Special offer

Buying 3 Months after Selling Short? Yes, It Can Be Done....

By
Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606

It just happened.  I spent about 1.5 months getting this guy's ducks in a row.  Sounds almost too good to be true.  But it is true.  You can't do it on a conventional loan.  You can, however, do with an FHA mortgage with:

TWO CRITICAL CAVEATS!!!!!

  1. The bank CANNOT be reporting the current loan as deficient;

  2. The borrower can't have any 30 day lates reporting either.

THIS DOES NOT APPLY TO SHORT SALES REPORTED TO HUD....

THOSE SHORT SALES ARE A DIFFERENT BREED ALTOGETHER!

We've done a myriad of them at our company this year.  There are reasons why some folks who sell a home short, should be allowed to buy immediately, but great discretion needs to be exercised.

My buyer was denied by two other mortgage companies over the last two months.  The other mortgage banks didn't look at the 4155 (or the FHA guidelines).  Realtors, this is critical.  A buyer still needs to qualify, but if they sell their home in a short sale and meet both of the aforementioned criteria, then....you have another happy buyer! 

Loan officers need to have the support.  They need to know the guidelines.  Buyers do have options.

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Comments(18)

Barbara Hensley
RE/MAX Properties - Rockwall, TX
Homes for Sale in Rockwall County, Texas

Larry - good information to know and thank you for posting this busy week.  Enjoy your Thanksgiving holiday! 

Nov 22, 2011 07:07 AM
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

HI LARRY!  So what are reasons that short sellers should be allowed to buy immediately?  Just curious.

Nov 22, 2011 07:16 AM
John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Hi Larry - Good grief that is  quick turn around!  Good job on your part and thanks for sharing the information!

Nov 22, 2011 07:23 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Gabrielle.  I just had a family who makes decent money, but they just found out that they are pregnant with twins and their father in law, came down with parkinsons and just moved into their home and they have no room.  Their house has lost $40,000 in value.  They desperately need more space, but have negotiated with their current lender to sell short and the bank will not report the defeciency.  Blah, blah, blah....

Nov 22, 2011 07:32 AM
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

Wow! Sounds like a one in a million opportunity for those buyers. Good for them for knowing how to get around the guidelines and use them to their advantage!

Nov 22, 2011 07:48 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Hm, I may need to call you on this for some of my clients.  Thanks for the heads up.

Nov 22, 2011 07:50 AM
Carlotta Remong
Berkshire Hathaway HS N.E. Prime Properties - Newport, RI

Larry, I was under the impression it would take 3 years for a seller who was involved in a short sale to be able to purchase another home. Thanks for sharing...this information is good too know.

Nov 22, 2011 07:51 AM
Peggy Yee
NoVa House and Home - Vienna, VA
Search Vienna Homes For Sale - Northern Virginia

Thanks for sharing, Larry!  It's great when a loan officer understands all the details in the rules to create solutions instead of just saying no.  I wish you worked in Virginia!

Nov 22, 2011 08:13 AM
Linda K. Mayer
License # 01767321 - La Verne, CA
Realtor, SRES, SoCAL, A REALTOR YOU CAN TRUST

Larry, This is such good information!  If you are getting them closed, then good for you!  I wonder, instead of trying through all these other people, what states are you/your company licensed in?

Nov 22, 2011 09:20 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Karen...it's great for the right homeowner.

Paula...you're welcome!

Carlotta....look a bit deeper next time you have that situation to see if it fits!

Peggy...how fun would that be?

Linda....we do have loan officers licensed in California if you have an interest!

 

Nov 22, 2011 09:26 AM
Ed Gillespie
WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 - Folsom, CA

Good news, Larry!  I can do them with hard money but that is a short-term solution until the borrower qualifies for FHA financing.  

I have yet to encounter anyone who fits the exception criteria because of how the deficiency is reported.

Nov 22, 2011 10:27 AM
Not a real person
San Diego, CA

My wise old grandmother always said, Where there's a will, there's a way. You just supplied the will to make a way! Congratulations!

Nov 22, 2011 03:15 PM
Digital Digital
Alachua, FL
full service

Hi Larry,
This blog should be great news for both Realtors and potential buyers.
You’re clearly a mortgage expert.
Happy Thanksgiving!

Nov 23, 2011 01:32 PM
Lanre-"THE REAL ESTATE FARMER" Folayan
Samson Properties - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Larry I agree with Wandanna Melliphant. You definitely know your stuff. I wouldn't be surprised if some lenders don't know about this. Or they do know but they don't want to tell you. RE-BLOG AND FEATURED. Hope you have a great Thanksgiving. Have a great weekend.

Nov 25, 2011 02:39 PM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

Larry, bookmarked your post - because I've come across a client who may need to go for short sale now but wants to buy in 3-6 months!

Nov 25, 2011 03:04 PM
Michael Collins
*ROCK REALTY|Broker|Realtor|Real Estate|WI Short Sale Agent* - Janesville, WI
CDPE, SFR , Wisconsin Short Sale Specialist Realto

Fantastic news to hear Larry. So it all comes down to late payments and how/if the bank reports the short sale, huh? I will keep that in mind, thanks!

Dec 01, 2011 01:15 AM
Liz Flint
Century 21 Hardee-Team Realty - Houston, TX
Houston\Tomball Realtor (832)816-8066

Thanks for the post Larry, good information that a lot of Short sellers would find helpful.

Dec 05, 2011 07:22 AM
Mike Dobbins
Realty ONE Group - Cave Creek, AZ
Scottsdale, Cave Creek, Carefree

The banks have been making loans to folks that had to relocate and have just done a short sale.

Dec 15, 2011 01:44 AM