I recently received an email from a person who was very distraught over the necessity of having to go through a short sale. The simple fact of needing the short sale was very upsetting to her, but she was also upset over the fact that she was told that she would not be able to own a home again for at least 5 years!!!
I was shocked when she said that to me.
I asked her who told her such a thing? She informed me that her bank had indicated that to her.
That left me thinking that many other consumers may have been told similar statements.
What a load of baloney!!!!
HUD clearly defined, at the end of December 2009, the guidelines in which would allow a person to obtain a mortgage after a short sale,Mortgagee Letter 09-52. A person can buy a home after a short sale if “they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and the proceeds from the short sale serve as payment in full.” Now if the short sale was done JUST to take advantage of the declining market and reduced property value with no genuine hardship and try to purchase a similar or superior property within a reasonable commuting distance it will not be allowed. Some lenders have not adopted this rule, but many have.
FHA’s guidelines are quite clear. The simple fact that you completed a short sale on your home does not preclude you from qualifying for another mortgage without a waiting period. Their stipulations are:
Summary – Guidance on Borrowers current at the time of Short Sale – Borrowers are considered eligible for a new FHA-insured mortgage if:
• they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
• the proceeds from the short sale serve as payment in full.
Summary – Guidance on Borrowers in default at the time of Short Sale – Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.
As you can see it is NOT the short sale itself that causes any waiting period, it is the lates on the mortgage payments that is causing the ineligibility for immediate financing.
