Question on Short Sale, Credit Reports, and FHA

[Anonymous]

Hi---After a two year train wreck in trying to sell my upside down home in Ohio, I finally closed, but not before a short sale.  It was a nightmare through CitiResidential, but in the end I received a doc with "Paid Mortgage in Full" on it.  That was May of 2008...since then I have done everything to clean up credit...couple CC's opened and recently paid everything off..all in all three CC's with close to zero balances, two installment loans(one almost at 0 and the other a car loan through my CU)...my DTI is crazy low..besides minimal car payment, no debt....clean for the last 12 mo+, job steady 3 yrs, and in cleaning up my CR's, I've noticed that no where on them does it note "short sale"--it basically has the original mort. balance owed and in May 2008, "Balance 0".."Paid as Agreed"...although it does show under notes "Pre-foreclosure started"...After relo'ing to Cali 3 years ago and renting, I want to take advantage of the $6,500 TC before April 30th, when my scores are ready, I'd like to apply FHA for a condo.....how heavy will the short sale weigh almost two years old versus a 620+ median score, and everything else in order?

[Anonymous]

does it show a date for the pre-foreclosure starting.  I am not sure exactly how this is defined, but lenders may expect you to wait through the foreclosure waiting period.  It does not matter if you actual went into foreclosure.  If foreclosure was start or the loan shows 90 days late at any point, alot of lenders require you to wait 3-5 years from the time it reported that way before you get another mortgage.

[Anonymous]

Well, I certainly hope that's not the case...with so many people in that position all over the country..and even worse, many having gone into full foreclosure, I'm hoping there are some lenders out there that will look at circumstances too.  If FHA is stringent and I find that I can't get pre-app, what are the chances of doing a 90 or 95% LTV with 5 or 10% down(utilizing the $6,500 TC for some of it)...straight conventional?  Although I'm still holding out hope that FHA will consider it...anyone else have past experience?

[Anonymous]

Make sure you keep the short sale agreement with your previous bank, you will need it. I just applied last week for a VA loan (same requirements as your type of loan) thinking 2 years after a short sale was the gold rule and found out its now changed to 3 minimum. I even have docs from my mortgage company stating I was never late and another stating full and final payment. Still a no go. I've had 24+ months of perfect credit also and no debt except a car payment which is around $500.00 a month. I also make $75,000+ a year. My mid score is 672. My scores are a little low because of my divorce, long story. Anyways good luck. I also have no collections and only 1 3+ yearold charge off which is whats probably bringing my score down below 700's.

[Anonymous]

Well, I was afraid of that...amazing!  Oh well, I've been waiting to get my score up and probably won't even attempt to pre-qualify until March...but if this is the case, I may be throwing my money away on rent for another year.  I guess what I find even more amazing is the amount of potential buyers this is affecting..the folks who were lucky enough to at least be able to pull a short sale off versus a foreclosure(and unless you've been through the whole short sale nightmare, you really can't relate)...but after all that, you are not eligible to buy for three years?  At the end of the day, my house in Ohio was on the market two years ..I had put 40k into it and in a neighborhood that would have appraised at 135-145k when the market there was decent, I basically sold it for $55 more than what I bought it for 8 years before!  And then the only reason why it sold was the price got so low, the neighbor bought it for fear the "riff-raff" would move in!(His words, not mine!).  If anyone else out there has any experience with this and has a miracle story of still getting an FHA loan, let me know.

[Anonymous]

There are exceptions, but not in that situation usually.  The banks do not care about transfers or moves.  If there was a death in the family, serious injury leading to loss of income, etc then they will consider waiving the wait time.  But with that pre-foreclosure statement, it basicly counts against you like a foreclosure whether you sold or not.

[Anonymous]

Thank you very much Mickie08~!

I did speak with a lender and he said that it was unlikely that my injury would benefit the situation since my dh was the sole borrower on the loan. I guess we will just have to be paitent which is not one of my virtues but one I should get habit of considering the lack of it is probably what has caused all of our finacial problems all along.

Thanks again~