Are lenders making FHA insured loans to borrowers immediately after a short sale when the homeowner had been current on the loan?

Asked by Carolina, El Dorado Hills, CA Tue Mar 15, 2011

We are current on all our debts. Will meet the FHA's rule that says that you need to be current the 12 mo before the short sale to qualify for an FHA loan on your next home. That rule from FHA has been around since Dec 09 but are any lenders making loans to such borrowers?

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Wed Aug 31, 2011
We are Carolina and I have several short pay refinances and previous homeowners who sold their homes on a short sale in my pipeline. Please be aware that not all lenders are doing these. Please feel to contact me and I will be be more than happy to give you your options. In the meantime, you can read my article regarding this subject.…

Best of Luck!
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Donna Meyers, Agent, Folsom, CA
Tue Mar 15, 2011
I have a FHA lender that sent me this BRAND NEW guidleine just yesterday. Here is what she sent to me:

There is a new government program that allows people to do a short sale and move to another more affordable home, with no penalty, so long as their payments are current.
Right now one out of every three homes is upside down in our state, Arizona, and statistics show this is going to continue for up to 10 more years. Numerous other states like Nevada and Florida have similar issues.
The next decade of housing will be suppressed and how exciting that the government is doing something about it. Keep in mind, the program only applies to homeowners who are current and have no late payments. Also, make sure your sellers get pre-approved. It requires a minimum 620 credit score. The program is limited to sales prices of about $360,000 and require at 3.5% of the home price as a down payment. Contact lenders in your area for more information on this new program. Then be sure to educate and inform your clients of this program.

I can send anyone interested in this program to the local broker who is doing this niche program.

Best wishes to all those short sale sellers out there! Donna L Meyers Connect realty
1 vote
Patti Kane, Home Buyer, Boulder, CO
Sun May 12, 2013
I had a short sale last year and my Realtor recommend for a home loan. I am very happy to be able to purchase again.
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Jim Paulson, Agent, Boise, ID
Wed Aug 31, 2011
On March 15, I had replied saying I had never seen it happen, but I am pleased to say now I have! The problem is even though FHA has the guideline, most lenders are afraid to implement it for fear of potentially having to buy the loan back.

I know of a lender here in Boise that was able to close an FHA loan for a borrower that had just completed a short sale the previous week!
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Ted Golshana…, Agent, Folsom, CA
Wed Aug 31, 2011
Lender requirements change daily. The rule of thumb is about 2 years. However, there are many other things affecting that ability. Call for a no obligation appointment to learn more. (888) 408-9591.
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Jack Dalton, Agent, El Dorado Hills, CA
Wed Mar 16, 2011
Hi Carolina,

The rules are changing frequently. I suggest you contact a mortage broker such as Mary Westphal of Vitek Mortgage for the most current information. Mary can be reached at 530 417 2304.

Rgards, Jack Dalton
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David Zucker…, , Frederick, MD
Tue Mar 15, 2011
Carolina the three criteria are current on the mortgage prior to the short sale (as you mention), the mortgage holder indicates that the payoff has been made in full on the credit report, and that you have an extenuating circumstance such as a relocation. In other words you didn't use this tool just because your house value went down. As far as whether my company or any other lender will generate a new loan using FHA I would have to discuss this with you one on one.
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JILL BERNI L…, Agent, El Dorado County, CA
Tue Mar 15, 2011
I believe FHA's rule is a wait period of 3yrs after the short sale.
There are exceptions if the situation is due to extreme circumstances.
FHA also has a preferred fico/credit score of 640. As you can see,
each case is reviewed. Please talk to a loan officer who can run
your credit and discuss your circumstances to determine if you
have to wait the full 3 yrs. I like Kelly Redmond of Partners Mtg.
She as been taking care of my buyers for the last 20 yrs.
Her pn# is 916-505-5914.
Please contact me if I can be of further help.
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Morgan Larson, Agent, Folsom, CA
Tue Mar 15, 2011
Carolina, Great question! The best way to find out the answer to your question is by speaking with a mortgage lender who can run a check for you. It is mostly a matter of your credit score. The mortgage lender I work closely with, Shelly Mellomida, lives and works in El Dorado Hills, can run the check for you, and if you can't purchase now, she can help you get your credit score where it needs to be in order to purchase as soon as possible.

Her contact info is...
Office: 916.933.7340
Cell: 530.391.1021
eFax: 916.367.6740

Hope this helps :)
0 votes
Jim Paulson, Agent, Boise, ID
Tue Mar 15, 2011
I was of the impression this only applied for relocation clients. I have yet to see a lender be able to close one though. Usually, it drops your credit score so much even if the guideline says you can do it, the credit score won't let you. Go figure, a government catch 22.
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