Does job loss count as an extenuating circumstance for a short sale?

Asked by Julie, Roseville, CA Fri Jul 27, 2012

It has been two years since my short sale and I would like to qualify for a conventional loan for 10% down.

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26
Bill Eckler, Agent, Venice, FL
Sun May 11, 2014
Yes, Julie, one of the things necessary for seller's seeking to qualify for "short sale" status is to demonstrate a hardship. The loss or change of conditions such a salary decrease should qualify as a "hardship" condition.
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aftervince19…, , Greenville, NC
Sun May 11, 2014
Don't let a foreclosure stop you from buying a new home. See Comstock if you have a buyer in need. They have a flexible credit loan. This program assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.

http://www.thinkcomstock.com/buy-after-foreclosure
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Joycelewis412, Home Buyer, Sacramento, CA
Sat Aug 10, 2013
After short sale, foreclosure, or filing bankruptcy, CFS Mortgage will help you determine if you can qualify for a mortgage. Take the first step and visit http://www.whywaitbuytoday.com.
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Ryan Hellwege, , Dallas, TX
Wed Jan 30, 2013
Check with your Lender. It is up to the descretion of the underwriter. The best letter of explanation helps.
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, ,
Thu Jan 24, 2013
John - I would replace 'inept' with 'non-qualified'......

And did you read my previous response to Julie regarding this topic? Please scoll down to see it, and you also might want to review Gregory Denny's response as he provided quite a bit of detail from Fannie's selling guide.

And in addition to these guides we have lender overlays to factor in, the chief factor why your response was inappropriate. Even if you make it a habit to study HUD and Fannie/Freddie guides, there's simply no way, if you're not CURRENTLY working in a lending capacity, you'd be familiar with extenuating circumstance requirements..

Though I've had a DRE license in the past, but I've never helped clients buy/sell real estate, should I respond to agent-related questions? I did spend many hours studying for this exam...

John - I know you mean well in responding to these questions, but hopefully to some degree, you see where I'm coming from....again, feel free to contact me directly if you'd like to review this topic in more detail!

Best regards, Jeff M
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John Arendsen, Agent, Leucadia, CA
Thu Jan 24, 2013
OK Jeff, so what about the RE professionals who aren't "Loan Specialists" but who have taken hours of loan modification training? Are they inept to answer these type of questions?
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, ,
Thu Jan 24, 2013
To the agents who correctly stated, 'it depends, check with a loan officer', then kudos to you, that's the best answer you could have provided!

Successfully validating extenuating circumstances is very rare, and behind every borrower is a host of circumstances that need to fully reviewed to confirm full loan approval.

Unless you're an agent who's CURRENTLY also working in the capacity of a loan officer, you shouldn't be confirming nor denying a lending guideline of this nature, it's anything but straight forward.

Feel free to contact me in case you'd like to continue this conversation in more detail!

Best regards, Jeff Marr
0 votes
Robert Adams, Agent, Henderson, NV
Thu Jan 24, 2013
Absolutely yes!



Best Regards,
Robert Adams
Broker/Salesman
The Adams Team at
Rothwell Gornt Companies
702-349-9175 cel
RobertAdams@LVrealestateHELP.com
http://www.LVrealestateHELP.com
0 votes
Wes Burris, , Auburn, CA
Thu Jan 24, 2013
Yes, loss of in come is an extenuating circumstance just as a divorce, a death of a spouse or a change of location mandated by your employer is. How it will affect your required waiting period to get a new loan depends on the type of loan you are trying to get. If you have sufficient extenuating circumstances you may be able to get a VA loan in as little of 12 to 18 months.

Wes Burris
Agent/Owner Sierra Brokers Real Estate
0 votes
Allyn Terpst…, Agent, Roseville, CA
Mon Jan 21, 2013
Absolutely, job loss is a very strong factor is gettin a short sale approval. I have been successful in helping clients purchase a new home after the two year anniversary of a short sale. There are some very good loan products available that you can now take advantage of. I am happy to help you locate a home and make some very good lender recommendations.
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Robert Ternes, Agent, Granite Bay, CA
Thu Dec 20, 2012
Yes, Any loss of income can be an acceptable reason to pursue a short sale
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Wes Burris, , Auburn, CA
Tue Aug 7, 2012
Conventional Loans usually have a longer waiting period then say an FHA loan. If you are going to put down 10% on a conventional you will still have PMI to add onto your payment. Why not go with an FHA with a lower down payment and a shorter waiting period. Depending on your particular circumstances you could be eligible in as little as two years. Once again I have to urge you to contact a lender in your area and give them all of your information so that they can advise you.
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Bud Zeller, Agent, Folsom, CA
Mon Aug 6, 2012
Depends on various factors, contact a couple of local lenders for their opinions.
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Wes Burris, , Auburn, CA
Sun Aug 5, 2012
Yes, job loss is an extenuating circumstance. It does not mean that you can run right out and purchase another house once your house short sales. What it does mean is that your waiting period may be shortened so that you do not have to wait a full three years before you qualify again. With Extenuating circumstances you can get one or two years reduced from your waiting period. It is always best to contact a knowledgable lender. I have a few that I would be happy to recommend.

Wes Burris
Lic# 01392131
Co-Ower Sierra Brokers Real Estate
0 votes
, ,
Sun Jul 29, 2012
Julie - I don't think you'd be posing this question unless you've been told 'no'....

I just checked OUR guides (if I were doing your loan in house), and we've just changed the ruling to NOT allow this, here's the complete verbiage pasted below:

Borrowers in default at the time of short sale:
 A borrower in default on their mortgage at the time of short sale is not eligible for an FHA-insured mortgage for three years. Exceptions may be made for isolated cases only, including death of primary wage earner, long-term uninsured illness or forced relocation.
 Loss of job is not an eligible circumstance beyond the borrower’s control and has been removed from the guidelines.
 Forced relocation is an acceptable circumstance as long as supporting documentation from the employer is obtained.

This DOES NOT mean I can't find another lending source that will allow it, but there's a very good chance you'll need the 20% down to move forward on an approval...

And I agree with Denny's comments regarding the agents responding to this question. Though I know they're only trying to be helpful, they really should simply redirect you to one of their preferred lending sources when they don't have the opportunity to check with an underwriter, or at least review selling guides
0 votes
Anita Anders…, Agent, Roseville, CA
Sat Jul 28, 2012
Yes, job loss is definitely an extenuating circumstance. Please contact an experienced Lender, regarding obtaining a loan. If you need some suggestions, please contact me at 916-726-8306. During my 26 years in real estate, I have worked with many lenders and can make several recommendations of lenders that will do a good job for you

Anita Anderson, RE/MAX GOLD
2998 Douglas Blv #125
Roseville, CA 95661
website: LiveinSacramento.com
0 votes
Sally, , Placer County, CA
Sat Jul 28, 2012
Job loss is one of many extenuating circumstances for a short sale. To proceed with your desire to purchase a new home you should contact an experienced lender or lending institution to become prequalified. They will be able to answer specific questions on different type of loans that may work for you.

Sally Vallieres
Leslie Arnott Realty
0 votes
Kathy Dyer, Agent, Roseville, CA
Sat Jul 28, 2012
To answer your question, yes a job loss is a good reason for extenuating circumstances.
We had a client who we short sold her house over 2 years ago and she now qualifies to purchase using a conventional loan. She is in the process of closing now.
If you need any leads for a good lender feel free to give us a call.

Kathy Dyer
Keller Williams Realty
548 Gibson Drive #200
Roseville Ca 95678
916-759-2147
Lic# 01723710
0 votes
Morgan Larson, Agent, Folsom, CA
Sat Jul 28, 2012
The best way to find out if you (and your specific circumstances) qualify for a loan is to contact a broker and apply. Different brokers and banks have different guidelines which they must follow. Most follow Fannie Mae guidelines, but some are stricter.

Need some names of excellent brokers? Give me a call and we'll find one to help you.

Morgan Larson
916-241-8788
morgan@morganlarson.com
0 votes
John Arendsen, Agent, Leucadia, CA
Sat Jul 28, 2012
Job loss is fundamentally one of the biggest reasons for a short sale.
0 votes
Justin & Gen…, Agent, Roseville, CA
Sat Jul 28, 2012
It's quick, easy and free for us to have you prequalified over the phone. Please let me know if I can be of further assistance.

Justin Sherrets
Keller Williams Realty - Rosevile
Lic # 01272617
(916) 872-4300
justin.sherrets@kw.com
0 votes
Mike Sullivan, Agent, Gainesville, FL
Sat Jul 28, 2012
A borrower will be eligible for a Fannie Mae loan within 2 years of a short sale. Certainly job loss is considered an extenuating circumstance in the SALE of a short sale. Your question was can you qualify for a 'conventional loan'....if a Fannie Mae backed mortgage, then I would think yes....but to be sure, best to check with a qualified Mortgage Broker.

Best of luck to you
Web Reference:  http://alachuarealty.com
0 votes
Bill Eckler, Agent, Venice, FL
Sat Jul 28, 2012
The waiting period after a short sale required by lenders seems to vary greatly but usually depends on the extent of damage caused to your credit during the short sale process and how well you have maintained your credit since your transaction.

To answer your question, yes, job loss is one of the main conditions accepted by lenders for short sale status.

Good luck,

Bill
0 votes
Gregorio Den…, , San Diego, CA
Sat Jul 28, 2012
Julie,

I really don't know why agents answer these questions becayse none of the information you have received so far is accurate. The people telling you 3 years have obviously never read the Fannie Mae selling guide or they would know, as you obviously already do, that 10% down financing is available after 2 years with extenuating circumstances. (20% down without)

As for what constitutes extenuating circumstances, the selling guide addresses that too.

From The selling guide:

B3-5.3-08, Extenuating Circumstances for Derogatory Credit

"Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that
result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in
financial obligations.
If a borrower claims that derogatory information is the result of extenuating circumstances, the
lender must substantiate the borrower’s claim. Examples of documentation that can be used to
support extenuating circumstances include documents that confirm the event (such as a copy
of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.)
and documents that illustrate factors that contributed to the borrower’s inability to resolve the
problems that resulted from the event (such as a copy of insurance papers or claim settlements,
property listing agreements, lease agreements, tax returns (covering the periods prior to, during,
and after a loss of employment), etc.).

The lender must obtain a letter from the borrower explaining the relevance of the documentation.
The letter must support the claims of extenuating circumstances, confirm the nature of the
event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no
reasonable options other than to default on their financial obligations."
-----------------

Assuming you have restored your credit and not incurred any other derogatory events, Fannie May DU could potentially give the approve/eligible which would be required. If you get that finding from the automated underwriting and you have sufficient documentation of the reasons for your short sale then it's certainly possible.

If you would like assistance, I would be happy to help you with your approval.
Web Reference:  http://WeFixRates.Com
0 votes
Jesse Coffey, Agent, Roseville, CA
Fri Jul 27, 2012
Most lenders require a 3 year waiting period. The only exception I know of is for VA buyers. VA buyers can purchase after 2 years, but the loan defaulted on must not be a VA loan. Your best option is to consult a lender for assistance with your specific situation.
0 votes
Zac Bacon, Agent, Granite Bay, CA
Fri Jul 27, 2012
Julie,
I wish there was a 100% accurate answer for you, but the answer will vary from lender to lender. As a general rule, I believe that most conventional lenders will require 3 years since the short sale was closed. You MAY be able to find one that will allow a new loan after 2 years. I would recommend calling Karen Dunn at Summit Funding. She can definitely answer your questions, and if the timing works, help you with your new purchase. Best of luck to you!
0 votes
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