Foreclosure Facts and Basics
Millions of homeowners had a foreclosure in recent years. Foreclosure rates have reached historic highs since the 2008 real estate meltdown. Million of homeowners who thought they had thousands in equity in their homes soon realized all of the equity in their homes have evaporated. A substantial percentage of homeowners were left hanging with mortgages that were higher than the value of their homes. Many turned in their keys to their mortgage lenders and walked away. Others did a deed in lieu of foreclosure or a short sale and walked away with nothing but a dream that someday they can own another home.
Real Estate Meltdown Of 2008
Yet, there are other homeowners who still have their homes with mortgages higher than the value of their homes. Those who own a home whose mortgage loans are higher than the value of their homes are stuck in their homes until their value substantially increases in value. If they want to sell their homes, they would need to pay down their mortgage loans.
For those homeowners who have mortgage balances that are higher than the value of their homes, it is often called that their homes are underwater. The government create the HARP program for those homeowners with underwater mortgages. HARP, stands for Home Affordable Refinance Program, and was created for homeowners who had mortgage balances that were higher than the value of their homes. There is no appraisal needed but the home loan needs to be owned by Fannie Mae and/or Freddie Mac prior to June 1, 2009.
For those homeowners who have loans that have not been sold to Fannie Mae or Freddie Mac prior to June 1, 2009, HARP 3.0 is scheduled to be implemented this year. HARP 3.0 is being created for those homeowners who could not take advantage of the HARP 2.0 program.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is when a homeowner voluntarily surrenders the keys of his home to the mortgage lender in lieu of the mortgage lender not pursuing legal proceedings to foreclosure on his or her property. When a homeowner enters a deed in lieu of foreclosure agreement with his mortgage lender, the mortgage lender does not come after the deficit of the mortgage loan after the foreclosed property has been sold.
Conventional Loan After Deed in Lieu Of Foreclosure and Short Sale
A person who has undergone a deed in lieu of foreclosure is eligible for a conventional mortgage loan in 2 years from the date of the deed in lieu of foreclosure only if he or she can put 20% down payment. FHA mortgage loan programs treat deed in lieu of foreclosures just like any other regular foreclosure. The wait time for a FHA mortgage loan borrower is the normal 3 years for foreclosure.
A short sale is when a homeowner sells his home below the amount of his or her mortgage balance with the mortgage lender’s blessing. When the real estate meltdown of 2008 hit the United States, real estate values plunged throughout every neighborhood of this country. Short sales, a term that was almost non existent prior to 2008, was a household name.
Home Loan After Short Sale
A homeowner who had a short sale on his record is eligible to purchase a home via conventional mortgage loan after 2 years from the date of the short sale as long as he or she has a 20% down payment. For those who are seeking a FHA mortgage loan, the wait time is 3 years. FHA treats short sales like any other regular foreclosure when it comes to wait times.
If you have had a regular foreclosure, there is a three year waiting period from the date of the sheriff’s sale of your property or the date your name was transferred out of your name into the mortgage lender’s name to qualify for a FHA Loan. It is not the date you turned in your keys or the day you got evicted. You need to check with public records as of the date the deed changed over to the mortgage lender or new owner.
2015 Update On Conventional Loan After Deed In Lieu And Short Sale
New Fannie Mae and Freddie Mac Guidelines to qualify for a conventional loan after a deed in lieu of foreclosure and short sale has been implement in August 2014. There is now a four year waiting period to qualify for a conventional loan after deed in lieu of foreclosure, short sale, and bankruptcy with 5% down payment. The two year waiting period after deed in lieu of foreclosure or short sale with 20% down payment is no longer available. The good news is that the 20% down payment is no longer a requirement. Conventional loan mortgage borrowers can qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale with a 5% down payment after 4 years.