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FHA Loan With Timeshare Foreclosure Mortgage Guidelines

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FHA Loan With Timeshare Foreclosure Mortgage Guidelines

This BLOG On FHA Loan With Timeshare Foreclosure Mortgage Guidelines Was UPDATED On December 16th, 2018

Is There Waiting Period To Qualify For FHA Loan With Timeshare Foreclosure

There are mandatory waiting periods after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale to qualify for a home loan.

  • Every mortgage loan program, whether it is FHA, VA, USDA Loans, and Conventional Loans have mandatory waiting period after housing event
  • Housing events are the following:
    • foreclosure
    • deed in lieu of foreclosure
    • short sale

There are mandatory waiting period after bankruptcy as well for borrowers to qualify for government and conventional loan programs.

HUD Guidelines On Waiting Period After Housing Event

Under HUD Guidelines, HUD is the parent of the Federal Housing Administration or FHA, there is a three year mandatory waiting period to qualify for a FHA Loan after the recorded date of a foreclosure and/or deed in lieu of foreclosure to qualify for a FHA Loan.

  • The three year waiting period clock does not begin when a homeowner turns in their keys to their lender
  • The three year waiting period time clock starts from the date of the sheriff’s sale and/or when the deed to the property has been transferred out of the name of the homeowner
  • HUD Guidelines require a three year mandatory waiting period for a FHA Borrower to qualify for a FHA Loan after a short sale
  • The three year waiting period start date begins from the date of the short sale that was reflected on the HUD Settlement Statement of the short sale property

HUD Guidelines On Waiting Period After Bankruptcy

FHA Guidelines After Bankruptcy require a mandatory two year waiting period for a FHA Borrower to qualify for a FHA Loan after a Chapter 7 Bankruptcy discharge date.

  • Home Buyers who are currently in a Chapter 13 Bankruptcy can qualify for a FHA Loans one year into their Chapter 13 Bankruptcy repayment plan
  • Need Chapter 13 Bankruptcy Trustee approval
  • Lenders will want to see proof that the borrower has made at least 12 timely payments to his or her creditors with no late payments

HUD Guidelines On Timeshares

Many consumers purchased timeshares in the 2000’s when the real estate market was hot.

  • After the 2008 Real Estate And Mortgage Meltdown bankruptcies and foreclosures have soared to historical highs
  • Among foreclosures were consumers who purchased timeshares
  • Timeshare owners could no longer liquidate their timeshares and had to go through timeshare foreclosures
  • I get many calls by home buyers who were told by banks and mortgage lenders that they do not qualify for a FHA Loan because they have a timeshare foreclosure
  • Timeshare owners were told that there are mandatory waiting period after timeshare foreclosure to qualify for a FHA Loan
  • This is not true
  • Unfortunately, these loan officers who are telling home buyers that there is a waiting period after timeshare foreclosure to qualify for a FHA Loan
  • These loan officers do not know what they are talking about
  • There is no waiting period to qualify for a FHA Loan with a prior timeshare foreclosure
  • Timeshares are not considered real estate loans
  • Timeshare loans are considered consumer installment loans under HUD FHA Guidelines

We will be discussing qualifying for FHA Loan With Timeshare Foreclosure on this blog.

FHA Loan With Timeshare Foreclosure: What Are Timeshares?

Timeshares are rights to a property such as a condo, town home, or home where it is owned by a group of real estate investors.

  • Under HUD Guidelines, timeshares is not real estate
  • Timeshare loans are considered loans and not real estate mortgages

Therefore, there is no waiting period after timeshare foreclosure.

  • Timeshares allow to those who purchase timeshares for them to occupy and enjoy the property for a certain period of time of the year
  • During the time where the timeshare owners have their time there, they can enjoy it like their vacation homes for themselves and their families
  • Bottom line, a timeshare property is a vacation home
  • Timeshares is used for the timeshare owners and their families on a certain scheduled time every year
  • A timeshare property investor purchases a deeded timeshare property and in return the timeshare property owner gets the rights and certain percentage of the rights of the timeshare property

FHA Loan With Timeshare Foreclosure: Defaulting On A Timeshare Property

Timeshare properties are like any condos, town homes, or homes.

  • Timeshares properties are normally in resort areas such as lakefront properties, ski resorts, or golf course settings
  • If a timeshare property owner defaults on their timeshare property, timeshares are foreclosed just like regular homes
  • A timeshare unit owners defaults on their timeshare property when they fail in making their monthly mortgage payments and housing expenses such as homeowners associations dues
  • Both the timeshare property management company as well as the timeshare lender can initiate foreclosure proceedings when a timeshare property owners defaults on their timeshare loan and homeowners association dues
  • The foreclosure process is similar to a regular home foreclosure process where the foreclosure gets filed in the county court system in where the timeshare property is located

However, under HUD Guidelines, a timeshare loan is not a real estate mortgage but rather an installment loans. Due to HUD Guidelines On Timeshare Foreclosure, there is no waiting period after timeshare foreclosure to qualify for FHA Loans.

FHA Loan With Timeshare Foreclosure: Qualifying For Home Loan

As mentioned earlier, many mortgage lenders will tell a prospective borrowers that they need to wait three years after a timeshare property foreclosure to qualify for a FHA Loan.

  • If these loan officers would do a little bit of due diligence and check HUD 4000.1 FHA Handbook they will realize that under HUD’s FHA Guidelines, timeshare foreclosures are treated as consumer installment loans and not mortgage loans
  • FHA Foreclosure waiting period guidelines do not apply with timeshare foreclosures
  • Any borrowers with a prior timeshare foreclosure does not have to abide by the mandatory waiting period after a foreclosure guidelines under FHA

Home buyers told they do not qualify for a FHA Loan due to a prior timeshare foreclosure, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. Our team at Gustan Cho Associates Mortgage Group are available 7 days a week, evenings, and weekends to take your phone calls and answer any questions you may have.

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