDNT PAY THE MORTGAGE FOR OBER 10 MONTHS , HE DIDNT PAY ON THE HOUSE WHERE IM STILL LIVING WITHMY 14 YEAR OLS , I NEVER WORKED , HE WAS THE BREADWINNER WILL I BE RESPONSIBLE AS I NEVER WORKED AND IM ON THE DEED OF THE HOUSE I THINK ..I AM WORRIED SICK
Ken Mascia 09.28.11 at 9:27 am
TJ,
Most of your questions/comments are things I couldn’t possibly answer. The one thing I can say for sure is that if you signed the “Note” agreeing to be responsible as a co-borrower on a mortgage then the final outcome of that loan is your responsibility and it will impact your credit rating, etc. I suggest you talk to Wells Fargo directly to find out what your responsibility is on this.
Tracey McFadden 10.03.11 at 7:06 am
Hello Ken, We sold our home through short sale in 2009. Prior to the short sale we were not current on the mortgage as my salary alone was insufficient for a modication or refinance. Since 2009 we rented for 2 years (all timely payments) and getting to enter into 3 years. We’d like to buy again but our realtor’s telling us she’s having difficulty finding a lender program for us. Please help.
Ken Mascia 10.03.11 at 10:17 am
Tracey,
Three years is the minimum elapsed time since a shortsale that you can make application for a new mortgage. The time clock starts the day the short sale closed. If you have re-established credit and your credit score is good then you should be able to do something after the 3 years has elapsed. If you are in Michigan and want to purchase a home here, then I may be able to help you get approved. My contact info is on the home page of the blog.
G.C. 10.03.11 at 8:32 pm
Bill Stanley,
Sorry for such a late reply. Delta Credit Union is in Atlanta and is the Delta Airline employee credit union, but I think mortgages are given to others. Also, we found a realtor who was aware of another credit union who used their own underwriters and granted mortgage loans on a case-by-case basis. Check around for knowledgeable realtors, some of them know who is lending to short-sale victims.
Rasmi 10.04.11 at 12:13 pm
we did short sale 2010 oct,we stoped payment with advise by citi bank to approve our short sale.My husbend is software engineer i am running daycare in sunnyvale now we want to buy a new home.what is our position,can you tell me.His credit 730.
Rasmi 10.04.11 at 12:16 pm
we did short sale of our property in oct-2010 and my current credit score is 710. When can we start applying for loan again to buy a new home.
Ken Mascia 10.04.11 at 12:28 pm
Rasmi,
in 2 more years. As per the original article and all of the responses above
kevin 10.14.11 at 11:38 pm
my wife owns a vacation home in a different state than which we live in her name only, not mine, which is mortgage free. I am the only one on the deed of our primary residence and just completed a short refinance because i was about 140k underwater. my wife is a stay at home mom and we want to know if we will be able to take cash out on her home to lower our bills even further. can we use her credit and my income to get a 50% loan on her house?
kevin 10.14.11 at 11:40 pm
also if I do apply for the loan will shorted bank try to obtain her assets?
Ken Mascia 10.17.11 at 10:11 am
Kevin,
It is not possible to use one persons credit and someone elses income to support a loan. If your income is used then your credit must be considered too.
Katie 10.29.11 at 12:37 pm
My husband and I purchased our home 3 years ago. At that time, we were both employed full time with my husband as the primary borrower on the mortgage. Since then, my husband was forced to close his business and is now a full time student. We will have to move to another city in 9 months for him to continue school. Our plan is to sell our house so we can rent in another city. We are currently under water on our mortgage by $20,000. Things are extremely tight since I am the only one employed. What should we do? Our mortgage company doesn’t even want to discuss a short sale since we are still making payments but we are trying to plan for the future.
CLARA 11.16.11 at 5:05 pm
I GOT REALLY EXCITED WHEN I READ ABOUT CG COMMENT SAYING THAT THERE ARE LENDERS LIKE DELTA CREDIT UNION THAT CAN GIVE YOU A HOME LOAN,WELL I GOT THE PHONE AND CALLED THEM AND I GOT REALLY DEPRESSED.I WAS TOLD BY A LOAN SPECIALIST THAT I HAVE TO WAIT 4 YEARS AFTER MY SHORT SALE WHAT A DECEPTION
Stacie 11.27.11 at 2:10 am
As part of my divorce stipulated judgment, I had a year to refi my mortgage to get my ex off or we’d have to sell the house. Because of my great credit and fact I’ve never missed a payment or been late, my lender allowed a short pay refi for both my first and second (the house was about $200,000 underwater at the time) and I got a new FHA loan with a different lender for the current market value of the home. It’s been about 14 months and the short pay refi are the only negative items on my credit (ever). I would like to sell my house and get a new one. Would I be able to qualify for anything (my credit is over 700, good income, etc)? Does the 2 year Fannie Mae waiting period apply when there wasn’t actually a sale and there were documentable extenuating circumstances (divorce)? What about for FHA loan? Thanks.
Ken Mascia 11.28.11 at 11:45 am
Stacie,
This short payoff refi will be treated exactly like a shortsale. A 2 or 3 year waiting period will be required. Unfortunately, Divorce is not considered an extenuating circumstance. You can only have one FHA loan so you would have to sell your existing home to get a new FHA loan, and FHA requires the same waiting period as well. In light of the fact that your debt was reduced to market value on your home it seems like your best move is to stay there.
Dave 12.06.11 at 7:45 am
I settled on a short sale in December 3, 2009. The short sale was due to divorce and loss of job. I had to be late on payments to get the short sale. The house had been for sale for months prior to starting the short sale process… I was getting excited since im almost to my 2 year mark have maintained a credit score of 720+ through out everything. I am remarried and looking for a new home. Ive read through most of these comments and see that people are being told 3 years now. We have been talking to agents and have been told its 2 years but we are questioning there knowledge now. Can you offer any in-site. We don’t want to be lead down the wrong path to settlement.
Autumn Augusta 12.17.11 at 11:44 pm
My husband and I short sold our house in 2009 due to the
Fact government testing Of cancerous water in the well water.
Multiple family with little kids were getting brain tumors. With the several months of research and Erin Brokovich herself warning family’s in the area There was a possibility our children may get tumors. Not only do I work in the medical field but my mother is a pediatric nurse who took care of these families with brain tumors. I have gathered several documents supporting this research from Governors, CDC, and the EpA. My husband and I make great money and have great credit. We had to file hardship with the bank in order for us to let us sell, and 9 months later at closing they told us we could not close until we missed a payment. So we missed two payments and closed.
My husband found a loan officer, by chance, who is going to submit a case to his under writer of ” extenuating circumstances.”
I have spoken to many “Morgage brokers” who are telling that this would not qualify, but what did they want me to do wait and find out if it happened to my 9 month old baby ? After two years of research, nothing was proven, but files still remain open as to what is going on.
Autumn Augusta 12.17.11 at 11:47 pm
And we had a FHA loan and are hoping to get another one as that is the most affordable way of buying a house. Do you think that we would have a chance at 24 months after we did a short sale?
Ken Mascia 12.19.11 at 11:09 am
Autumn –
No. The minimum time for this case is going to be 3 years. That is what FHA requires from a borrower that previously defaulted on an FHA loan.
Mike 01.09.12 at 3:42 pm
Ken,
My wife and I moved from Minnesota to Idaho in August 2008. We had purchased a home in MN in March 2007 and used my VA benefit to purchase the house. We were current at the time we moved to Idaho, for my wife’s job, and rented the MN home for nearly 2 years before we had to accept a short sale as our tenants became late on their rent payments, which in turn caused us to be late on our mortgage payment.
We closed on the MN house in Sept of 2010 and B of A accepted our short sale offer for less than amount owed but now we are wondering if we can get an FHA mortgage in Idaho. All of the VA Guaranty was used to cover the debt to B of A.
eric 01.17.12 at 10:03 am
Ken, my wife has been out of job for about 11/2 and recently is no longer receiving unemployment. If she is able to find employment how long what it take for here to qualify a loan?
Ken Mascia 01.17.12 at 12:11 pm
Mike – the short sale is too recent for you to obtain any type of mortgage financing. Generally speaking, FHA requires 3 years after a short sale
Eric, I’m not sure what you mean by “for about 11/2″. If she has been unemployed for more than a year then the requirement is typically that she be on the new job for a minimum of 6 months for that income to be used
Kris 02.01.12 at 8:53 pm
Is a divorce considered extenuating circumstances? I was on the shit-end of the stick so to speak. Wife wanted to keep the house and then walked away before removing my name from the mortgage. It has been two years.
Ken Mascia 02.02.12 at 11:28 am
Kris,
As previously stated, divorce is not considered an extenuating circumstance
Lisa 02.05.12 at 9:58 pm
Ken
I am listed on our first mortgage under my maiden name was single at the time I purchased the house. Later we did a 2nd mortgage under both our name I can’t remember if we were married at the time. I am now a stay at home mom. We are underwater on our mortgage like so many of us. We were thinking of maybe trying in refinance under the HARP program to maybe get lower payment and maybe see if we could rent our home and purchase another or short sale our home. We contacted another place they recommended that we file bankruptcy because of our income, mortgage being underwater, no savings, and other debt. I don’t want to go the bankruptcy route. I am wondering could I file for a short sale/or bankruptcy seeing how my name is only on the first mortgage, and then could my husband apply for a mortgage loan for us to get a new house. Would the short sale, foreclosure, or bankruptcy only affect my credit or will it affect both of ours? Besides being underwater on our bankruptcy we are out of space at our home. Like I said I bought this house when I was single now married with 3 kids in a 2 bedroom. Where should we go from here?
Thank you for your time & insight.
Tina 02.06.12 at 2:23 am
We closed on a short sale in June 2011. The short sale was approved (after meeting the required delinqincy and submitting a letter of hardship to the bank for our reason needing to sell our home) We needed to relocate and fast. We knew selling during this down turn in the housing market meant our home would sell for far less than what we owed…..even though we had paid 100K down when we purchsed it 5 years prior. This decision to sell was not easy. We had NEVER been late on ANY credit loans, mortgage or Rents prior to the required delinquency payments needed to get qualify for this short sale. We oth had credit scores in the 800′s. Within thirty days of our home being listed we had an offer. Had the bank not taken 60 days to decide and accepted the ALL cash offer right away, we would have only had one delinquent/missed payment in all. The fact that all of our other financial obligations were maintained during this time supports our reason for short sale was not due to financial hardship. We recently purchased some land and had no problem getting the loan for that. Now we are looking to build our home. My understanding is that we can qualify for a construction loan however once construction is complete (6-7 months) we will need to have the land and construction loan rolled into one mortgage loan. The area is rural and USDA loans are common here. Are USDA loans using the same guidelines as FHA and conventional? Do you have any reccomendations for lenders who handle these loans? We both still have great-excellent credit, 745-760 and income is not an issue plus we have the savings for down payment if needed. (20%) How can we secure the mortgage prior to building, it would be horrible to get the home finished and have NO lenders willing to finance the new mortgage.
H E L P!
Ken Mascia 02.07.12 at 11:17 am
Lisa,
If either mortgage has both you and your husband on it then any shortsale or foreclosure will affect you both. Whether it’s in your maiden name or married name does not matter as it will still show up on your credit report.
Ken Mascia 02.07.12 at 11:19 am
Tina,
With a shortsale in June 2011 it’s going to be very difficult for you to get a new mortgage of any type. You should make sure you can obtain end financing prior to building the house. Check with lenders in your area or the folks who can give you the construction loan.
disgruntalhomeowner 02.20.12 at 7:04 pm
I live in Redford and to put it lightly, the values will NOT come back or atleast in a reasonable time frame. I bought in 05 before the fallout and now the home is severely underwater. So I looked at all avenues. Should I rent out my home and get a new one, short sell, walk away? The bottom line was I wanted out of this home and in a better city/better home. My home is my first and now I feel as if I am a prisoner. Now if you want out and to just get out, some realtors claim they can get you out depending on the situation. Generally, you need a legit hardship to get a waiver of deficiency which means you’re clear of mortgage debt. Now of course you can’t buy for another 2-3 years. This I am finding to be true no matter what someone tells you. Now without saying names, one agency out there says they can get you into a new home you want and out of the underwater one. Sounds to good to be true… well it probably is. Generally in order to qualify for a short sale, you need a hardship. Now if you have the means to buy a new home but own an underwater home, you’re probably in good shape as in YOU DO NOT HAVE A REAL HARDSHIP. If you come up with some numbers that makes it look as if you do, you have committed fraud. If your employment shows you generate enough income to pay your underwater mortgage, guess what…. you’re paying it one way or the other. The only way you can get a short sale is job loss, relocation, family circumstances that effect your livelihood, and other legit circumstances that effect your ability to keep the home.
Ken Mascia 02.21.12 at 12:39 pm
Disgruntled,
Renting your home out may be a viable option for you. A lot of people have opted to do that over the past 3 years and then bought another home. If your credit is good and you qualify for a new mortgage it should work.
Victoria 02.23.12 at 1:15 pm
Hi Ken,
I bought my townhome in 2005 at the height of the market. I’m married now with 2 kids and the place is too small and over 60-70k underwater. It is just my name on the mortage. Is it possible for my husband (credit over 700) to get approval with HIS parents “co-borrowing” on it and then we can short sale my townhome once we are in the new place? Do banks ever approve short sales if one of the married couple owns another home? Thanks so much!
Ken Mascia 02.23.12 at 4:04 pm
Victoria,
If your husband is not obligated on the mortgage on your home then he will be unaffected by any shortsale of that house. Assuming he qualifies for a new mortgage he could buy another property in his own name and get a mortgage on his own. You could not be a co-borrower but he may be able to use someone else depending on the mortgage companies in your area and there guidelines. I can’t speculate on what a bank might approve or not approve in a shortsale
aertuy 02.26.12 at 2:10 pm
Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan rose to 3.95 percent. That’s up from the previous week’s rate of 3.87 percent, the lowest since long-term mortgages began in the 1950s.
mortgage calculator
aertuy´s last [type] ..Banking sector: Dexia loses more than 11 billion euros
edwin choute 02.29.12 at 3:14 pm
I had an equity line of credit and just short sale on a house. The title was under both my wife and I. But bank of America charged off the account. It,s been two years since the short sale. Will I be able to get another loan and when,. If not how will I able to get another loan because I can,t afford to pay the charge off loan amount. Is there any loans for me out there .my credit score after the two years is good. Another thing is that boa said I was 30 days late on my payments. I tried to settle with boa but they were asking for a high price I couldn’t. afford. I even got a lawyer to help but boa wouldn’t settle. What should I do now
edwin choute 02.29.12 at 3:16 pm
This is my email address
Ken Mascia 02.29.12 at 4:39 pm
Edwin,
Based on today’s lending guidelines, As long as you have an outstanding balance on a mortgage charge off you will not be able to obtain new mortgage financing. You would have to settle that account with the lender.
ed 02.29.12 at 9:48 pm
What happens if I settle with the lender. Will I still have to wait to purchase a mortage. Or can I proceed for a new mortage. And what exactly must my lender write on The settlement documents
Ken Mascia 03.01.12 at 11:09 am
Ed,
Because that loan is going to be considered in default it would be a minimum of 3 years after the short sale date before you would be considered eligible for a new mortgage. The loan should show on the credit report as “settled for less than full balance”
rob 03.07.12 at 12:19 am
What if you were on the deed of the short sale through marriage however there was in no way was there any financial obligation to me or my credit. The condo, loan etc… was all in my wife’s name.
Ken Mascia 03.07.12 at 12:53 pm
Rob,
If you were not obligated on the mortgage then you will be unaffected by the shortsale.
Dan 03.17.12 at 5:56 pm
My mortgage company, GMAC, has offered us a short sale opportunity. I am currently unemployed, making reduced payments (runs out November 2012) and am under water by at least 50k. I could be getting a new job soon, however. Can I still short sale it once I get word that I got the job? Or do it do it now even though I have no place to live set up at this point (and of course, no job).
Ken Mascia 03.19.12 at 9:29 am
Dan,
Whether you can short sell the house is completely up to the lender. I can’t say whether their decision will be impacted if you get a job. Unfortunately, I can’t tell you what to do either. You need to do what you feel is best for yourself.
Diana 03.21.12 at 12:04 am
We are short selling our condo because of the market conditions. We have a condo that is in a good neiborhood, but the HOA is running it down and market conditions are bad. We have come into an inheritance of a a lot of money, and we want to buy again. We will need a mortgage of about $60,000.00: how do we do this?
Ken Mascia 03.21.12 at 9:44 am
Diana,
You don’t. As stated in the blog post and above answers, After short selling your home it will be at least 2 or 3 years before you will be eligible for a new mortgage.