Home Buying in Allentown>Question Details

JSLI, Home Buyer in 18069

VA Loan approval 2 years after short sale

Asked by JSLI, 18069 Wed Jul 11, 2012

Looking for a local LO who can underwrite to VA guidelines. I'm told we qualify based on 2 year waiting restrictions. Short sale was due to extenuating circumstances and we were released from liability. Credit back up around 680-690. First loan was an FHA. Looking to buy before summers end.

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I myself had an FHA short sale back in 2011 and now I'm trying to do a VA loan on a home we are building and we ran into this CAIVRS list. My lender at the time basically told me the VA wants the CAIVRS cleared, or I could wait another 14 months for it to fall off, or switch to a Conventional Loan and put 20% down to get a loan 2 years after a short sale. Well none of those were good options for me so I began looking online.

After doing a lot of research for this myself and I wanted to pass along what I discovered. First off, FHA/HUD will not remove a person from the CAIVRS list before the 3 year 1 day waiting period unless the person was put on their incorrectly or they qualify for one of three exceptions (bankruptcy over 2 years ago, divorce where mortgage was assumed by spouse before short sale, and death of a spouse I believe). In my situation I was trying to do a VA loan at the 2 year mark (which was what I had found was the standard wait time for VA after a short sale) and I ran into the CAIVRS road block. Our lender told us originally that the VA will not guarantee a loan if a customer is on the CAIVRS list and it has to be clear, which as I explained above is not going to happen.

The good news is I did a TON of digging and calling and here is what I found: By calling my local VA regional loan center (St. Paul, MN 1-800-827-0611 option 3) I found that the VA really doesn't follow the 2 year mark anymore. That was an older rule that they followed with the housing market collaspsed. But as they told me, most short sales were done not out of financial hardship but more because people can't get their homes appraised for what they owe. So they told me that as soon as 6 months after a short sale you can get approved if you have good credit.

Now the trick is, what about CAIVRS? Well I was told they follow two specifc exceptions to guaranteeing a loan even if you are on CAIVRS. The first is if you have an established payment plan in place. The second would be if you could prove you do not owe the federal goverment a debt. Below is the link verbiage the VA sent me:

Please open up this link below and go to page 4-36&4-37(34 out of 65 in Microsoft word) and you will see what I was able to locate. http://www.benefits.va.gov/warms/pam26_7.asp

Of course the VA doesn't have any of these written anywhere so you either have to call them and verify or have a lender that has dealt with this before.

Now in my case I took part in the Pre Foreclosure Sale to do my Short Sale and was able to successfully close on my home within a few months. This was key because the Pre Foreclosure Sale Program specifically says that a "mortgagor (myself) that successfully sells their home under this program is relieved of their mortgage obligation." Check out the HUD mortgagee letter 2008-43 (page 15, section P, first sentence) to verify what I submitted to my loan officer. Just do a google search and you'll find it.

So with that along with the Approval to participate in the Pre Foreclosure Program letter I received, I was able to prove to my lender that I no longer owed the federal government a debt which is what the VA says they need in case they ever audit the lender's files. That's big too because the lender submits a bunch of loan approvals and it is only if they audit them that this would come up and then the Lender would need documentation of why they approved this loan. Because Lenders are so worried about mortgages not being insured/guaranteed, they will overscutinize a loan.

To take this another step further, I even called HUD myself (which thankfully I found a good number) at the HUD National Servicing Center (1-877-622-8525, option 1) and was able to give them my name and FHA case # and they flat out told me that HUD nor my bank would come after me for any deficiencies. The people I spoke to basically say they mainly go after those who walked away from their property or had multiple foreclosures in the past (go to http://www.hud.gov and then do a search for judgements and you'll find stuff on this). I also emailed FhaSfclaims@hud.gov and asked them if I owe a debt and their response was " No, there should be no deficiency that HUD would require you to repay for a claim paid on a single family mortgage preforeclosure sale."

I hope this helps those of you out there that are in my type of situation and run into this problem. CAIVRS is going to become more and more popular since those of us with a short sale are now looking at buying again and about half of the lenders I called even knew it existed. But keep in mind, this isn't on your Credit Report and CAIVRS is only ran during underwriting so if you have a short sale I would advise your lender to run that CAIVRS report right away because it will save you some time and headaches! My lender knew about this and was able to manually approve our loan and so we are moving into our new house in September! Good luck everyone!
1 vote Thank Flag Link Tue May 14, 2013
Hi there,

My name is Jimmy Vercellino and I would be honored to serve you. I am a United States Marine Corps Veteran and now specialize in serving Active Duty Military and Veterans across the nation.

It's funny that you ask this question because I literally just wrote a blog on this the other day.

Feel free to check it out at

http://www.valoansforvets.com/va-loan-after-a-short-sale/

Thank you and may God bless you for your service to our great country!

Semper Fidelis,
Jimmy Vercellino
0 votes Thank Flag Link Wed Aug 6, 2014
There are cases where veterans can get another VA loan within a year after a short sale. Check if you qualify for a mortgage. Try http http://:www.whywaitbuytoday.com
0 votes Thank Flag Link Sat Aug 17, 2013
I had a client who wanted to buy a home in Arizona, but he had a foreclosure. After researching the web I found a loan program at http://www.cfsflex.com, they allow a mortgage after a foreclosure. There is no waiting period. Good to see lending options coming back.
0 votes Thank Flag Link Sat Apr 27, 2013
Hi JSLI, in this kind of situation it is important to work with a lender who specializes in VA loans, especially since you are looking to buy in the next few months. You need a loan officer who understands the ins and outs. You may be interested in this article that talks about obtaining a VA loan after a foreclosure/short sale. Good luck! http://www.directvaloans.com/VA_Home_Loan_Guide/A43/VA_Home_…
0 votes Thank Flag Link Mon Jul 16, 2012
Thanks! Based on that article and what I am continually told, we qualify for the loan. Now my hurdle is to find a lender locally that specializes in VA loans.
Flag Mon Jul 16, 2012
Hi, I was told by a reputable mortgage person that you have to wait three years after short sale
0 votes Thank Flag Link Wed Jul 11, 2012
WOW, that was fast! Thanks everyone! Just to give you an insight before making contact with your recommendations: we applied with a local bank back in May and have been SLOWLY moving through the process of an approval, HOWEVER... the original reply from the underwriter required additional information and supporting documentation. The big glitch right now is that they want our CAIVRS to come back with the code that says your clear, however, that won't happen for at least another year and we're concerned it will result in the bank denying us. We have provided TONS of paperwork and hate to have to start all over but don't want to waste time. One issue that I've found is a conflict is that when we were negotiating with the bank and working with our lawyer is that we were told we had to be 90 days delinquent on payments on the mortgage and have had the home listed for 90 days in order to qualify for the short sale. In the mean time, do you also have emails for your recommendations? I have a busy schedule and phone calls are often difficult during working hours. I'll do follow up calls when I catch a minute but wanted to get the ball rolling with emails if you have them. Thanks again for your help and quick responses!
0 votes Thank Flag Link Wed Jul 11, 2012
Patrick Rooney's email address is: prooney@premier-mtg.com
When you contact him, just tell him I gave you his info.
Good luck and please let me know if you have any more questions/need help.
Take care,
Sharon
0 votes Thank Flag Link Wed Jul 11, 2012
I'd suggest you call Fairway Independent Mortgage at 610-432-6600 to find out for sure the time frame that would work best. It is an amazing buying market. Feel free to contact me further.
0 votes Thank Flag Link Wed Jul 11, 2012
I have been working with a very good, reliable and trustworthy loan officer for the past few years. He is name is Patrick Rooney and he is with Premier Mortgage. His cell is: 610-973-4173. He is there when you need him and will work hard for you.
0 votes Thank Flag Link Wed Jul 11, 2012
After writing loans for 11 years it is hard to find a loan officer you can put all your trust in. I found one guy in the LV that I do just that with. His name is Gerry he is with Quaint Oak Mortgage and he is very honest and upfront. His cell is (610) 504-3666 and I'm sure he would be happy to look at anything you need him to.
0 votes Thank Flag Link Wed Jul 11, 2012
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