Experience buying after DIL or short sale?

[mbcdefg]

We tried to purchase a short sale house, and wound up dropping out after waiting six months for the seller and bank to get their act together (our realtor told us that, in NJ, you can just change your mind at any time, and we lost no money on the deal). It was a lot of back-and-forth and we had pretty much no control over the matter. The seller declared bankruptcy and had multiple loans or something like that, and I think he was going through a messy divorce as well, so every time the bank got one issue sorted out another would pop up. The person at our bank (PNC) didn't seem too competent, either.

We had an open-ended timeline at the place where we were living during all of that. If it was a situation where we had to renew a lease or be out by a certain date, we would've been screwed because there was just no way of knowing when everything would happen.

The short sale house wasn't worth waiting around for, and it turned out to be a blessing in disguise because I really like the house we wound up buying (conventional sale, not a short sale).

It's really a crapshoot. Our friends bid on a short sale (a giant house they wouldn't have been able to afford otherwise, they told us) and they wound up moving in three months after they first saw it. Easy peasy for them.

[mbcdefg]

Ah, sorry. Reading FAIL.

[kaylie]

I don't have first hand experience, but if you happen to be in the PA/NJ area PM and I can give you the name of my mortgage person if you want it. My mother has been on the verge of foreclosure off and on for about four years now and he's been very helpful in talking me through her options. He's great at presenting pros and cons of each option without pressuring you to do anything.

[pinkdutchtulips]

my mom lost her house in a DIL in 94 and bought again in 01

she got her house through a special mortgage program for CA Teachers to encourage them to buy close to their schools .... and no she was priced out of where her school was and had a 30 min commute.

[madisen]

I'm not sure why you're still being told fnma has a 5yr waiting period after dil or SS. It's 4yrs from the charge off date. Did you get your credit run yet? Do you know the actual charge off date of the dil? Did your prospective lender run your scenario through FNMA's automated underwriting system? Did you try a different lender that doesn't have an overlay over the 4yr waiting period?

[madisen]

wizard - I do this for a living. I run products and pricing for a mtg bank and part of my team's job is to help our lo's find homes for loans, answer scenario questions, and research agency and investor guidelines. Trust me when I say it's 4yrs for fnma. I'm on my phone too but can send some screenshots when I get to work.

However, most investors/lenders won't manually underwrite conventional loans anymore and they will require a pass from fnma/fhmc's auto underwriting systems. That takes your whole profile - credit, loan info, etc and gives an eligible/not eligible answer. In your case I'd tell my lo that 4 yrs is the waiting period and to collect all your credit/income/liability info and run it through DU for a risk profile answer.

[madisen]

I suggest doing the math or having your lo help you do the math. It's a question of pmt comparison over the life of the loan and uncertainty regarding rates.

Taxes and insurance will be the same. Have your lo price out your scenario as an fha30 and a conforming30 so you can compare rates/pmts today. Include upfront mi and monthly mi for the FHA. Include PMI if you'll be over 80% ltv on the conventional, etc.

The hard part will be making some kind of guess on where rates will be a year from now.

[mrsw101109]

I always thought it was 2 years to be able to get a conventional mortgage and 3 years for fha.

I'm at the 2.5 year point after a DIL and that's what a mortgage company told me.

[madisen]

Today the standard waiting periods are as follows from a short sale or dil:

Fnma - 4 years
FHA - 3 years (1 year if the borrower was current on their loan and ALL other debts in the 12 months preceding the short sale or dil, I've yet to see this scenario)

If there were extenuating circumstances and they can be thoroughly documented, the waiting periods from a short sale or dil are:

Fnma - 2 years
FHA (back-to-work) - 1 year

Fhlmc follows FNMA's timelines but has additional overlays when there are derogatory credit events so they're not really worth going into.

Extenuating circumstances have a very high standard to meet. Generally there is some medical event, job loss, divorce, etc and even more often more than one of these events may be needed to meet the standard. It's a little subjective and if fnma/FHA pull that loan for review a lender will want to make sure there was no question on their judgement regarding interpretation. Otherwise it ends up in a repurchase and the lender has to buy back that loan which is never a good thing.

Previously fnma allowed 2 years from a short sale or dil if more than 20% down payment would be put down on the new loan but fnma changed their guidelines on this in August 2014.

Maybe your lender believes you have enough going on to qualify for extenuating circumstances. That's the only current way to get past the 4 year waiting period from short sale or dil on a conventional loan.