SUBJECT: FHA Waives 3-YR Wait Time For Short Sellers
This may help a few of your clients who have already "short sold" their home...or it can make a big difference to your future clients who are considering a "short sale" in the future.
FHA has financing for homeowners who are short selling their home and wants to repurchase another home after the short sale is approved and completed thru their current lender.
There are a number of home owners who will qualify for this program by meeting the "extenuating circumstances" criteria.
If marketed correctly.....this loan program will deposit commissions into your bank account; by persuading those homeowners to "list" with you because YOU have a lender that can provide financing for their next property.
In other words...there will be "life (home ownership) after foreclosure" following their short sale.
The CAVEATS are:
1) They must be current on their mortgage and all other credit obligations for the 12 months prior to the actual short sale completion date.
Editor Note: Contrary to popular belief .. a "short sale" in and by itself is a not a credit score killer! The damage to a borrower's credit score by the number of “lates” incurred during the "ramp up" to the short sale.
Also note...there is absolutely no discernible difference between a "short sale", a foreclosure or a loan mod in relationship to Fico scores.
FHA/Fannie/ Freddie see all 3 events listed below as equally negative to each other.
2) Home owners must document "hardship" defined as:
a) Job loss and subsequent job transfer/ relocation... (a new stream of income will be needed to qualify for the new loan).
b) Catastrophic medical bills (and/ or possible death) incurred by a member of the borrower's "nuclear family" (i.e. co signer of the current mortgage..child...spouse..or other dependent as listed on the borrower's tax returns).
3) They must be downsizing and relocating. Buying a bigger home across the street will not fly.
4)Their current lender(s) must be willing to approve the short sale of their current residence.
5) Their credit scores need to be above 620 and any outstanding collections (usually medical bills) need to be paid THRU ESCROW (ONLY) at COE.