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Dispelling short sale myth's - # 1 - You have to wait 12-24 months after a short sale to purchase

By
Real Estate Agent with Keller Williams - The Mello Group

My clients are  picking up there keys to there brand new home as I type this and it's only been 3 months since there short sale was approved and closed. There short sale was approved on 10/25/2010 and closed escrow on 11/1/2010. New purchase loan approved on 2/14/11 and COE 2/28/11

After my clients realized in April that there loan was going to adjust from $1,900 to $3,600.00 they contacted their lender.   Their lender took there financials over the phone and determined they qualified for a loan modification. So the story goes...they send in documents, documents get lost, more documents are requested over a 1 year period.  So after 12 months of attempting a loan modification, I stepped into the picture. There exhausted and frustrated. They have spoken to Attorneys and companies claiming specialization in Loan Modifications all of them wanted a minimum of $3000 to retain there services. After 1 year, still no approval.

My clients called me out of exhaustion and frustration. I sat down with my clients, reviewed there financials along with the Guidelines for modification with there lender. They didn't qualify and no matter how many people they hired and no matter what the bank said to them, they were never going to get the modification. Unfortunately the bank is only playing with their hopes in an attempt to get them to continue paying. Which they were and that is one of the reasons why the bank would never do it. Besides that, they made to much money.

After talking to them and reviewing their situation, I came up with a plan. I believed they would qualify for a HAFA short sale under the imminent default guidelines. There payment was going to jump from $1900 to $3600 and they would qualify based on these guidelines. And based on the fact they have never been late and have perfect credit scores, they will be able to purchase a new home after close of escrow.  I just have to have one person at the bank that will agree...and a lender to fund the new loan.

Long story short after many negotiations, two appraisals, one denial, one escalation to investor and one phone call to the Director of the Short Sale Department, the lender agreed to the HAFA short sale and the clients never missed a payment.

All this time the sellers were working with a new mortgage broker, who said he could do there new purchase loan after the short sale was completed. Ultimately, he couldn't do it and after 5 denials from other lenders who said they could do it,  we found 1 lender who could do it. And what a job the did! We are on record and my clients are moving into there new home 3 month's after there short sale.If you want the name of the lender, send me an email and I will send it to you. I haven't discussed putting his name out there with him even though I'm sure he wouldn't mind it.

Now, not all will qualify to purchase immediately after a short sale and here are some of the guidelines the new lender is looking for to purchase after a short sale. This is not what the FHA guidelines state, but what the actual lenders are looking for. If you have these two things going for you and you qualify for the loan based on income and DTI of course, then you can purchase the day after your short sale closes.

  • A Really Justifiable Hardship - Not the payments were going to adjust, even though that's why the bank accepted the short sale. The new lender wanted a different reason...My clients had in-laws move into there three bedroom home with there 2 children. That's 6 people in a 3 bedroom.  They also lived in a neighborhood that had 50 calls to the police department on there street alone in the last year.
  • Never late on a payment - Not one late payment in 5 years on there mortgage loan. Never late on any other debt payments. Right when we were having the new lender look at there credit, the short sale did report on there credit and dropped it to 680, however it was within the guidelines. Whew!!

I have never written a blog, but s story is so amazing that it has propelled me into the blogosphere. My writing style I'm sure will find a voice and I think the story just found it's voice. All it took was The Power of One - 1 Willing Real Estate Agent, 1 Short Sale Manager and 1 Sharp Mortgage broker, and I have one happy client.....

 

Posted by

Anonymous
Scott Dusenberry

Cindy,

Please feel free to offer up my name anytime! Excellent job with your first blog attempt. I only would want to clarify that FHA is the only way to go right now, if your clients are looking to purchase soon after a short sale. Conventional financing is not available so soon after a short sale. Additionally, FHA will require that the reason for the short sale, was valid and siginificant. IE, crime infested neighborhood, like our deal. That is the most imprtortant aspect of the approval. Besides never being late on your mortgage, of course.

Scott

Mar 02, 2011 07:56 AM
#1
Cindy Mello
Keller Williams - The Mello Group - Tracy, CA

Scott, your absolutely right FHA is the way to go. Thank you so much for your outstanding job on this deal. Expect more referrals! YOU ARE A ROCKSTAR!

Mar 05, 2011 04:09 AM