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Options For Buying A Home After A Short Sale

1. There is a 3 year waiting period after a short sale before you can qualify for an FHA loan on a new home.

2. Get a non-FHA loan. The majority of conventional (non FHA) loans available from mainstream lenders are insured by Fannie Mae & Freddie Mac. Both agencies impose a shorter, 2 year, post-short-sale waiting period, as long as the borrower is coming in with a 20% down payment.

3.Plead the case of extenuating circumstances. FHA guidelines do make an exception for the 3 year post-short-sale waiting period for former homeowners who can document that they were forced to do a short sale be extenuating circumstances. An example would be a job transfer (not a job loss) or a natural disaster that affected the property (fire, flood, etc). If you had an accident or illness that resulted in a temporary disability, it might be worth the effort to plead your case, it is up to the discretion of the lender.

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Beware Of Short Sale Fraud

A short sale can be a lifeline for a distressed homeowner heading for foreclosure. That’s because in a short sale the lender accepts a lower mortgage payoff when the homeowner owes more than the home is currently worth.

But fraudsters have found ways to make a profit off these deals. CoreLogic estimates that suspicious short-sale transactions may cost lenders as much as $375 million a year.

One of the most common forms of short-sale fraud happens when a seller or someone representing a seller doesn’t submit the best offer to the lender. A middleman purchases the short-sale property at the lower price, then turns around and resells the property to a legitimate buyer at a higher price — often on the same day, according to a recent Federal Bureau of Investigation report on mortgage fraud.

The middleman pockets the difference, sometimes sharing it with an accomplice.

“It does require a pretty sound knowledge of how a conventional loan is closed and how a short sale is negotiated and approved,” said Robert Hagberg, lead fraud investigator at Freddie Mac.

Sometimes fraudsters try to manipulate the price lower by encouraging the owner to make the house look worse than it is, referred to in the industry as “reverse staging.”

That means you “don’t weed the yard, don’t shovel the sidewalks, don’t do any continued maintenance of the property, don’t worry about keeping it clean. That reduces the value of the property when the appraiser or broker comes to evaluate it.

Be careful when choosing a real estate agent, there are scammers out there.


What's keeping You From Buying A Home?


Mortgage rates are at an all-time low. What's keeping you from buying?
Lender requirements are too strict. I can't qualify for a loan. 2389 (39.4%)
I have to sell my current home first. 2204 (36.3%)
You could bring the interest down to 0 percent -- I still couldn't afford the monthly payments. 1477 (24.3%)


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