FHA Loans and Short Sales
It is not always possible or even desirable to obtain home equity loans from the banks that hold the mortgages on short sale properties that you intend to purchase. The only way to obtain a mortgage from the major mortgage investors without a down payment is to obtain a government-backed loan. Due to the government’s backing of FHA mortgage lenders, your credit score or down payment will not significantly affect your interest rate.
The offers reduce the risk of government-backed loans for lenders, allowing them to extend their normal lending criteria to borrowers with riskier financial profiles, such as those without a down payment. In a short sale, a home is sold for less than what the seller owes, resulting in the original lender not receiving the full amount. After a short sale, a mortgage lender may forgive the entire debt, even if the sale proceeds do not cover the entire mortgage.
In a short sale, the homeowner must sell a home that is underwater, and the mortgage lender grants permission to sell the home for less than the outstanding mortgage balance. In a foreclosure, the lender seizes the property and evicts the previous mortgage holders, who are still liable for the outstanding debts.
A short sale remains on your credit report for seven years; however, you may be able to finance a new home purchase one to seven years after a short sale, depending on your credit scores, loan type, down payment, and circumstances leading up to the short sale.
If a home loan is delinquent at the time of the appraisal, servicers must determine, based on the completed BRP, whether the borrower is in current delinquency or less than 90 days delinquent with a Fannie Mae Short Sale. Contact us for more information.