Is Timeshare Foreclosure Considered Mortgage Foreclosure?

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss the question of is timeshare foreclosure considered mortgage foreclosure? Timeshares used to be extremely popular throughout the United States.  Timeshares are where a group of investors invests in a subject property in a resort area. Each investor has a certain period of the year allocated to them and their families to enjoy the subject property exclusively for themselves.

Under HUD, VA, USDA, Fannie Mae, and Freddie Mac agency guidelines, timeshare foreclosure is not the same as a house foreclosure. Homebuyers, sellers, realtors, loan officers, and event underwriters often contact us at Gustan Cho Associates to ask is timeshare foreclosure considered mortgage foreclosure?

HUD Waiting Period on FHA Loans of Timeshare Versus Home Foreclosure
HUD Waiting Period on FHA Loans of Timeshare Versus Home Foreclosure

Tens of thousands of homebuyers could not purchase a home because they were told under HUD guidlines, there was no difference on timeshare versus homes in default. Many mortgage underwriters hands down believed timeshare foreclosure considered mortgage foreclosure. Timeshares used to be very popular in the 2000s. Timeshares are a luxury option for vacations. A timeshare is somewhat of a vacation home that can be used by the family for a certain time each year. When a timeshare owner buys a deeded timeshare property, they get a portion of the rights to the subject property. In this article, we will discuss and cover why timeshare foreclosure is not considered real estate foreclosure.

What Are Timeshares?

Timeshare unit owners, like homeowners, pay their portion of the fees and costs of maintaining the timeshares. Homeowners’ insurance, association dues, property taxes, and property maintenance fees are assessed. Each timeshare unit owner is responsible for their portion of the expenses and general maintenance costs of the timeshare project.

Getting Mortgage Denial By Underwriters Due To Timeshare Foreclosure Considered Mortgage Foreclosure

In the event timeshare owners have a mortgage on a timeshare, they are responsible for paying the mortgage payment as well. In a sense, it is a second home but the acquisition cost is much less because owners only have rights to the timeshares for only a certain period every year. For timeshare owners who do not pay their portion of the expenses in the timeshare unit, the timeshare management company can foreclose on the timeshare.

Can a Timeshare Go Into Foreclosure?

Timeshares, like residential homes, can be foreclosed for timeshare unit owners who are in default of their mortgage and housing payments. The timeshare mortgage lender and/or timeshare management company is responsible for initiating the foreclosure proceeding after the timeshare owner is in default of his or her monthly obligations.

The U.S. Department of Housing and Urban Development (HUD), the parent of FHA) classifies timeshare mortgages as installment loans and not real estate loans under HUD 4000.1 FHA Handbook. Unfortunately, a large number of mortgage underwriters assume a timeshare foreclosure considered mortgage foreclosure. Mortgage underwriters should due a little bit more due diligence on agency mortgage guidelines before issuing a well deserved homebuyer a loan denial.

Is There a Waiting Period After Timeshare Foreclosure?
aiting Period After Timeshare Foreclosure

Is a timeshare foreclosure considered mortgage foreclosure? A timeshare foreclosure on the credit report is treated like regular residential home foreclosure. As reported on a credit report can significantly drop credit scores.  A timeshare, the foreclosure will stay on the credit report for 7 years like any other foreclosures. Timeshare Foreclosure Considered Mortgage Foreclosure? On the credit report yes, but not with mortgage lenders. Timeshare foreclosures have been skyrocketing after the 2008 real estate and banking collapse. Most lenders will treat timeshare foreclosure considered mortgage foreclosure.

Is Timeshare Foreclosure Considered Mortgage Foreclosure By Lenders?

If a lender treats timeshare, foreclosure considered mortgage foreclosure, then they will require a three-year waiting period. Borrowers with a foreclosure on their record need to wait 3 years from the recorded date of the foreclosure for them to qualify for FHA loans. Many lenders can treat a timeshare, foreclosure as a regular foreclosure. But per HUD mortgage lending guidelines, a timeshare is not treated as a regular foreclosure and is treated as consumer debt. Gustan Cho Associates does not treat timeshare foreclosure as a real estate foreclosure so we do not have any waiting period after foreclosures on timeshares.

Qualifying For FHA Loans With Timeshare Foreclosure

FHA loans has the most lenient mortgage guidelines on getting approved after a recent timeshare foreclosure. Even though all mortgage agencies allow borrowers to qualify for a mortgage  with a timeshare foreclosure, FHA loans are the easiest and quickest loan program to get approved. It is easier to get an approve/eligible per automated underwriting system on FHA loans versus any other government and/or conventional loan program. This is due to HUD programming lenient algorithm on FHA loans. 

Are There Waiting Period To Get a Mortgage With Timeshare Foreclosure?

Timeshare owners who had a previous timeshare, or real estate foreclosure, and need to qualify for FHA loans can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates is a mortgage company licensed in multiple states with no mortgage overlays on government and conventional loans. Gustan Cho Associates has dozens of lending partnerships with non-QM wholesale lenders.  We will talk more about why many underwriters deem timeshare foreclosure considered mortgage foreclosure.

How To Get Approved For an FHA Loan After Being Denied Due To Timeshare Foreclosure Considered Mortgage Foreclosure?
FHA Loan After Being Denied Due To Timeshare Foreclosure

Not only do we offer no lender overlays on government and conventional loans, but we also offer non-QM and alternative financing loan programs on owner-occupant, second homes, and investment homes. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify for a mortgage elsewhere. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Homebuyers and homeowners looking to speak with a five-plus star mortgage broker licensed in 48 states including Washington DC and Puerto Rico with zero lender overlays, please reach out to Gustan Cho Associates at [email protected]

Best Mortgage Lenders For FHA Loan After Being Denied Due To Timeshare Foreclosure Considered Mortgage Foreclosure?

Homebuyers needing a pre-approval can call us or text us at 262-716-8151. The team at Gustan Cho Associates are avialable 7 days a week, including late evenings, weekends, and holidays.  Our veteran experienced loan officers at Gustan Cho Associates are experts in helping borrowers qualify and get for a mortgage where other mortgage lenders cannot. We have a national reputation of being able to get home mortgages approved when other lenders cannot.

This Blog on Is Timeshare Foreclosure Considered Mortgage Foreclosure was published on July 26th. 2022