Home Buying in Elk River>Question Details

Jeni, Home Buyer in Elk River, MN

Any news if the time frame to get a mortgage after a short sale will be reduced from 3 years to 2 years?

Asked by Jeni, Elk River, MN Thu Oct 27, 2011

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As of right now I have no information that FHA is planning to reduce the waiting period after a short sale from 3 to 2yrs. What rumors I have heard have been sketchy at best. I do know that Fannie Mae will consider a borrower for financing after 2 years if they put 20 % down and the explanation for the short sale is acceptable to the lender.
0 votes Thank Flag Link Sat Oct 29, 2011
As mentioned below, depends on the type of loan. I have linked below the section of Fannie's Selling Guide that deals with this subject, it is the book lenders go by when selling a loan to FNMA. Hope this is helpful,
0 votes Thank Flag Link Fri Oct 28, 2011
Hey Richard,

I think you brought up a good point that is better left up to the mortgage professionals. There are a whole lot of if's and scenarios that fit into the short sale realm.

At the end of the day best advice is to team up with a mortgage lender ASAP to figure out the best route for someone in this situation.
0 votes Thank Flag Link Fri Oct 28, 2011
Chris,

Even though I do not do mortgages in MN I feel compelled to comment.

It is Bankruptcy that is 2 years and foreclosure that is 3 years. Technically there is no waiting period for a short sale. However a short sale is treated like a foreclosure if there is a late 12 months before the short sale, a default ever. Also if there is the appearance that the short sale was a strategic short sale, it is a default. There must have a darn good explanation. And they would need a Desktop approval.

Here is the problem, Most of them have a 30 day late, so = default = wait 3 years.
Of the rest, most resemble a strategic short sale, so = default = 3 years.
Or they do not have the income or assets to get the desk top approval, so = denial.

So if they have a good reason for t he short sale, they can get a desk top approval, and had no late payments or defaults before the short sale then it is possible. It is just that I have never seen it. I know you are an agent, but a lender saying they can do it, is much like those 2.25% rates they advertise all the time. If you can qualify you can get the rate; the problem is that no one qualifies so it seems wrong to set those expectations. I am always careful to try to not waste people's time, especially agents who can find t hemself bankrupt spending too much time on buyers who cannot buy. There is a chance that something like this could go through so I guess it does not hurt to try.
0 votes Thank Flag Link Fri Oct 28, 2011
Hey Jeni!

- Short Sale is still 2 years
- Foreclosure is still 3 years

You CAN technically go FHA right away if you do a short sale pre-foreclosure and thus are current on house payments. Something a lot of people may not know. Anyways, Elk River is where my brokerage is so if you have any questions feel free to contact me directly through my profile.

Thanks!

~Chris Block
0 votes Thank Flag Link Fri Oct 28, 2011
FHA it is still 3 years and FNMA it is still up to 7 years, sorry.
0 votes Thank Flag Link Thu Oct 27, 2011
Jeni it depends on what type of mortgage you are getting and how much you are putting down, you could get a mortgage right after if you have 35% down, some mortgages are 2 years and others are 3 years. As banks continue to tighten their lending standards, it is unlikely that some governement back loans will lower the criteria while loans are still at this level of default. You should see a loan offcier who can guide you to what you will need to do in order to get a mortgage in the future.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Oct 27, 2011
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