Waiting Period After Short Sale With No Late Payments Prior To Short Sale
This BLOG On Waiting Period After Short Sale With No Late Payments Prior To Short Sale Was PUBLISHED On June 12th, 2019
There are mandatory waiting periods to apply for a new mortgage loan if you had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.
- If you had a bankruptcy, the waiting period is two years if you want to apply for an FHA purchase loan
- The waiting period is three years if you had a foreclosure for you to qualify for an FHA mortgage loan
- FHA treats deed in lieu of foreclosure and short sales the same as a regular foreclosure
- So the waiting period for these will be the mandatory three-year waiting period
In this blog, we will discuss the Waiting Period After Short Sale With No Late Payments Prior To Short Sale.
Waiting Period Guidelines After Deed In Lieu And Short Sale
If you had a deed in lieu of foreclosure or a short sale, you will be able to qualify for a conventional loan in four years as long as you can put 5% down payment.
- However, just waiting out the two-year mandatory waiting period does not guarantee conventional loan approval
- You need an automated underwriting system approval by Fannie Mae’s Desktop Underwriter
- What the automated underwriting system looks for is for credit and income after the deed in lieu of foreclosure and/or short sale
If you have aggressively and conscientiously have been working on repairing and re-establishing your credit after your deed in lieu of foreclosure and/or short sale, you should have no problem in getting an automated approval by the Fannie Mae’s Automated Underwriting System.
The Automated Underwriting System (AUS)
The Automated Underwriting System is also known as the AUS
- The AUS is like a brain where it takes into account your income, debt, assets, liabilities, and credit scores and comes up with a decision to either approve you or deny you
- In the event of a denial, the automated underwriting system will state the reason for denial
- Some reasons for denials are that the waiting period is not over, high debt to income ratio, poor credit, late payments after the deed in lieu of foreclosure or short sale, or current credit disputes
No waiting period exception on short sales
If you had a short sale and your mortgage payments and all monthly debt payments were timely for 12 months prior to your short sale, there is no waiting period to qualify for a new mortgage.
- In other words, if you kept on making your mortgage payments and your mortgage payments were current until the finalization of your short sale, you can qualify for a mortgage loan
- You do not have to abide by any waiting period regulations imposed by Fannie Mae or FHA
- However, your other monthly debt payments had to be made on time for the 12 months preceding the short sale
- Many potential homeowners who had short sales do not realize this loophole
If you have any further questions, contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email at email@example.com. Gustan Cho Associates at Loan Cabin Inc. are national direct lenders with no overlays on government and conventional loans. Gustan Cho Associates are experts in originating and funding Non-QM Loans. You can also subscribe to our daily real estate and mortgage newsletter at www.gustancho.com.