Email Elizabethbuying after a short sale
Waiting Periods Are Over for Buying After a Short Sale
You might be able to immediately buy a home right after closing a short sale
Having personally helped hundreds of sellers in distress close Sacramento short sales — to the tune of more than $65 million since 2006 — and put the entire horrid nightmare behind them, I often hear first-hand a seller swear she will never buy another home ever again. I caution with a grin, “Oh, I wouldn’t be so certain about that if I were you.” Those are often famous last words. If that were true and we all had long memories, women would never get pregnant a second time.
Believe it or not, there is joy and pain in a short sale. Over time, the pain and frustration from the short sale dissipates. Not only that, but the minute a short sale closes escrow, there is a huge sense of relief that suddenly appears out of nowhere. It’s almost as though the clouds stopped raining and tulips instantly bloomed in technicolor. You can hear angels sing. At least that’s what my sellers tell me.
Today, many short sale sellers are returning to buy a home after closing short sales. How soon can you buy after a short sale? The good news is if you have 25% to put down, you can buy immediately. Further, if you have completed a HAFA short sale without a Notice of Default nor late payments from the summer of 2013 forward — and if the lender reported your short payoff correctly as PAID IN FULL — you should be able to buy immediately under any financing program, including FHA with minimum down.
But FHA also has implemented its own Back to Work program for sellers who have “Paid in Full for Less Than Agreed” reported on their credit reports and who experienced an economic event, which allows a repurchase within one year. That’s pretty incredible as compared to the lengthy waiting times from the past. It used to be 7 years, then 5, then 3 years, (2 under Fannie Mae).
See, with time, lenders finally come around. I suspect they had to eventually because short sale sellers are not like foreclosure recipients. Short sale sellers are responsible people who struggled to do the right thing. They have a conscience, generally, and do unto others as they would have them do unto them. That’s a special breed. And these people deserve a second chance. I’m thrilled to see home loans available for them, without a big scarlet S hanging around their necks.
If you would like more information about buying again after a short sale, call Dan Tharp at Guild Mortgage, 916.257.1470 or email him at dtharp@comstockmortgage.com. Then, call this Sacramento real estate agent, and we’ll get you started on looking at homes to buy: Elizabeth Weintraub, 916.233.6759.
How to Get a Short Sale Credit Report as Paid in Full
Up until now, it has been very tricky and almost impossible for a seller to immediately buy a home in her own name after closing a Sacramento short sale unless the short sale credit report shows paid in full. There were a few other ways to do it such as having a high FICO and big down payment, and working with a smaller bank that funds portfolio loans, but if a short sale seller has a high FICO and a big ol’ wad of cash, the short sale bank probably won’t grant the short sale. It has been like a Catch-22.
There is one way around it. Very few real estate agents seem to know about it because their bedime-reading material is not changes to government short sale programs. It’s how to get a short sale credit report as paid in full. I’ve read the recent HAFA Supplemental and know that this change exists, but I haven’t really tried it until now. This is the coolest thing ever. To qualify, the seller cannot have a Notice of Default filed. It is preferable to be current on the mortgage payments, but if a seller is behind a payment or two, it’s not the end of the world. Not every short sale bank investor will allow a seller to be current but many have loosened guidelines to allow for it.
Which makes sense when you think about it, even though banking rules don’t always make sense to us mere mortals. It makes sense that the investors would prefer to get some money than no money, but that would mean somebody was actually looking out for the investors and not just pocketing big ol’ wads of cash through the PSA agreement. When a seller comes to the bank to ask for a short sale and plans to continue making payments, you’d think a bank would not have to say: Sorry, we don’t want your stinkin’ money. Stop making your payments, go into arrears, and then we’ll short sale it. Because that’s ludicrous. But like I said, banking rules don’t always make sense until somebody yells out: Hey, what’s that man doing behind the curtain?
The new HAFA short sale guidelines allow for a different type of reporting of the satisfaction of mortgage for less than the full balance to the credit bureaus. If there is no Notice of Default filed, the short sale credit bureau reporting is PAID IN FULL. Not paid in full for less than agreed, no, no, no, none of that garbage. Paid in FULL. Do you know what Paid in Full means to a person’s credit report? It means the loan was paid off. Period. There is no derogatory credit. If there is no derogatory credit, there is no hit to the credit score.
Paid in full for a short sale credit report is huge. This is humongous. This is incredible. About time, too. If you’re thinking about doing a short sale in the Sacramento area, call your #1 Sacramento short sale agent, Elizabeth Weintraub, at 916 233 6759. I am a HAFA Certified Specialist.
