New law passed by FHA

[Anonymous]

Has anyone heard the new law passed by FHA that if you are to Foreclose you can not buy a home for 4 plus years.  If you short sale it is now 2 years.  Can anyone confirm this?

We just did a short sale since my spouse had to take a job out of state  We were almost 100K upside down in our home.  We would have stayed in it to stick it out, but we had to go where the job went.

We just really want to buy a new house in our new state and don't feel we should be punished for 2 years.  We made our payments on time every month for 5 years, even up til the closing date.  I just think it stinks 

[Anonymous]

I'm working with my broker and he says that in order to get approved by FHA foreclosures need to be 2 years old.  I'm not sure about a short sale.

Best of luck!

[Anonymous]

I just saw it on the Fannie May website passed in August 2008.  If you had a foreclosure, you must wait 4 years, put down 10% and have a score of 680.  Short sales are 2 years.

Now I am clueless as to all the loans types and such, but we were told by our broker to just wait 6 months put our credit up a little, it is a little bruised by short sale, not much surprisingly.  There are probably other loans out there you can get, but higher stipulations.

Who knows.  We will have our credit pulled in 6 months and start over again.

Good luck to you.

[Anonymous]

I find it highly unlikely that in anything less than a year (and then only using the job change to claim extenuating circumstances) you would be able to start the purchasing process.  The 2 years sounds more like it and the higher scores/down payment seem about right to.  Honestly, I would not be surprised to see these get even stricter and the only thing that will prevent that is the massive amount of homes on the market and the need to get them sold.  Just look at it from the bank's standpoint.  You walked away on 100K in debt.  The banks should and will hold it against you..  Too many people now think that foreclosures, BK, and short sales should not be held against them do to the market conditions.  No offense, but the is a joke.  I am not saying you or others are bad people and I empathize with your situation, but the fact is that you defualted on a debt and now it will require some work on your part to regain your status in the credit market.  Job or no job, it was still a choice to move (even though it probably was the best choice overall)

[DallasLoanGuy]

no new law.

foreclosure or deed in lieu are the same.... 

 D. Previous Mortgage Foreclosure. A borrower whose previous principal

residence or other real property was foreclosed or has given a deed-in-lieu of

foreclosure within the previous three years is generally not eligible for a new FHA-

insured mortgage. However, if the foreclosure was the result of documented

extenuating circumstances that were beyond the control of the borrower and the

borrower has re-established good credit since the foreclosure, the lender may grant

an exception to the three-year requirement. Extenuating circumstances include

serious illness or death of a wage earner, but do not include the inability to sell the

house because of a job transfer or relocation to another area. 

[Anonymous]

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@Anonymous wrote:

Has anyone heard the new law passed by FHA

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@Anonymous wrote:

I just saw it on the Fannie May website passed in August 2008.

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I'm confused. Fannie May and FHA are different agencies.  I though Fannie May bought up conventional mortgages (and hence effectively sets the guidelines for lending on conventional mortgages), and FHA insures "FHA loans" (and hence effectively sets the guidelines for lending on "FHA loand").  Or does Fannie May buy both conventional and FHA-backed loans?

[DallasLoanGuy]

op is confused.

fannie just strengthened their guidelines for past foreclosures. didnt affect fha because they arent governed by fannie/freddie

[Anonymous]

If you read the original post it said we DID NOT stop paying our payments so we did not default.  So us defaulting is not the fact.  How dare you make judgements on me and others who had to short sell their home.  It was either short sell it and take the job out of state, or lose our jobs in the current state we lived in and than did a foreclosure.  The bank got a portion of their money back PLUS we have to pay them back 15% of the loan over the next 10 years.

At least we didn't foreclose.

am not saying you or others are bad people and I empathize with your situation, but the fact is that you defualted on a debt and now it will require some work on your part to regain your status in the credit market.

[Anonymous]

Sorry if my wording was a little harsh or incorrect but the situation is still the same.

A short sale is still a settled account.  The account was not paid in full.  Defualt may have been the wrong word to use.  My main point was that In your original post you claim you don't think you should be punished because you paid on time up until you did the short sale.  The fact that your scores have not tanked as much as most who have done a short sale is directly due to the fact that you did pay it on time until the short sale.  And that is great and admirable.  But, the underlying issue is that no matter the situation, a lender is going to want to see positive recent history, no lates for 12 months, and an explanation for the short sale (i.e job change, etc.) prior to purchasing a house. Why would a lender or an insurer be obligated to loan money on  a house under the current circumstances.  It will likely be a low down and therefore high risk loan (and if you put a bunch of money down, that will throw up flags as to why you just had to settle the previous mortgage), there is very recent negative credit information, there is a change in location.  These are all reasons that would give pause to any lender, even more so in this market.

Anyways, in the end, I was not judging you at all.  I specifiaclly stated that I empathized with the situation and that it was not a good person/bad person thing.  I actually applaud the fact that you kept up on your payments prior to the shortsale.  I just think that saying you should not be punished or held accountable for the fact that a short sale was necessary as far as future credit/lending is wishing, not reality.  The situation is horrible and millions of families are going through similiar situations right now.  That doesn't change the reality of the housing market or the credit markets right now though.