The Department of Housing and Urban Development (HUD) released a letter to lenders regarding borrower eligibility for a new Federal Housing Administration (FHA) mortgage after pursuing a short sale.
Here is the actual language from the new FHA Guidelines:
FHA Guidance on Short Sales Borrowers are not eligible for a new FHA 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
Here is the exception:
Guidance on Borrowers current at the time of Short Sale Borrowers are considered eligible for a new FHA-insured mortgage if they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and the proceeds from the short sale serve as payment in full.
Reference: For detailed information, see “Short Sales” at 4155.1 4.C.2.l.
Translation: If the homeowner/ borrower didn’t miss any payments prior to doing the short sale AND their overall credit history will allow…they CAN buy immediately following a short sale using FHA financing. The focus seems to be on rewarding those who made their payments on time..and did a short sale VS. those who missed payments prior to a short sale.
More info:
Guidance on 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. Lenders may make exceptions to this rule under certain circumstances.
Reference: For detailed information, see “Short Sales”, at 4155.1 4.C.2.l.
Translation: Borrowers CAN use a new FHA-insured mortgage if they were current on their previous mortgage and other debts at the time of the short sale and if the proceeds from the short sale serve as payment in full.
Bottom line, missed payments = no FHA financing…for 3 YEARS. If a borrower executes a short sale while in default on their mortgage would not be eligible for a FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Some lenders can make exceptions if the default was due to circumstances beyond the borrower’s control such as the death of the primary wage earner.
Anyone eligible for the Home Affordable Foreclosure Alternatives program (HAFA) would not be eligible for a new FHA-insured mortgage for three years. WHY? Because to qualify for HAFA the homeowners has to MISS PAYMENTS! Under HAFA, the US Treasury Department provides incentives to servicers, banks and investors to pursue a short sale for seriously delinquent borrowers.
It is possible to buy a home immediately after the short sale with FHA if you weren’t late on the mortgage during the short sale process as long as you have a valid reason for the short sale.
If you were late on the mortgage during the short sale process you will have to wait 2 years for a conventional loan and 3 years for FHA.
Give me a call and we can discuss your situation.
Jared Leichliter
Mortgage Wholesale Network
888-842-4452
Hi my husband and I just completed our shortsale and never missed a payment and our trying to purchase a new home 100 miles away were my husbands job is located but all three bank we applied with turned us down, Do you know of any lenders/ brokers that specialize in loans after a shortsale?
The irony in the FHA rules is that as they are written, it actually rewards people who did short sale for gain, as opposed to those who were in a situation beyond their control.
Think about it. They say you can buy again without waiting if you didn’t miss any payments, but that you can’t do it if you did a short sale purely to take advantage of a declining market. So wouldn’t it make sense that the people who were struggling with their mortgage payments are precisely the people who are NOT trying to capitalize on the falling values?
This makes no sense. If you are current on your payments and not struggling, and you’re trying to buy a cheaper house right away, then you obviously are trying to take advantage of dumping a more expensive house so you can erase the debt on the old house.
The people who were truly struggling with the payments and had to short sale, should be given a one year, not three year, window to improve their credit, and rebuild, then buy. This FHA rule seems to favor people that is supposedly seeks to stop. Totally nonsensical.
what are the current rules as of today 1/24/2011 for making a new purchase after a short sale if you have never been late on your mortgage? please shed some light. i do not want to short sale my house if I will not be able to buy for 3-7 years.
Good question…actually, FHA standards are up to 24 months, after a successful short sale. 5 to 7 years if a foreclosure was involved.
Hi, I have a question. In Jul. 2010, I completed a short sale (Legally paid in full for less than the full balance). At that time, my credit score was 741. As of today, Sep-30- 2010, my credit score dropped to 689 & has a KD on it for the month of Sep. Question 1: What does KD signify & for how long will it be on my credit? Is there anything I can possibly do to have it removed? Question 2: Is 689 score & the KD considered low/bad/not so bad/fair/good, etc.? Please, explain. Also, how soon will I be qualified to apply for an FHA loan, keeping in mind that my credit report does not show any late payments on the mortgage (with the exception of the KD reflected for the month of Sep. 2010 after the completion of the short sale)? I’d highly appreciate your comments. Thank you.
In California, the FHA approved banks ARE NOT making loans to buyers who have a short sale, even if they are current on their payments and have good credit history. They are claiming that all short sales are take advantage of declining market conditions and won’t even accept evidence to the contrary. I have one of the top mortgage brokers in S. California looking and he has 3 clients right now, including me, who the banks are turning down. Is there some place that we can report this to?
We have 2 FHA mortgages on 2 different homes in 2 different states. We have owned the Colorado home for 5 years and it is still in an upside down mortgage. We relocated for work to Florida 1.5 years ago and then after a year that job ended so we relocated back to Colorado. My husband has found work but he’s making 50% of what he was making before. Our Florida mortgage isn’t upside down as it was a short sale purchase. The home is currently on the market to be sold. Our Colorado home is also on the market to be sold and we hope that atleast one will sell before they go into foreclosure. I’ve tried paying one one month and the other the next month but I just can’t keep this up. Will we qualify for a HAFA short sale? I’ve tried to do loan modification per HAMP and was denied because the bank tells us we can’t afford both homes. I’m very aware of this. I don’t want to own anything right now as we may have to relocate again for work. Any advice ?
Thank-you for your question. Who are your lenders?
Bank of America for both loans.
My husband and I own a home in maricopa, az that we owe $200,000 on. It is a 30-year interest only 80/20 ARM with a minimum of 8% on the larger loan and a fixed rate of 11% on the smaller loan. The house is now only worth about $88,000 and falling. We obviously have no hope of ever recovering from this. Our problem is that we CAN afford our ridiculously high monthly payments. Our family is growing and we feel like we have no options for getting out of this house and into one that can better suit the needs of our growing family. Any ideas?
We are just beginning the short sale process on our home in Florida. We have financial hardship but are still able to afford a smaller mortgage. My current credit scores are above 830 and we are current. Is there anything I can do during the short sale negotiation to improve my chances of getting approved for a mortgage immediately?
We have many pets (as I am a vet 🙂 ) and a young child and I feel that renting a home in the school district we want will be difficult.
Hi,
My husband and I have been approved by Benefical(HFBC) for a short sale…we are getting 120,00 for a house that we owe 139,000 for. We are in the process of getting an FHA loan..Our real estate agent said not to say anything about the short sale to the bank we are using (BB&T) we didn’t like that idea….but when they read the contract for selling our house for less…they will know that it was a short sale…we live in Georgia and current wanting to purchase a house that is valued less than the house that the short sale is on….do you think we have a chance with the new loan since we have a short sale…we haven’t heard yet from the bank ….the bank officer was sending it to the underwriters to see if they would still approve the loan….what do you think….we have never been 30 days late and we both have a score of 620 or above…our other bill are current also…thanks….ts
Update on our short sale. I’m not on the mortgage, but my name is on the deed/title with my wife. I have been turned down by at least five lenders. One lender said they can approve me in one year from the closing of our house, which has not happened yet. I was hoping to move into a more affordable house but it’s not going to happen, so we are now going to rent for a year or so( and I have not rented for over twenty years). My credit score remains over 700 and should not be affected. All those houses out there and my hands are tied, but the most important thing is to get our house sold and my family free and clear of it.
I would love to be put on the list to be notified if and when the rules change regarding buying after a short sale. I also had to sell a house in Oregon when we moved to Phoenix to get work. I also went through Wells Fargo who would not do the short sale unless we were delinquent. I want to buy another house to take advantage of the great deals out here, and I HATE renting! But, no one will help us either. We have good jobs and a decent credit score.
I worked for the Census this year so I know how many vacant homes there are out there… A whole lot!! Maybe once this next wave of foreclosures happens with no available buyers,, they will re-think the rules!!
My wife and I moved to Texas from MN, and still own a home in MN that we are upside down on. I am hoping to purchase a home here in Texas and then short sell my house in MN. Can the bank come back on me for my new house in Texas, and put any liens or judgments against it? Bottom line, if they don’t accept a short sale than I’ll just hand them the keys and tell them they can have it (deed in lieu of foreclosure) so not worried about whether they approve the short sale or not, but more worried about whether they can come after my new home?
Thank you for your question.
Great questions:
1. MN law is a non-deficiency state meaning if you meet certain criteria you will be released from the debt…again you must meet certain criteria and I would suggest that a licensed attorney from MN discuss this with you.
2. Will the lender pursue a lien or judgement…they may be able to agian it depend on certain criteria and laws for MN. In most acases yes.
3. There should be no reason shy the lender will not accept the short sale. It amy take time, but as you have relocated to another state, the likely hood is that you will succesfuly sell your home. If you need an educated Short Sale agent in MN please let us know… kdarney06@gmail.com
4. Can you buy a new home in TX? That will take you asking a lender in TX…FHA has many restrictions however, it can be done.
Best Kris
I am going through a short sale currently and waiting to see if GMAC will accept an offer that was submitted to purchase our home. I don’t want to rent. We have a daughter and want to buy another home and get her settled before school starts again. We are not late on payments. Any ideas of what lenders will finance us. We have a credit score in the hight 700’s. We live in Monroe, Michigan. Please help.
Yes..there is a program available…speak with Roger Chandler…760-550-7687.
Tell him Kris Darney sent you!
I have started my first blog called piggybankblog.com for all those who have been abused by Bank of America during the loan modification process. Feel free to join us all there and share your thoughts.
John Wright
Piggybankblog.com
John…Grassroots efforts are what changed America…
Best,
Kris & Kim
I have been preapproved to buy a house. We are in the middle of a short sale ( in my wifes name). I’m just wndering if I should wait for the bank approval of the short sale before I buy. The house mortgage is all in my wifes name. Could I jeopardize the short sale some how? If I can buy soon ,I might be able to move from this house right into that house and save alot of headache.
Mark,
From what you have described…I would move forward sooner than later and save yourself from having to rent.
Best,
Kris & Kim
Paul,
FHA rules are pretty strict when it comes to qualifying to purchase a new home right after a short sale, so check into that very carefully before getting excited about purchasing a new home real soon. If you fall within those guidelines, great! Also, you may need to call or email a lot of lenders asking them if they even participate because even though FHA allows for it, not every lender will do it. It’s still very new to them. If there is anyone in Colorado needing a lender that will do this, Kathy Nau with Colorado Professionals Mtg can and will. Her cell number is 303-668-2100. Let her know Debbie Harris sent you 🙂 She just approved one of my clients!
created a blog called piggybankblog.com where it gives you the CEO email and tells you what to say and phone numbers of the BofA CEO’s in charge. I created this site for others that are being abused and one of the people out here told me the CEO office called them back and said that CEO’s have all seen my page.
Just go to piggybankblog.com and select the “Write an email to the BofA CEO.” There is also plenty of people there who are in the same situation. We are all uniting as one voice and we would love to have more of you with us.
Divided we may have fell, but UNITED WE MUST STAND!
Piggybankblog.com
Kris & Kim,
Long story short: was told must be delinquent first, so I became late, short sold in Dec’ 2008. Since then, credit has totally recuperated, but looks like I’m going to get rejected on a house I have a contract on and love dearly because of the new 3 year FHA guidelines
Any lenders that you know of that will do an FHA loan for me in MA?
I just finished a short sale with Wachovia. I owned the house sinse 2006, and never missed a payment. They did a short phone interview, asked me a few questions and less than 30 days later my house was sold. I did have a “Pick-A-Pay” type loan, not sure if that made a difference. I am looking for a new home and was wondering if i will get a good interest rate or if it will be different because of the short sale. Prior to the short sale my credit score was between 769 and 812.
Can I buy a house? I’ve been turned down by some lenders but others say I’m already approved. My wifes name is on the mortgage, but my name ( I believe) only appears on the Title/Deed. Pull my credit and theres no mortgage. We are in the middle of trying to short sale, and are 3 monthes behind. We have an offer on the house and waiting for bank approval. My realitor says that I would have to wait one year( my wife three years) and is worried that I might be committing morgage fraud. He says the FHA in the end will not give me the loan cause I’m still attached to the mortgage through marrige. He thinks I might go forward and end up losing down payment and appraisal money. We are giving up for 3 reasons. We have large credit depts ( from our interest only, high interest rate loan), our house is WAY upside down, and we want better schools for our 3 boys. We are going to sink if we can,t move to a more affordable mortgage.
I make enough money to buy a smaller house. Do I give up and rent for a year, are do I try for a new mortgage. What are the RULES for people like me? If I had 20% i could buy a house; or if i kept up payments. Sooooo, the system allows wealthy people to short sale and buy at a deal; but as for me????????? ( just saying)
Hi There – we are in the process of short selling out home. I am moving 2 hours north and hoping to be able to secure a new loan to buy there right away. The latest FHA guidelines say we can (we have no missed payments) and no misssed / late “installment debts”. Does anyone know if property taxes would be considered “installment debts” or if they’d show up on our credit for not paying? We haven’t paid as our home will be sold soon as a short sale…but my fear would be this shpwing up as a “late / missed payment” and disqualifiy us from an FHA loan.
I’m going through a divorce and since we bought our house 5 years when the market was high, we have to short sell our house. When I talked to our USBank Mortgage lender, he thought that I would be able to qualify for a new mortgage after our house sells, but since my individual debt to asset ratio is too high, I would have to wait for the current house to sell before I can buy something new. He recommended renting for 1-2 months in between.
Any thoughts on why he would recommend renting for that short of a period? When we sold our previous house (though was not a short sale) we were able to move to our new home right away. I was assuming that I would be able to do the same as long as we lined up the timing correctly.
Has anyone else had to rent for a short team in between sale/purchase?
It just sounds like a logistics issue trying to be able to find a place for that short of a period and also put all my furniture in storage.
Thanks!
You do not have to be late to qualify for HAFA. All you have to do is foresee a hardship coming and you will be approved. For my client, she recently got divorce so the household income decreased, that is a hardship. My client is hoping to purchase another property using FHA and their new guild lines. Does anyone know of a lender that participates yet?
Jennifer,
Roger Chandler has a program that may help you in Georgia.
Here is an email link kfsrchandler@gmail.com
Roger has programs for all 50 states I believe
Best,
Kris
Kris and Kim,
Do you know of any lenders in GA? We are almost to the 2 year mark on our short sale and we are being told we should be able to qualify for an FHA loan once we makd the 2 year mark. We have found a really great house and I would love to make an offer. Can you help us find a lender? Our credit is GREAT, minus the short sale, and our credit scores are almost 700 again. We have more than enough income for the home we like and we have steady jobs. Is there hope for us now?
I just wanted to make a correction on the website for the story I gave. It is actually at Unitedlawgroup.com under the John Wright vs. Bank Of America story.
Thank!
I did get a short sale without missing a payment. Not sure why I was approved as the bank said I needed to be 90 days past due and I didn’t miss a payment in 11 years, right through to close.
My issue was a condo that was not viable. I had to refi to pay for termite related expenses, had the hosue listed below estimated loan value for 3+ years. Not sure under the communities financial situation that a buyer can finance there. My buyer paid cash.
Want to get a new loan, but was told that I can’t buy a superior home (which would be anything not in violation of building codes). I could afford my home. My mid score is 689 even with the bank charge off. But mortgage broker says its too much of an uphill battle. Are there brokers who specialize in this?
H Melissa, there are lenders that specialize in your situation. I will pass along your info to a couple we work with, in the mean time things are changing in the lending industry that will make it easier to purchase for those who have sold property using the short sale. So keep watching our blog for updates as they happen.
Are you sick of getting the run around by Bank of Defrauding America concerning your modification!?
WHERE IS MY LOAN MODIFICATION BANK OF AMERICA?
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.
http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don’t care what goes on around
In their eyes there’s something lacking
What they need’s a damn good whacking.
Everywhere there’s lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
John Wright vs. Bank of America Lawsuit at:
http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1
When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
Divided we might have fell America, but united we must stand!
Please send your email directly to Bank of America and include the following:
1. Your name
2. Your complaint concerning your experience with Bank of America.
3. Please end your email “I support John Wright vs. BofA Lawsuit!”
4. Please send a copy of your email to johns-wright@hotmail.com
5. Please send your email to both BofA link below and the CEO email
BofA Linked Email:
https://www3.bankofamerica.com/contact/?lob=general&contact_returnto=&state=VA
CEO Brian Moynihan:
brian.t.moynihan@bankofamerica.com
We are in the exact same situation Adrian commented about. My husbands job transferred him 350 miles away from where we have our home. I have been living in the home and keeping my current jobs so that we could afford to continue making our mortgage payments and bills as well as the living expenses for my husband at his new job. We attempted to sell our home without a loss and finally came to the conclusion we had no choice but to short sale. When we received an offer we submitted it to Wells Fargo as a short sale. They “DENIED” the short sale for only one reason we were “CURRENT ON OUR PAYMENTS.” We had to be at least 30 days past due to meet the “CHECK LIST” of the so-called investors. Officially my husband and I have been living nine months away from each other and are now waiting to be 30 days past due on our payments to attempt to submit another short sale and hopefully get approved this time. WHAT A NIGHTMARE! I had been talking with another lending agencies and they said they would loan to us as long as we were current on our payments! I told the lending agent I didn’t know how that was even possible with what the requirement is to short sale your home which is the only way to sell a home at this point in time. Our home is worth now only worth 1/2 of what is was 2 years ago. My question is…. Who is going to buy all of these short sales and foreclosures when the banks are destroying everyones credit and making it impossible to get another loan?! This includes the dependable homeowners who have been making there payments and HAD excellent credit but were forced to give up everything they had worked so hard to achieve due to a hardship they had no control over. This is an absolute mess and so so wrong! When is someone going to see this and actually come up with a solution that makes a difference.
I want to know, if a person has a fha loan which is guaranteed to pay the lender. what happens if your property is sold or not sold during a short sale. Does the lender pay the bank. do you have to pay back the Government . what happens.??
What if the short sale was on a piece of land? Can you buy using FHA financing for a new primary residence?
If you have a Fannie Mae loan can you do a short sale without missing a payment? My lender has told me that I have to miss a payment according to Fannie Mae guidelines in order to do a short sale, but I wanted to see if it is true or if there is somehow I can do it without missing a payment. Thank you for your time and attention.
Kris and Kim,
Thanks for the response. Please, please post any updates as soon as you have any info as to the gov’t easing up for people in situations like us.
Unfortunately, everyone I have spoken with is saying more changes are coming to FHA this summer 2010, and they will be even stricker, with higher FICO scores, more down payment and tighter restrictions due to FHA losing money and trying to stay away from claiming federal “insolvency”. 🙁
I hope YOUR info is correct! 🙂
Thanks again,
Kristie
This new terminology has really made it difficult, next to impossible, for us to get an FHA mortgage. We had to short sale our home in Northern Cali in 2008 to relocate 500 miles for my husband’s job and simply could not afford to pay for 2 houses (the home for sale and rent on new house) while we waited for ours to sell. All the while the home for sale’s value was dropping weekly!!! We did not qualify for modification because we make too much money. We had never been late on a mortgage in 15 years, and were told by GMAC that if we wanted them to accept the offers coming in that were lower than we owed, than we had to be in DEFAULT first! My husband and I literally CRIED over making those last few payments late until the short sale closed esrow. GMAC told us we had to stay in DEFAULT the entire time until close for them to finalize the process. It has been over one year now, we make $200,000 a year, have a bundle of money saved, our credit has fully recovered as we did not default on anything else, and yet we are being denied an FHA loan!
There is seriously something wrong, and the govt is at fault for the housing market not recouping in CA due to not allowing us to buy those homes that are for sale or about to foreclose, and help the economy begin the healing process.
DAMN THEM!! 🙁
~Upset in Cali
Kristie,
Believe me…we understand your frustration.
We see your scenario every day. The government is looking to ease these conditions for an FHA. Just how soon…Lord only knows.
We will blog about this as we learn more.
Keep the faith.
Kris & Kim
I have to agree with Adrian. My husband and I relocated to GA from FL and could not sale our home for almost 2 years. Every offer we received was less than what we owed and Wells Fargo turned them all down, simply because we were not behind on our payments. They REQUIRED that you be 90 days late to even be considered for a short sale. So the time came that we had to let the house payments go. At the 90 day mark we submitted our short sale packet and 3 more offers came in (each one less and less) before Wells Fargo finally agreed to a short sale. PMI paid Wells Fargo the loss but we were asked to sign a promissory note to the PMI company before they would consent to the sale. Reluctantly, we signed. And we were told we would be able to buy a home in 12 months. Everything else on our credit was paid perfectly but Wells Fargo reported we were 6 months behind and “amount settled less than owed.” So now we are unable to buy a home, have been paying perfectly on the promissory not for almost 2 years and still have a year to go before we can buy again. No where on our credit report will you find the promissory note. No where on there will you see how hard we worked with Wells Fargo trying to come up with a solution. You also wont see on there what great people we are, how hard we work or how much this has hurt our family over the last 3 years. Yet, the banks keep expecting me to bail them out. We make more money now than we ever did, we pay more taxes than we ever have, we still have perfect credit other than the house… and no one will touch us! No one will help us buy a new home. And the sad thing is that everyday we ask ourselves why we even bother. Why not just sit at home and file bankruptcy? Really, what do we have to loose? Not a house…
Jennifer,
So sorry to hear about your situation. Can you tell me how much the balance owed on the home after the short sale and the promissary note they made you pay? I am just curious b/c we are in the same boat and I was wondering if it is worth it.
Jennifer
We went through the same thing with Wells Fargo, my SO was transfered with the military from Fl to GA and we couldn’t sell our home for what we owed so we started the short sale process upfront to putting the house on the market and we were already in the shortsale process and had a buyer within the firsat 3 days of the house being on the market who was willing to go through the whole process knowing it could take months, we had our short sale done in 7 months we started in Jan 2010-July2010 but in March of 2010 our transfer orders and the fact that we couldn’t rent for what was owed and our income sheet showed that we were $189 in the whole every month did not qualify us alone for the short sale approval and the Wells Fargo rep told us to stop making payments because we had to be 90 days in the whole in order to be approved for the short sale and that at closing the deliquent payments would be rolled into the sale settlement and the only thing that would be on our credit would be the short sale settlement and in 24 months we could buy a new home in our new state, well 18 months after our closing date we were informed it was now 36 months and the deliquent payments are still showing on our credit report and since it was a verbal conservation regarding missing our payments to qualify there is nothing we can do till next July and hope that our exe-circumstance was that the military sent us somewhere else would allow us to buy a new home.
We did not have to pay anything according to our settlement agreement and our house was only $30,000 in the whole from what we owed and what the house sold for. I have heard nothing but horror stories regarding Wells Fargo short sale process and remodification process.
Do you have the closing paper work stating that you have to pay on the note or anyother paper work from WF. If you do you can dispute it with the credit agencies that it isn’t reporting to your credit to show that you are making ontime payments and if you don’t have anything in writing and wells fardo isn’t reporting it you may not have to owe them anything because their saying is if it isn’t in writing it doesn’t exist. I would continue to look into it more. Try this number to see if they can give you any advice/help 800-CALLFHA its a short sale dept.
NEWS FLASH!! Lenders wont even approve a short sale unless you are LATE and can prove extreme difficulty in making the payments. So this new FHA guideline makes no sense since the only way to do a short sale is for the lender to approve it (Approve = be delinquent and prove you can’t pay on time or at all). I went through a short sale about 18 months ago after a divorce (Dual income to single income), and the lender almost didnt approve the short sale unless I could A. Prove that I couldn’t make the payments and B. I WAS ALREADY DELINQUENT! FHA really needs to realize that people such as myself didnt want to “dump” our homes but faced unfortunate circumstances and couldnt keep them based on the rates, and housing economy fall-out. All they are doing is contributing to the housing crisis by not allowing good people the ability to buy a home. Good idea – lets keep the stock of empty bank owned homes full!
Hi Adrian,
I’m sorry to hear that you had such a horrible experience with your Short Sale. As a recent homeowner…I say recent, as we also had to surrender our home due to financial hardship a few years ago. My husband and I have been specializing in listing Short Sales since our personal experience. We have worked with many homeowners that have never been late on a payment, in fact making their house payments up till escrow closed and the new owner took over the deed. In our experiences we have found that to qualify for a Loan Modification some lenders require the homeowner to be late, but as far as a lender refusing to approve a Short Sale based on the fact the homeowner has never been late has yet to been an issue. There have been Short Sales where the sellers of the property have been gainfully employed with savings in the bank. These sellers have been asked by the lender to contribute some monies to the release of the lien in order to obtain the Short Sale approval. We have heard that FHA lenders are looking at our housing crisis realizing that many people who have been forced to sell their homes have done so due to “unfortunate circumstances” and are seriously looking at creative ways to put people back in homes that want to purchase again. We are hoping they find a solution to this lending dilemma soon.
Actually they do approve a short sale but their under ‘hardship’ circumstances. Such as a job transfer. We’ve made our payments on time, never been behind and we’re about to close on our short sale due to the job transfer. We are now also working on preapproval for a FHA loan to buy in our new location.. It does happen and it does work
I believe the government is trying to combat the current problem they have with owners not paying on their current mortgages during the short sale stage. This rule is merely a ploy to try to increase the short sale seller into continuing to make their monthly payments. In my experience it is very rare, that you will find a short sale lender who will be willing to negotiate a successful short sale when the current owner is not delinquent on payments. America, don’t be so easily fooled once again!!
Krystal, Try calling this Lender…I am not affiliated with him, but I send many of my homeowners to him to assist in buying a home after we sell their homes in a short sale…Please tell him that Kris Darney, Harris Real Estate University sent you. Best,
Kris
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I called my mortgage guy and it seems that the key here is finding a lender who is willing to do this… he works with 20 lenders and none of them had ever heard of this or wanted to work with it. My husband and I have never missed a mortgage payment but are way upside down in our home value… just like many others. We want to move to a more affordable neighborhood but don’t know what lenders to approach about his program. Any hints?
How can they prove it if you are TAKING or NOT taking advantage of the declining market? If you haven’t missed a payment, why would the bank do a shortsale in the first place? Sounds like “what came first, the chicken or the egg?”
Ok 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 but I need to move to another city and would like to buy. I am considering a short sale, but does that mean I have to keep paying my current mortgage until the short sale closes? or until I list my house with an agent for short sale? please help, I am not sure what they mean by this. What is the latest payment I need to make to qualify for this program?