WOW!!! Great Info for all in this situation, Keep up the good work and good luck with your business, E
Better late than never is truly the case here! Great post with easy to understand explanation of what a borrower needs to do.
Thank you for the information. I will bookmark this and share it with my clients.
I will bookmark this information for future reference. It is about time that we are able to help people who are in most need. There is a lot to do and it is a good beginning.
Charles, it's that Economic Event that will eliminate many potential buyers from this rapid recovery. So many short sales were strategic, rather than due to direct economic events.
This is great news. Love hearing this. By the way, you wrote an excellent article. Have a great Sunday!
This is a great program for those who truely had an "economic event". I dont agree it is for those who just owed more than the house was worth so they bought a new home for much less and sold the old home via a short sale or simply gave it back.
Charles, slow progress is right! It probably took the three years to get it approved.
GREAT INFORMATION. This was so worthy of a feature, I am SO glad I read this. Excellent post.
Tis is one of those grain of salt FHA announcements. For instance, for years they have said that if you do a successful short sale and you can get your credit back up to snuff, then you can get an FHA backed mortgage in two years. The problem is and has been finding an investor to buy the loan. I think this new ruling will follow a similar path.
Great information. I can see if any of my short sale clients are interested in purchasing a home. Most were happy to get out of their situation and rent.
This is solid info, Charles. Thank you for sharing and i'm glad this was featured!
What's the chance of getting one these puppies thru? I love the new verbiage 'ECONOMIC EVENT'. Who makes up this stuff?
I also think that if the only thing late was their mortgage during the whole 'event' that's pretty darn good. But then, they weren't paying a large portion of their debt (mortgage $$) so they should have extra money laying around right?
Charles, Thank You for sharing great information with us, with all the extra work, I suspect FHA closings will even take longer than typical 30-45 days.
Interesting. When did they make this change? I have to believe its a very recent mtgee letter as I don't recall seeing it but am going to check it now.
Thanks
Nina Hollander – I learned from a previous post regarding buying immediately after a short sale using FHA financing (they have to stay current through closing to do that) that a checklist is a must on these. Absent the supplemental checklist, the client gets “documentation fatigue” and I spend way more time on the phone. Plus, if this stuff is in the file ahead of time, the underwriters love the file and treat it like a greased pig. Absent the documentation, they beat the file up and make the file a hard close.
Norman Padula – I’ve seen plenty of strategic defaults on foreclosures but I really haven’t on short sales. Perhaps my experience is strange but most of people I’ve dealt with on buying after a short sale were able to prove their hardship during the short sale process. Most had debt to income ratios in excess of 45% at the time of their short sale. The exceptions were typically reassigned soldiers or relocated employees. Maybe I’ve had strange experience though.
Michael Setunsky – SLOW IS RIGHT. I exercised restraint in my rant about this. This should have come out as part of mortgagee letter 09-52 in December of 09. I’m not embellishing here. . . I’ve taken hundreds of calls, emails and blog posts with scenarios that would have qualified for this over the last 3 years. I’m not saying that it’s too little too late buy man, . . . what a missed opportunity. Hopefully, in addition to getting some people back into homes under this Back to Work program, it will also shed light on the capacity for people to buy right away after a short sale using FHA and VA financing when current because there are still a ton of people struggling out there who are trapped upside down in their homes.
Joe Pryor – FHA, until now, has either allowed you to buy right away after a short sale or wait 3 years. VA is only slightly different. Fannie will go after 2 years with 20% down or 10% down when documenting extenuating circumstances. This is the first waiting period guideline change in a while. Investors have had appetite for all of these. I haven’t had problems selling my “buy after short sale” deals to investors at all. Now actually preparing a good loan package for them is a different story. Make no mistake, these are a pain to do and are NOT like doing a normal FHA, VA or conventional loan. They take more coaching, preparation and documentation. This one will be no exception. This just came out and I already have investors who’ve adopted it. Awesome dog photo by the way.
Bill Wagner – New Jersey!!! Thanks for spreading the word. The faster we get the good boomerang buyers back into housing, the faster the economy will improve. Let me know if you can’t find people who know how to do these. I’m in NJ too.
Lyn Sims – You’re so right. Your question, “I love the new verbiage 'ECONOMIC EVENT'. Who makes up this stuff?” gets right to the heart of the matter. This stuff is written by people who don’t understand the psychology of underwriters. The psychology of underwriters is a lot like the dogs in this commercial: http://www.youtube.com/watch?v=IO9d2PpP7tQ. So what’s the chance of these puppies going through? Good IF this documentation checklist is followed and expect them to pay close attention to income calculation on the 20% rule. If I were a Realtor and had a buyer under this program, I’d grill the loan officer to ensure that that threshold is definitely met and that all of the documentation is in the file prior to making an offer without exception.
Beth Atalay – Actually, that’s one of the beauties of rates going up. Since refinance volume is down, processing and underwriting capacity has gone through the roof. FHA’s are taking about 21 calendar days. This particular loan would probably take a little longer NOT IN UDNERWRITING but in the pre-approval process. Because of the extended preliminary analysis and extra documentation on these, it will take your loan officer longer to be ready with a pre-approval letter.
David Shamansky – Yeah it came out on my birthday (8-15). I couldn’t have got a better birthday present.
I've had one buyer who purchased 2 years after a short sale. I do wonder if 1 year is long enough for someone to get fully back on their feet after an "economic event."
This really does make a big difference with the buyers. Money is loosing up.
this is great news that will help many people and I think that it is fair..surprisingly so...I would say that 2-3 years after and adverse event would be fair
So, now that FHA has put these guidelines in place, which lenders are adopting them or are overlays preventing it? The government often has a way of making it sound like they're doing something but in the real world it doesn't work.
This is great news on the one hand, but it may be difficult to folks to meet these criteria.. Time will tell how successful the 1 year plan will work.
Charles, thanks for the excellent post! The details you have provided here will help all agents working with clients dealing with these issues.
Charles, one piece of useful information - at least for one of my ongoing transaction - does help my client as they are involved in chain that begins with them and ends with a short sale.
"HUD allowed FHA loans immediately after a short sale under certain circumstances."
Actually, my lender said me about this opportunity for short sale sellers: FHA loan,1 year after event. But we just tried to PQ one of my clients who had SS last year, but we could not get him any financing. As they say: one should 'qualify'. Dah!..
Sounds like there will be many hurdles to overcome to get a FHA loan one year after short sale. Thanks for the information.
Charles - I agree that it would have been a good thing to have provided to borrowers in distress a few years ago.
Thanks for sharing this information in such great detail. One of my clients called me about this last week and I called a loan officer to ask about it, but clearly they were not informed.
Great news and a great article. Thx!
Adam