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Has anyone closed on a new loan less than 3 years after short sale?

New Member

Has anyone closed on a new loan less than 3 years after short sale?

Hi everyone,

 

Long time reader, first-time poster in the forums. Just wondering if anyone out there has successfully closed on a new mortgage less than 3 years after a short sale?

 

We completed a short sale on our previous home 2 years, 9 months ago. I just applied for a conventional mortgage with 5% down with USAA and received conditional approval on the loan pending us submitting all our documents, etc. I spoke with a USAA rep and he said that they've already ran our credit scores and have seen the short sale on those credit reports. We've been turned down by everyone else so I don't want to get excited that this could be actually happening. 

 

So I'm hoping someone out there has been through a similar experience and can share their story.

 

Thanks in advance!

Message 1 of 10
9 REPLIES
Regular Contributor

Re: Has anyone closed on a new loan less than 3 years after short sale?

We have not closed yet however we have gone through automatic desktop underwriting with a result of approve/eligible only 1 year post short sale. Our scores were 664 and 689 and what I have learned is that many people act like you have a disease when you mention short sale, at least that has been my experience. What I have also learned since discovering myfico, is every lender is different and for sure every LO is different. I found 2 lenders  that  do not have overlays when it come to short sales that approved us for VA however one is moving faster than the other. With the current lender, they were mainly concerned that the short sale was reporting correctly, "legally paid in full; settled for less than full balance". One was not but because I was proactive as a result of all the wonderful advice and wealth of information I found here, I was able to get that resolve as of last week as required by the lender. We locked our rate today at 4.25%, lender is sending over packet tomorrow for bottom line numbers, verifying employment, and appraisal. Our conditions were very EASY. Tentatively, our closing date is 7/28 but I have a feeling it will be sooner. The house is brand new at $325K. So, I will say to you have faith and hope and enjoy the conditional approval result. Moving on to the next step Smiley Happy 

 

What's next for you?

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Message 2 of 10
Super Contributor

Re: Has anyone closed on a new loan less than 3 years after short sale?


sayhi2tinee wrote:

Hi everyone,

 

Long time reader, first-time poster in the forums. Just wondering if anyone out there has successfully closed on a new mortgage less than 3 years after a short sale?

 

We completed a short sale on our previous home 2 years, 9 months ago. I just applied for a conventional mortgage with 5% down with USAA and received conditional approval on the loan pending us submitting all our documents, etc. I spoke with a USAA rep and he said that they've already ran our credit scores and have seen the short sale on those credit reports. We've been turned down by everyone else so I don't want to get excited that this could be actually happening. 

 

So I'm hoping someone out there has been through a similar experience and can share their story.

 

Thanks in advance!


Fannie Mae financing will permit just a 2-year waiting period after a short sale... but require 20% down (only 10% down if due to extenuating circumstances).  If USAA has their own portfolio program that doesn't go by Fannie Mae or Freddie Mac financing then what you are seeking could be possible.  If they are trying to get you approved for either Fannie or Freddie financing it'll come back as a denial though.  Ask them what program it is for.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial Multifamily) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

shane@thebesthomeloans.com
Message 3 of 10
New Member

Re: Has anyone closed on a new loan less than 3 years after short sale?


ShanetheMortgageMan wrote:

Fannie Mae financing will permit just a 2-year waiting period after a short sale... but require 20% down (only 10% down if due to extenuating circumstances).  If USAA has their own portfolio program that doesn't go by Fannie Mae or Freddie Mac financing then what you are seeking could be possible.  If they are trying to get you approved for either Fannie or Freddie financing it'll come back as a denial though.  Ask them what program it is for.


Thanks, Shane. I asked the loan processor if USAA has its own mortgage portfolio program, or if they follow Fannie Mae or Freddie Mac guidelines. She replied that the majority of their conventional loans are backed by Fannie Mae. They do hold a handful of loans in portfolio however they require approval and are rare. 

 

So it sounds like we would've gotten denied once our complete package with all our documents went to underwriting for a full review because Fannie Mae would've said no.

Message 4 of 10
Super Contributor

Re: Has anyone closed on a new loan less than 3 years after short sale?

Unfortunately I believe you are correct.

 

See https://www.fanniemae.com/content/guide/selling/b3/5.3/07.html#Deed-in-Lieu.20of.20Foreclosure.20and... for the full details.  But it says:

 

Deed-in-Lieu of Foreclosure and Preforeclosure Sale

These transaction types are completed as alternatives to foreclosure. A deed-in-lieu of foreclosure is a transaction in which the deed to the real property is transferred back to the servicer. A preforeclosure sale or short sale is the sale of a property in lieu of a foreclosure resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer.

The following waiting period requirements apply.

Waiting Period Additional Requirements
Two years80% maximum LTV ratios
Four years90% maximum LTV ratios
Seven yearsLTV ratios per the Eligibility Matrix

Exceptions for Extenuating Circumstances

A two-year waiting period is permitted if extenuating circumstances can be documented, with maximum LTV, CLTV, or HCLTV ratios of the lesser of 90% or the maximum LTV, CLTV, or HCLTV ratios for the transaction per the Eligibility Matrix.

 

Note: Deeds-in-lieu and preforeclosure sales may not be accurately or consistently reported in the same manner by all creditors or credit reporting agencies. See Identification of Significant Derogatory Credit Events in the Credit Report above for additional information.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial Multifamily) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

shane@thebesthomeloans.com
Message 5 of 10
New Member

Re: Has anyone closed on a new loan less than 3 years after short sale?

Thanks, Shane for the info! After reading the guidelines on Fannie Mae's site, even if we could qualify under "extenuating circumstances" it looks like we'd have to come up with a 10% down payment, not 5%. You just saved us a bunch of potential heartache!!

 

 

Message 6 of 10
Super Contributor

Re: Has anyone closed on a new loan less than 3 years after short sale?

You are welcome.  Unless the loan officer really knows their guidelines, a lot of them are more or less just throwing darts at a board.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial Multifamily) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

shane@thebesthomeloans.com
Message 7 of 10
Established Member

Re: Has anyone closed on a new loan less than 3 years after short sale?

I will be 2 years post short sale in October. I've been old that due to our circumstances (job loss, then moving 3,000 miles away for work), no other late payments, credit scores still in the 700's, and dual 6-figure incomes, that we will only need 10% down.  My lease is up in March and I am hoping to buy and close before then.

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Message 8 of 10
Super Contributor

Re: Has anyone closed on a new loan less than 3 years after short sale?


VanRickets wrote:

I will be 2 years post short sale in October. I've been old that due to our circumstances (job loss, then moving 3,000 miles away for work), no other late payments, credit scores still in the 700's, and dual 6-figure incomes, that we will only need 10% down.  My lease is up in March and I am hoping to buy and close before then.


Moving 3,000 miles for work isn't an extenuating circumstance, but job loss can be.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial Multifamily) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

shane@thebesthomeloans.com
Message 9 of 10
Established Member

Re: Has anyone closed on a new loan less than 3 years after short sale?

Can @dreamer2014 or the OP tell me if they were able to close?

 

I am trying to do the same, short-sale almost 4 years ago, 20% down and I have been denied by 1 lender. Other two said they can finance me, but I haven't heard back from them yet on the conditions.

Message 10 of 10