Fannie Mae allows financing after short sale

Everyone has their opinion about the impact of a Short Sale on your credit and whether you can get a new mortgage after short selling a home.

To answer these questions we must refer to the current Guidelines for FHA, and Fannie Mae.

FHA has recently changed their rule so that if a borrower has short sold their home and all the payments were made on time, then they may be eligible for a new mortgage. Borrowers are not eligible for a new loan if they pursued a short sale to, take advantage of declining market and purchase at a reduced price a similar or superior property within a reasonable commuting distance. Motivation for new home purchase is subjective and requires careful consideration by the lender. Otherwise, if any payments were made late or you cannot demonstrate extenuating circumstances, then it is a 3 year period before new FHA financing can be considered.


Fannie Mae policy is pretty straight forward – It is a minimum of 2 years to re-establish credit after a short sale.

This is Fannie Mae’s Guideline:
Link to more information from Fannie Mae.

FICO & Short Sales

The FICO, has become a symbol of credit worthiness. Scores can range from 300-850 and is a statistical calculation which is based upon payment history (35%), credit utilization (30%), length of history (15%), credit type (10%), and recent credit checks (10%). Items stick around for seven years; bankruptcy for ten. Maxing out a card, a 30-day late payment, debt settlement, foreclosure (150 point ding) or bankruptcy (150-200 point hit) all negatively impact FICO. Those wondering whether or not a short sale hurts your credit score as much as a foreclosure, and apparently it depends on whether the borrower stays current on their payments and how the lender reports the sale (try for "debt repaid in full or settled or settled for less than balance").

Financing After A Short Sale

Real Estate RecoveryHome Loan Program

This loan program is designed for borrowers to SHORT SALE a home and immediately be eligible to purchase a new home!

Guidelines to Real Estate Recovery Loan Program:

• Primary residence purchase only
• Provide Short Sale Agreement
• Approved
• Motivation Letter
• Minimum middle credit score is 640
• No late payments during short sale process
• No late mortgage payment in last 12 months
• 3.5% Down Payment
• New home must be in different geographic area (new
  city and zip code)
  

Who benefits from the Recovery Loan Program?
Individuals moving closer to work
Homes with an increase in the number of dependents
Homes with a decrease in the number of dependents
Call with your motivation of new home purchase

Borrowers are not eligible for a new loan if they pursued a short sale to:
Take advantage of declining market conditions, and
Purchased at a reduced price a similar or superior property within a reasonable commuting distance

Call to find out how this loan can lead us all to real estate recovery.

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Thanks,
Troy Schuricht CFS Mortgage Corporation 7720 N 16th st Suite 325 Phoenix, AZ 85020 602-354-0537- office 602-241-9912 - fax

www.BankerAdvantage.com

Life After A Short Sale

There are many misconceptions about short sales. While this process has traditionally been a loss mitigation tool for the bank, it is quickly becoming a viable option for many borrowers that are "up side down" on their home.

One of the largest misconceptions is that you need to have 30 day late mortgage payments to qualify for a short sale. Most banks look for a reason as to why they would issue a short sale. Because every home owner has their own reason; loss of income, divorce, job transfer, over extended, added dependant, and so on, there are no set rules as to whom a short sale is approved for.

If home ownership is a goal of yours after a short sale, then maintaining timely payments (12 months before and during the short sale process) will be required in order to be consider for a new mortgage immediately following a short sale.

If you have been advised to miss payments to help qualify for a short sale, it might be a good idea to contact an attorney to at least discuss your situation. There are attorneys that that will give 1 hour consultations for free. They will tell you that you have no more leverage with late payments than you do with timely payments. If you are missing payments, now the bank actually has the leverage because you have given them the legal right to foreclose on you should the short sale negotiation fail or take longer than anticipated. It is a good idea to have attorneys negotiate the short sale.

Three things to think about as you move forward with the possibility of a short sale. 1) Do you have a goal to own a home again? 2) Are you being advised to miss payments? 3) Do you have a real estate attorney that can give you advise on legal ramifications of a short sale(Realtors provide real estate advise)?


For more information for financing a home after a short sale please contact:

Thanks,
Troy Schuricht
CFS Mortgage Corporation
7720 N 16th st Suite 325
Phoenix, AZ 85020
602-354-0537- office
602-241-9912 - fax
http://www.bankeradvantage.com/