When Can I Buy a Home Again if I do a Short Sale?
This is probably the most important factor for most homeowners when considering a short sale. What will the impact be to my credit, and when can I buy again? So, here is the scoop.
FHA Financing Guidelines after a Short Sale, Bankruptcy, Deed In Lieu of Foreclosure or Foreclosure:
Chapter 7 Bankruptcy:
FHA requires that the minimum waiting time is typically no less than two years from the discharge date.
In addition, the borrower must have re-established good credit or chosen to not incur new credit obligations.
Chapter 13 Bankruptcy:
FHA states that a Chapter 13 does not disqualify a borrower from obtaining FHA financing as long as the borrower can show that at least one year of the pay-out period has elapsed under the plan and that all of the required payments (and mortgage payments when applicable) have been made on time. Also, the borrower must receive permission from the court to enter into the mortgage transaction.
Preforeclosure Sale or Short Sale:
FHA does not currently have a policy regarding the time required to reestablish credit and obtain a new FHA loan after a short sale. So, if you manage to short sell your home without falling behind on your payments, you may be able to purchase a home immediately following the short sale. However, the borrower must be able to qualify using standard FHA guidelines including the fact that they typically can not have any late payments on their mortgage for the previous 12 months. In a case of relocation and there was a short sale on the previous residence and there are not any lates on the credit report, FHA will allow a new loan without a waiting period. The key is relocation (although it has not been defined what the minimum distance might be.) How the previous lender reports the short sale/mortgage to the credit bureau may determine the approval.Although this is the official FHA policy, many lenders have heard that FHA currently will not insure a new loan application from a borrower with a short sale that is less than three years old. Many of the individual banks and lenders have implemented their own policies regarding the waiting period after a short sale. I have seen a typical range between two and three years.
Foreclosure:
FHA states that the minimum waiting period is three years for a borrower whose house has been foreclosed or who has given a deed-in-lieu of foreclosure.It has been asked, How does FHA determine the date of the foreclosure? Sheriff's Sale? Redemption? Paid claim date (if past foreclosure was FHA)?
- If the previous foreclosure was not a FHA-insured mortgage, the three year period will typically begin on the date of the sheriff / trustee sale.
****NOTE*****If the previous foreclosure was an FHA-insured mortgage, it will be reported on HUD's Credit Alert Interactive Voice Response System (CAIVRS). CAIVRS is a Federal government-wide repository of information on those individuals with delinquent or defaulted Federal debt and on those for whom a payment of an insurance claim has occurred. In these cases, because the default is on federal debt most investors will not allow another FHA, VA, or USDA loan.
It is anticipated that FHA will issue a written policy regarding short sales with more liberal guidelines in the near future.
Fannie Mae (FNMA) recently announced new waiting periods, as of July 1, 2010, before being eligible for another Fannie Mae loan. The waiting period is defined as "from the date of the pre-foreclosure to the date of application".
Fannie defines ALL Pre - foreclosure events as any one of the following:
o Deed-in-Lieu
o Preforeclosure Sale
o Short Sale
Full Foreclosure retains a 5 yr waiting period
New Waiting Periods Effective July 1, 2010
Preforeclosure Event
Current Waiting Period Requirements
New Waiting Period Requirements
Deed-in-Lieu of Foreclosure
4 years
Additional requirements apply after 4 years up to 7 years
· 2 years - 80% maximum LTV ratios
· 4 years - 90% maximum LTV ratios
· 7 years - Standard LTV ratios
Preforeclosure Sale
2 years
Short Sale
No specific policy currently exists
For extenuating circumstances, for all 3 event scenarios, it's a 2-year waiting time and 90% LTV. It is expected that Freddie Mac (FHLMC) will follow in FNMA's footsteps and mirror these same guidelines.
If you are considering short selling your home, now is the time to do a short sale! Do NOT be foreclosed on! Avoid foreclosure. The Bank Pays us to Short Sell your Home.
Want to find out more? www.shortsalemyphoenixhome.com
Jessica Sulliman & Randy Curnutt
602-677-7977
www.ShortSaleMyPhoenixHome.com
About the Author...
This article was provided by Jessica Sulliman, a Nationally recognized Realtor and Certified Short Sale & REO Specialist. Jessica can be reached via e-mail at jessica.sulliman@ashbyrealty.com by cell phone or text message at 602-677-7977. Jessica has helped thousands of people buy and sell their home. For Arizona real estate and homes see www.sunshinespecialists.com or www.jessicasshortsales.com. For more info regarding short selling your home, please visit www.shortsalemyphoenixhome.com.Specializing in the following Metro Phoenix areas in Arizona: Queen Creek, Gilbert, Chandler, Mesa, Scottsdale, Apache Junction, Gold Canyon, Tempe, Florence, San Tan Valley, Coolidge, Casa Grande, Eloy, Maricopa, Ahwatukee, Anthem at Merrill Ranch resort community in Florence AZ.
Check out my blog: http://jsulliman.activerain.com
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