By Tom Branch, on October 23rd, 2011 
This is a common question among distressed homeowners we work with. It’s an easy question to ask, but the answer is complicated and constantly changing.
There are many variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or a short sale; however, the general guidelines that FHA, Fannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure are:
Short Sale with FHA loan
• Can purchase right away with no mortgage default/late payments
• 3 year wait if in default or late payments at the closing
• Reduced wait if the borrower has re-established good credit and can show more qualifying circumstances *
Short Sale with Fannie Mae Loan
• 2 year wait if the borrower puts 20 % down
• 4 year wait if the borrower puts between 10% to 20% down
• 7 year wait if the borrower puts less than 10% down
• 2 year wait if the borrower can show extenuating circumstances and puts more than 10% down *
Short Sale with Freddie Mac Loan
• 4 year wait before being able to get a loan
• 2 year wait if the borrower can show extenuating circumstances *
Foreclosure with an FHA Loan
• 3 year wait before being able to get a loan
• Reduced wait if the borrower can show extenuating circumstances and re-establishes good credit *
Foreclosure with a Fannie Mae Loan
• 7 year wait from the completed foreclosure sale date
• 3 year wait if the borrower can show extenuating circumstances. Additional underwriting requirements apply for 4 years after a 3 year waiting period.
• 7 year wait for a 2nd home, cash out re-financing, or an investment property
Foreclosure with a Freddie Mac Loan
• 5 year wait from the completed foreclosure sale date
• 3 year wait if the borrower can show extenuating circumstances *
*Qualifying/Extenuating circumstances are not applicable in most situations
This list does not cover all circumstances so always talk with an experienced mortgage professional about your specific situation.
Source: Townsquare Financial
By Tom Branch, on April 1st, 2011 Another short sale closed! The sellers avoided foreclosure, the buyers purchased a nice home at a discount, and the lender did not have the losses involved with a foreclosure.
Many people feel that the nation’s economy rises and falls with the housing market. While this is often true, we believe the current housing crisis is a direct result of the economic downturn and massive job loss across the nation.
In the Short Sale community, the vast majority of homeowners did not get a bad loan or buy more house than they could afford; they’re just good, hardworking Americans who fell on bad times.
All indicators point to Short Sales being on the real estate horizon for the foreseeable future, at least through 2012, and maybe longer. Industry experts see another wave of distressed homeowners surfacing when the once popular Pay Option Adjustable Rate Mortgages (ARMs) begin to adjust in the coming months.
These mortgages allowed the borrower to essentially “pick a payment” that fit their budget in order to get into the house they wanted to purchase. These loans have the potential to negatively amortize and the rate will adjust upward – it’s just a matter of time. Pay Option ARMs were widely used in California and will begin adjusting soon.
We encourage homeowners across the United States to get educated on the options available should they become financially distressed. Short Sales are a great tool, providing relief to all parties.
Just remember to choose a REALTOR® with a proven Short Sale track record to negotiate on your behalf. Making the right choice can mean the world of difference to your financial future.
By Tom Branch, on February 13th, 2011  Copyright 2011 - Imaged2Sell 4 Bedrooms | 2 Baths | 2-Car Garage | 2140 SF/Tax
Little Elm TX Home For Sale – Pre-foreclosure in Frisco ISD. Former Lennar model home with extensive front landscaping and large covered porches. Hardwood floors in entry, study, and formal dining. Island kitchen features granite counters and stainless appliances. Kitchen opens to living area with stone corner fire place. Master has dual vanities, garden tub, and walk-in closet. Designer touches include chair rails, crown molding, French doors, and upgraded lighting.
Little Elm Texas Home For Sale for Current Pricing, Details, Photos, and Virtual Tour.
Source: NTREIS
By Susan L. Johnson, on February 12th, 2011  Copyright 2011 - Imaged2Sell 3 Bedrooms | 2 Baths | 2-Car Garage | 1512 SF/Tax
Watauga TX Home For Sale – The bonus on this home is: HVAC system approx 4 years old. Roof replaced approx 6 months ago and an additional home office room with water hookups and cabinets. This home needs a little tlc to make it yours. Huge back yard and storage shed. See the possiblities and make it your own.
Watauga Texas Home For Sale for Current Pricing, Details, Photos, and Virtual Tour.
Source: NTREIS
By Leslie Ebersole, on January 3rd, 2011 If you are a homeowner having trouble making your mortgage payments, you may have considered doing a short sale or letting the home go into foreclosure. You must understand the difference between the two so that you can make the best decisions for your future.
A short sale of real estate happens when the sale proceeds fall short of the balance owed on the property’s loan(s). If a homeowner can’t make the monthly payments and the house can’t be sold for the amount of the loan(s) and other liens, then the lender may agree that selling the property at a loss is better than foreclosing on the loan. A lender may agree to a short sale if the homeowner can show financial hardship such as job loss, high debt from medical bills or business loss, or other financial difficulties that a homeowner will not be able to overcome.
A foreclosure is a legal process in which a lender or other lien holder seeks to take back a property if the homeowner stops making the payments or hasn’t met other commitments, like paying real estate taxes or homeowner association fees.
Illinois is a “judicial foreclosure” state. This means that the lender or other lien holder files a lawsuit to show that the borrower has missed payments. If the homeowner doesn’t make up the amount owed in a specific period of time, the lender may ask the court to allow that the property be sold at auction to pay off the debt. In Illinois the County Sheriff conducts an auction in which anyone can purchase the home to pay off the debts. Usually, though, the only “bidder” is the lender who owns the mortgage. The lender takes back the property and after a series of other legal steps is allowed to sell the home to pay off the mortgage.
Other options for distressed homeowners are loan modification programs or deed-in-lieu of foreclosure.
Know your options: consult your lender, a real estate attorney, a government-sponsored counselor, a tax professional and a real estate broker experienced with short sales.
SHORT SALE VS. FORECLOSURE: WHAT’S THE DIFFERENCE?
| Item |
Short Sale |
Foreclosure |
| Fannie Mae Guideline (Primary Residence) |
Eligible for new Fannie Mae insured loan after 2 years, no restrictions. |
Eligible for a new Fannie Mae loan with restrictions after 5 years, no restrictions after 7 years. |
| Fannie Mae Guidelines (Non-Primary Residence) |
An investor who has done a short sale is eligible for a Fannie Mae backed mortgage after 2 years. |
An investor who has had a property foreclosed cannot get a Fannie Mae backed loan for 7 years. |
| Credit Score |
Late payments on a mortgage will appear after completion of a mortgage. The effect can be as short as 12 to 18 months. Credit score affected by 50 to 100 points. |
Typically will affect credit scores for at least 3 years. Scores may be negatively affected between 200 and 300 points. |
| New Credit Application Questions (Form 1003) |
No questions on an application regarding a short sale. |
Questions: have you had property foreclosed upon or given title or deed in lieu in the last 7 years? |
| Credit History |
A short sale may or not be reported by a lender on a credit history. |
Remains as a public record for 10 years or more. |
| Security Clearance |
Usually does not raise red flags regarding security clearance. |
Security clearance will be questioned. |
| Deficiency Judgement |
Negotiable between seller and lender. |
No negotiations between the home-owner and the lender. It is up to the lender to file a deficiency judgement. |
This post was written by Leslie Ebersole and originally published on FoxValleyRealEstate. Use or reproduction without express consent of the author is prohibited.
By Tom Branch, on January 2nd, 2011  Copyright 2010 - Imaged2Sell 3 Bedrooms | 2 Baths | 2-Car Garage | 1008 SF/Tax
Farmers Branch TX Homes For Sale – Great potential for investor in Carrollton-Farmers Branch ISD. Covered front porch. Light and bright kitchen with lots of storage. French doors open to large heavily-treed back yard with storage building. Complete AC system replaced in 2009. Across the street from Rawhide Park. Enjoy the walking paths, mature trees, and playground along Rawhide Stream. Easy access to 635.
Current status, pricing, photos, and a virtual tour for this Farmers Branch TX Home for Sale.
Source: NTREIS
By Tom Branch, on December 15th, 2010 As usual, I found myself in a lively discussion this morning. Having published, The Field Guide to Short Sales, I get asked some really tough questions from time-to-time.
 Licensed from iStockPhoto Here’s the situation:
A tenant signed a one-year lease using the Texas Association of REALTORS® residential lease. They took possession of the property and have been paying the rent on-time for the last 13 months. The lease was not renewed and is continuing on a month-to-month basis. About a month ago, they started to receive notices in the mail addressed to the landlord from the mortgage company.
Being concerned, they confronted the landlord. He told them he was going to list the property “for sale” with a local broker and that the tenants could stay while he marketed the property. When he secured a buyer, he would give them the 30 days notice required under the lease.
The tenants eventually figured out that the landlord was in default on his mortgage and was trying to Short Sell the property. At that point they quit paying the rent. When confronted, they commented, “If the landlord is not paying the mortgage company, we’re not paying the rent.”
My thoughts:
My initial reaction was that the payment of the mortgage by the landlord and the payment of the rent by the tenant are two separate issues. I reviewed both the Texas Property Code and the Texas Association of REALTORS® residential lease form. There’s nothing that ties the two issues together.
The tenant defaulted on the lease by not paying the rent and is liable for late fees, court costs, and other relief available in the lease.
The landlord has not defaulted on the lease because the property is still available for the tenant’s use.
Epilogue:
This is a growing problem as foreclosures continue to climb.
If you are a tenant in this situation, you should seek legal advice before you simply stop paying the rent. State Laws vary and each lease may contain different clauses.
If you are a landlord, you should seek legal advice as well. If the property goes into foreclosure during the lease, you may be in default and liable.
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