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As rents rise and low mortgage rates and the economy gradually improves, those who lost their home in recent years will be able to re-enter the housing market. Prepare yourself first and when you are ready - here's the revised waiting period depending on your circumstances:

Conventional underwriting guidelines under FNMA.

  • Bankruptcy - Chapter 7 or 11. The waiting period is 4 years after the discharge or dismissal date.  With extenuating circumstances - the waiting period is 2 years.  
  • Bankruptcy - Chapter 13. The waiting period is 2 years from the discharge date or 4 years from the dismissal date. With extenuating circumstances - the waiting period is 2 years.
  • Short sale - The waiting period is 4 years after the short sale. With extenuating circumstances - the waiting period is 2 years.
  • Foreclosure - The waiting period is 7 years after Sheriff's sale date. With extenuating circumstances - the waiting period is 3 years.

Government underwriting guidelines under FHA:

  • Bankruptcy - Chapter 7. The waiting period is 2 years after the discharge or dismissal date. 
  • Bankruptcy - Chapter 13. The waiting period is 1 year from the discharge date.
  • Short sale - The waiting period is 3 years after the short sale and 1 year if can qualify for FHA back to work program.
  • Foreclosure - The waiting period is 3 years after Sheriff's sale date.

Government underwriting guidelines under VA:

  • Bankruptcy - Chapter 7. The waiting period is 2 years after the discharge or dismissal date. 
  • Bankruptcy - Chapter 13. The waiting period is 1 year from the discharge date.
  • Short sale - The waiting period is 2 years after the short sale date.
  • Foreclosure - The waiting period is 3 years after Sheriff's sale date.

According to Transunion 1.5 million "Credit Weakened" Americans were forced out of the housing market by the housing crash will flood the market in the next two years. They are more motivated because they have done it before. As long as their FICO score is 620, had no unpaid judgments or pending liens and had passed the waiting period above. Contact me for your Free Consultation. 



Posted by Sam Kader on June 11th, 2015 8:45 PM

Starting in November - short sellers who find their transactions were miscoded on the credit reports and are able to put down 20% will be able to obtain Fannie Mae's approval through its revised automated underwriting system 2 years after the short sale date.

Freddie Mac will also provide its approval after 2 years of short sale date IF borrowers can demonstrate extenuating circumstances such as income reductions due to loss of jobs, serious illness or death of a wage earner that are beyond their control that ruined their credit. Applicants must show 12 months of solid credit behavior and participate in a HUD approved housing-counseling programs.

FHA follows the same as Freddie guidelines and If you can qualify under FHA's back to work initiative - you can obtain FHA financing with 3.5% down in as little as 1 year instead of current 3 years. FHA further stipulated that there must be at least 20% decreased in income for at least 6 months that contributed to their delinquency. Borrowers must be able to demonstrate that they are now back to work paying their bills on time for the last 12 months after the short sale and earning enough to qualify for a new FHA-insured mortgage. Borrowers need not be current 12 months prior to the short sale. Borrowers must attend 1 hour HUD approved housing-counseling programs. This program will be manually underwritten and borrowers need to meet all requirements per the Mortgagee Letter 13-26.

Short sale, Deed-in-lieu or foreclosure- What you should know.


Posted by Sam Kader on September 18th, 2013 10:13 AM

Having a second chance is possible after a short sale. Here are the general guidelines:

If planning to use FHA financing; then:

  1. Home short sold cannot be a FHA loan
  2. 3 years waiting period from time of sell. This period has been waived under FHA back to work program.
  3. Sold home must not require deficiency payment for the difference
  4. 580 minimum credit score
  5. 3.5% down payment
  6. Short sale caused by extenuating circumstances and not just a person trying to take advantage of the market (by selling short and buying same type home at half the price). Please refer to item #2 above.

The last requirement of extenuating circumstances is where it gets cloudy. An extenuating circumstance, according to FHA is one of the following:

  1. Job loss or loss of income
  2. Sickness or illness of the main borrower
  3. Death of a wage earner
  4. Circumstances beyond your control

If you don't meet the above criteria for FHA; here are the time frames you have to wait before purchasing again for Fannie and Freddie:

-Fannie Mae Conventional 2 years with 20% down payment, 4 years with 10% down payment, and 7 years with less than 10% down payment.

-Freddie Mac - 2 years with extenuating circumstance and 4 years for financial mismanagement.  


Posted by Sam Kader on February 16th, 2012 2:09 PM
  • Respond to the mortgage company's calls and letters. Seek advice and negotiating help from a third party.
  • You have 190 days from the time a default notice was mailed to the time when the house will be auctioned off.
  • Options are repayment agreement or loan modification. Repayment amortize the back payment into future payments whereas loan modification tack the balance towards the end of the mortgage.
  • Consult with your lawyer, or accountant before making a deal with the servicer. Another place to go is a housing counseling agency or a consumer credit counseling service. (See list of website addresses below).
  • Know whether your problem is short-term or long-term.
  • Determine what you want and ask for it.
  • For short-term problems, the lender is likely to offer a forbearance. Usually, this entails adding a set amount to each month's payment. Longer-term problems that reduce income, such as disability, are sometimes solved by loan modifications. Theoretically, any term of a mortgage may be modified: The rate can be lowered, the final payoff date can be moved back, and even the amount owed can be reduced.
  • Document income and expenses, and keep all correspondence.
  • Gather all correspondence from the servicer. Postmarks envelopes are important to track dates. Collect a month's worth of paystubs, three years of W2s and tax returns, 6 months of bank statements, a few months of all bills including utilities, auto payments, credit cards, student loans and child support.
  • Document why you fell behind such as reduction of work hours, a layoff, an invoice for an auto repair, or a shutoff notice from a utility.

  • Be persistent in your quest to talk to the right people at the mortgage company. A mortgage servicer has two platoons of employees who talk with delinquent borrowers: the collections department and the loss-mitigation department. Ask for the loss-mitigation department, which consists of people who negotiate forbearances and modifications.

    What they'll get back from the lender is a push to get an agreement then and there. Fill out an application and let the lender make an offer first and then consider it for 24 hours. Talk it over with an adviser. Accept the offer if it's a good one; otherwise, make a counteroffer.

    Number of free agencies that offer counseling:

    Short selling a property - It means that a lender agrees to accept less than what is owed on the property to facilitate a sale of the property. 

    • Search online or courthouse listing to identify potential short sales
    • View the property, research and guestimate what the house is value.
    • Find all liens and mortgages on the property.
    • Find out how to finance the property.
    • Contact the existing lender and speak to loss mitigation department. A notarized letter from the seller is required authorizing you to discuss about the mortgage.
    • Complete the lender short sale agreement (if one is available).
    • Complete the proposal consisting the followings: The Application and authorization letter, signed purchase offer by both parties, a hardship letter, a statement of the property's value, costs ad liabilities and a settlement statement.
    • Lenders must approve the deal and lenders take an average 4.5 weeks to respond to a short-sale offer.
    • Negotiate and walk away if you exceed your limit. Due to the lengthy process, buyers may walk away due to financing due date.
    • Once the lender, seller and yourself are in agreement - get everything in writing and officially recorded.
    • Agents commission reduced or cut. Some lenders will pay lower or no agent commission leaving sellers to pay their agent outright or agents to give up some of their fee. 

    Tips for closing short sale.

    • Seller has stopped making the payment and received a notice of default.
    • The bank is ready for short sale confirming that the house is being sold for a reasonable price. Ask agent for the bank's agent name, title and if paperwork is complete.
    • Listing agent is experienced with short sales.
    • Foreclosure is at least six weeks away. It takes that long to get a short sale approved.
    • The home only has one mortgage.



  • Posted by Sam Kader on May 31st, 2008 3:40 PM



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