Gilbert Real Estate Blog
~ by Randy Hooker of Dreamcatcher Realty
-
When Can a Short Sale Seller Buy Again?
Thanks to one of my favorite Mortgage Consultants, here’s some very interesting information for those involved in or contemplating a short sale of their home.
HUD recently released its ruling on when and how soon a borrower may use FHA financing after
survivingclosing a short sale. Here is how it is going to work (effective immediately).- A buyer can immediately purchase a home if they executed a short sale on a previously owned residence, IF:
- They were current on their mortgage and other installment debts at the time of the short sale (no 30 day late payments in previous 12 months from time of new loan application for new purchase), OR
- The proceeds from the short sale serve as payment in full.
2. A buyer must wait 3 years from the time of a short sale, IF:
- They did a short sale simply to take advantage of declining market conditions, AND
- They are looking to purchase at a reduced price, a property that is similar or superior and within a reasonable commuting distance from the property that was sold short.
- They were in default at the time of the short sale
The exact methods being used to determine bullet 1 of reason 2 were not discussed in the mortgagee letter. However, it is expected that they will need to explain and document a legitimate reason as to why the short sale was necessary. That reason would need to indicate that the client did not short sale merely to adjust their mortgage liability to current market values by selling one house short and buying a very similar or “better” house in the same marketplace.
Exceptions may be made to bullet 3 of reason 2 IF:
- The default was due to circumstances beyond the borrowers control (death of primary wage earner, long term illness etc…), AND
- The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrowers control that caused the default.
In my personal opinion, this new HUD ’statement of clarification’ provides many more questions than answers. Time will only tell, but I’ll be attempting to keep you updated.
Image courtesy of ebmorse.
Is ‘Making Home Affordable’ Working? Not on this planet!
In a recent New York Times article, Gretchen Morgenson wrote, “LAST week, the stock market tumbled on news that housing foreclosures and delinquencies rose again in the first quarter. The Office of the Comptroller of the Currency said that among the 34 million loans it tracks, foreclosures in progress rose 22 percent, to 844,389. That figure was 73 percent higher than in the same period last year.”She went on to say, “The Obama administration has said it wants to wrestle the foreclosure issue to the ground by encouraging mortgage loan modifications, but its efforts have gotten little traction…. Lenders and their representatives, however, don’t like to modify loans through interest rate cuts or principal reductions because, of course, it reduces the income they receive from borrowers. No surprise, then, that loan modifications have been a trickle amid the recent foreclosure flood.”
“Alan M. White, an assistant professor at the Valparaiso University law school in Indiana, analyzed data on 3.5 million subprime and alt-A mortgages in securitization pools overseen by Wells Fargo. The loans were written in 2005 through 2007; data on their performance is provided to the trusts’ investors. Mortgages handled by five of the nation’s largest loan servicing companies — Bank of America, Chase Home Finance and Litton Loan Servicing among them — are contained in the Wells Fargo data.”
Gretchen published a very fine article on the plight of ‘loan mods’ in this country, and is well worth reading. Here’s a link to the article.
