How can I get a loan after a short sale?

[Viper786]

In December of 2010 I did a short sale on my house and paid my lender at that time (Sovereign Bank) 44k to get rid of my house. I am now looking to purchase a new house but am being told that I cannot get another mortgage loan due to having done a short sale and have to wait 2 years from the date of short sale. 

The short sale is on my reports as "Settled for less than full amount" or something along those lines.

Is it possible to get that changed to "Paid in full"? If yes, how can I go about doing that. Also, if it is possible to change it to paid in full, will that still count as short sale or will I be able to get a new loan?

Any help/advice will be appreciated, I am trying to get a new mortgage loan. Besides this short sale, I have a spotless credit history.

[Viper786]

Also I would like to add that I was never late on my mortgage payment or any other loans/credit cards.

[Lel]

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@Viper786 wrote:

In December of 2010 I did a short sale on my house and paid my lender at that time (Sovereign Bank) 44k to get rid of my house. I am now looking to purchase a new house but am being told that I cannot get another mortgage loan due to having done a short sale and have to wait 2 years from the date of short sale. 

The short sale is on my reports as "Settled for less than full amount" or something along those lines.

Is it possible to get that changed to "Paid in full"? If yes, how can I go about doing that. Also, if it is possible to change it to paid in full, will that still count as short sale or will I be able to get a new loan?

Any help/advice will be appreciated, I am trying to get a new mortgage loan. Besides this short sale, I have a spotless credit history.

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The mortgage is reporting accurately, so there's no justification to have it changed.  In any case, you're still obligated to disclose the short sale on your future mortgage application, even if it doesn't appear on your credit reports.

Since you were not late on your mortgage prior to your short sale, then according to Fannie Mae guidelines you are theoretically eligible to obtain a new mortgage now.  However, the banks may establish whatever criteria they wish when they make their lending decisions.  If the lender you are working with requires a 2 year wait even though you weren't late at the time of short sale, then you should try to find a lender that doesn't require this.

ETA: Wait....are you saying that you completed a short sale and then paid off the deficiency?

[Viper786]

I accidentally said Sovereign bank, I meant HSBC Bank.

I had to pay HSBC 44k in order to complete the short sale. 

I went to talk to a builder a few months ago and they said that since I did a short sale I cannot get a loan approved. 

So what you're saying If I have never had a late mortgage payment I should be able to get a loan even though I did a short sale less than a year ago?

[ShanetheMortgageMan]

Lel meant to say FHA guidelines, FHA permits you to purchase a home 1 day after a short sale as long as:

1.  You aren't taking advantage of declining market conditions by purchasing a similar or superior property within a reasonable commuting distance at a reduced price

2.  You were on time with all mortgage payments and installment payments within the month they were due for the 12 months prior to the short sale

3.  The proceeds (or lack thereof) of the sale settled the account

http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-1.4.C.2.l

So you can purchase with 3.5% down as long as you are looking for a home where your down payment can meet the FHA loan limit.

https://entp.hud.gov/idapp/html/hicostlook.cfm

Fannie Mae requires 2-years after a short sale in order to be eligible, however it's tricker than that as I am learning right now, the Manner of Payment code on the credit report for any late payments, or the short sale activity itself, must not notate a 8 or 9 or Fannie Mae's underwriting system will automatically trigger a foreclosure finding and get a "Refer with Caution" for 7 years after the mostt recent MOP of 8/9 is reported, meaning the loan needs to be manually underwritten if it could be approved at all, and that is very rare with conforming loan programs.  Fannie Mae does not require you to remain current on your mortgage during a short sale, you could actually months or even years late on the payments, and as long as there aren't any 8/9 MOP's reported, and you get an "Approve/Eligible" response from the underwriting system, you can purchase after 2 years with a 20% down payment.  So in the situation with a short sale and 8/9 MOP's being reported, I believe that technically would be incorrect, and the MOP's should be changed to 5's (which just indicate 120+ days late, not a foreclosure), and would allow the underwriting system to be capable of spitting out an "Approve/Eligible" response.

The builder you spoke to was just saying what their "in-house" lender can do, so if use a lender who can abide by the FHA guideline and you just may introduce the builder to their new preferred lender and get yourself some free upgrades of some sort.

[Lel]

oops, yes, I was referring to FHA guidelines.

[Anonymous]

I did a short sale on my house Nov 14th 2008.  I was never late.  Our credit says settled in full.  We paid each payment until closing.

I was told by about 20 lenders that we must wait 3 full years because a settled in full still looks like a foreclosure.  I also read on the FHA website it is 3 years unless you had extenuating circumstances.

Not sure what the answer actually is, however I am just telling you what happened to me.  I was preapproved and am now in underwriting.  We just can't close til Nov 15th 2011, which is fine because the house won't be built til then.

Good luck.