OK, this is potentially huge.

(So huge in fact that this info is copyrighted. Reused at your own risk. If you want to republish this info…request permission first.)

We have been sitting on this ’story’ because I wanted to make sure that all the details were correct. Having spent the last week or so researching this for you I am reasonably confident that this info is 95% correct.

Why not 100%…read on…

Get ready for this….according to this lender, and the info he provided in this post…its now possible for someone who has closed on  a  recent short sale to buy another home. Yes, you read that correctly….short sale today…buy another home tomorrow. NOT a buy and bail.

Epic.

So, what will this mean to you…? Lets consider the ramifications:

1) EVERY Short Sale Seller that you have can now buy IMMEDIATELY following the close of their short sale. That means all of you who are in Agent Short Sale Secrets could literally double your sales! (Obviously, there are rules and such…read this post for the details.)

2) All of the homeowners you know who are barely holding on to their upside down home can (and should) sell the home via short sale…and provided they meet the requirements…they can buy another home immediately.

3) How many homes will you sell now that you have this info? All the homeowners who did short sales in the past…call them. All you current short sale listings…call them. Everyone you know who is drowning in their upside down home only staying afloat because they fear not owning a home…call them. You get the idea.

4) If you have been reading this blog…and you are a student of the nations #1 Short Sale coaching and training program..AgentShortSaleSecrets.com….you are about to experience more opportunity to help others and earn boat loads of dough. Agents…please be clear about this…the golden age of short sales is now. Learn how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video and grab your FREE Agent Short Sale Secrets book.

FULL DISCLOSURE: I did my best to research this. If there are factual issues please let me know asap. From what I have learned thus far, this new lending program is on the very leading edge of the mortgage industry. If you have any specific questions please contact the lender directly. We are not attorneys, accountants etc. We always encourage students to seek professional advice when needed.

Here is the info…

Hi Kim, Kris and Tim,

Donald had forwarded this to me, and I’d like to address some of your questions.

1) We have three major FHA investors who are willing to do this program provided the borrowers remain current through the short sale process. At this point, for competitive reasons, we’d prefer not to provide the names of the lenders for which we’ve done extensive research. One is a bank, and the other two are mortgage banks, all with a national presence.

2) The most recent closing was for a client in TX who had a short sale in Jan 09. He closed on his new home in the Houston area for approx $150,000 with 3.5% down last month with investor #2. We have another approved with investor #1, the short sale was concluded last month and the sellers are looking for a home in their new price range (see approval sample below).

3) The advantage of the buyer closing concurrently is that their credit scores will not be affected by the short sale. Although the short sale is fully disclosed to the new lender as part of the new loan approval, once the short sale shows up on the borrowers credit, it generally reduces their scores 30-100 points. Not a big deal for someone in the 700’s now, but if someone is in the mid 600’s now, once the short sale reflected on their credit, their scores may end up below the needed 640. Additionally a concurrent sale prevents the need for the seller to rent a home in the interim.

4) If the seller starts looking for a home during the short sale process, and arranges a concurrent closing, it’d be just like the move up buyers of yesterday with concurrent closings.

Their new loan financing, appraisal, etc can be completed on the new home once their short sale is approved and a closing date set. The new loan/purchase closing date would just have to be after the short sale.   I understand your concerns. I’ve included some references below, along with a copy of a recent “sample” approval under this program.

Thanks,

Here are some reference materials from FHA and our investors:     FHA Product Guidelines (Direct from our national Bank investor)

Program guidelines:

Short Sales

Borrowers experiencing short sales are eligible for FHA financing provided the borrowers’ credit history is acceptable

Credit explanations are required

Short sale agreement must be provided for borrowers whose current home is being sold “short”. If the short sale agreement indicates the borrower will satisfy the short sale with a personal note, the new debt must be included in the ratios     From the FHA 4155 Guidelines:

SECTION 1: CREDIT HISTORY

2-3       ANALYZING THE BORROWER’S CREDIT. Past credit performance serves as the most useful guide in determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions.  A borrower who has made payments on previous and current obligations in a timely manner represents reduced risk.  Conversely, if the credit history, despite adequate income to support obligations, reflects continuous slow payments, judgments, and delinquent accounts, strong compensating factors will be necessary to approve the loan.

When analyzing a borrower’s credit history, examine the overall pattern of credit behavior, rather than isolated occurrences of unsatisfactory or slow payments.  A period of financial difficulty in the past does not necessarily make the risk unacceptable if the borrower has maintained a good payment record for a considerable time period since the difficulty.  When delinquent accounts are revealed, the lender must document their analysis as to whether the late payments were based on a disregard for financial obligations, an inability to manage debt, or factors beyond the control of the borrower, including delayed mail delivery or disputes with creditors.

While minor derogatory information occurring two or more years in the past does not require explanation, major indications of derogatory credit–including judgments, collections, and any other recent credit problems–require sufficient written explanation from the borrower.  The borrower’s explanation must make sense and be consistent with other credit information in the file.

Neither the lack of credit history nor the borrower’s decision not to use credit may be used as a basis for rejecting the loan application.  We also recognize that some prospective borrowers may not have an established credit history.  For those borrowers, and for those who do not use traditional credit, the lender must develop a credit history from utility payment records, rental payments, automobile insurance payments, or other means of direct access from the credit provider.  The lender must document that the providers of non-traditional credit do, in fact, exist and verify the credit information.  Documents confirming the existence of a non-traditional credit provider may include a public record from the state, county, or city records, or other means providing a similar level of objective confirmation.  To verify the credit information, lenders must use a published address or telephone number for that creditor.

As an alternative, the lender may elect to use a non-traditional mortgage credit report developed by a credit-reporting agency, provided that the credit reporting agency has verified the existence of the credit providers and the lender verifies that the non-traditional credit was extended to the applicant.  The lender must verify the credit using a published address or telephone number to make that verification.

The basic hierarchy of credit evaluation is the manner of payments made on previous housing expenses, including utilities, followed by the payment history of installment debts, and then revolving accounts.  Generally, an individual with no late housing or installment debt payments should be considered as having an acceptable credit history, unless there is major derogatory credit on his or her revolving accounts.

When reviewing the borrower’s credit and credit report, the lender must pay particular attention to the following:

A.        Previous Rental or Mortgage Payment History. The payment history of the borrower’s housing obligations holds significant importance in evaluating credit.  The lender must determine the borrower’s payment history of housing obligations through either the credit report, verification of rent directly from the landlord (with no identity-of-interest with the borrower) or verification of mortgage directly from the mortgage servicer, or through canceled checks covering the most recent 12-month period.

B.        Recent and/or Undisclosed Debts. The lender must ascertain the purpose of any recent debts, as the indebtedness may have been incurred to obtain part of the required cash investment on the property being purchased.  Similarly, the borrower must provide a satisfactory explanation for any significant debt that is shown on the credit report but not listed on the loan application.  The borrower must explain in writing all inquiries shown on the credit report in the last 90 days.

C.        Collections and Judgments. Court-ordered judgments must be paid off before the mortgage loan is eligible for FHA insurance endorsement.  (An exception may be made if the borrower has agreed with the creditor to make regular and timely payments on the judgment and documentation is provided that the payments have been made in accordance with the agreement.)  FHA does not require that collection accounts be paid off as a condition of mortgage approval.  Collections and judgments indicate a borrower’s regard for credit obligations and must be considered in the analysis of creditworthiness with the lender documenting its reasons for approving a mortgage where the borrower has collection accounts or judgments.  The borrower must explain in writing all collections and judgments.

D. Previous Mortgage Foreclosure. A borrower whose previous principal residence or other real property was foreclosed or has given a deed-in-lieu of foreclosure within the previous three years is generally not eligible for a new FHA-insured mortgage.  However, if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has re-established good credit since the foreclosure, the lender may grant an exception to the three-year requirement.  Extenuating circumstances include serious illness or death of a wage earner, but do not include the inability to sell the house because of a job transfer or relocation to another area. 

NOTE: Doesn’t address a short sale, our investors consider a “current” short sale derogatory credit, not a foreclosure.

E. Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy.  Additionally, the borrower must have re-established good credit or chosen not to incur new credit obligations.  The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs.  An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.  Additionally, the lender must document that the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time).  In addition, the borrower must receive permission from the court to enter into the mortgage transaction.

F.  Consumer Credit Counseling Payment Plans. Participation in a consumer credit counseling payment program does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the pay-out period has elapsed under the plan and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time).  In addition, the borrower must receive written permission from the counseling agency to enter into the mortgage transaction.

Recent approval, sample:     Loan Number:
xxxxx527
MERS MIN Number:
xxxxx745
Closed in the Name of:
KAISER FINANCIAL SERVICES
Property Address:
TBD
Chula Vista , CA 91915

Status:  APPROVED WITH CONDITIONSStatus Date:  08/21/2009
Lock Expiration:

Dear,
JUAN GARCIA
MARIA GARCIA $376,350.00 $382,936.00  OWNER OCCUPIED
360FHA 30-Year Fixed  PURCHASE
1.The title to the property located at the above address, given to secure this loan and all other legal matters pertaining to this transaction must meet with the approval of.
2.There will be an amount required to be held in escrow to cover ensuing real estate taxes, hazard insurance, and flood insurance and private mortgage insurance, if applicable, at closing.
3.Mortgage Title Insurance for at least the loan amount must be provided at your own expense, through your attorney or title company, and must be in our office prior to the closing being scheduled.
4.Hazard Insurance must be obtained through a company acceptable to Bank,  its Successors and/or its Assigns as their interest may appear,
5.Transaction Specific Closing Protection letters (CPL) are required on all table funded loans prior to funding. If CPLs are not available in your state, a copy of E&O insurance must be provided.
6.This Loan Purchase Commitment shall be null and void if, in the opinion of  there is a material change in the financial condition, employment of the borrower(s), cash equity, occupancy, or any other material situations prior to or at closing.
7.The property is to comply with all applicable law and code enforcement requirements.
8.This Loan Purchase Commitment will expire 10/15/2009. This is not your lock expiration. This loan must close and disburse no later than your lock expiration or loan purchase commitment expiration whichever is earlier or this loan purchase commitment is null and void. If the loan purchase commitment is extended it shall be extended at a different rate and different fee. THE FOLLOWING ADDITIONAL CONDITIONS MUST BE MET AND ANALYZED PRIOR TO CLOSING
1.  Document Source of EMD $ {3500} and provide cancelled check.
2.  NOTE: FHA case number assignment was not submitted at time of underwriting so Total Scorecard AND up front MIP is subject to change — other terms and conditions may apply or approval may be null and void (NOTE :to also update up front MIP and correctly disclose as closing condition).
3.  A completed Patriot Act Information Disclosure  dated within 3 days of application to comply with the USA Patriot Act and a copy of the drivers license or other form of photo identification and signed ID for signature authorization.
4.   perform a verbal verification of employment on all borrowers.
5.  Minimum credit score is 640 for all FHA loans.
6.  Satisfactory Flood Certification 7.  Short sale agreement must be provided for borrowers whose current home is being sold “short”. If the short sale agreement indicates the borrower will satisfy the short sale with a personal note, the new debt must be included in the ratios
9.  Provide copy of preliminary title commitment to document current ownership of the subject property.
10.  Property Flipping compliance: Document any re-sale of a property did not occur 90 days or less from the last sale. Exemptions apply to properties foreclosed on by Banks, their subsidiaries and/or vendors hired to sell their real estate owned. Must document property qualifies under this exemption or any of the allowable exemptions in Mortgagee letter 2006-14 (refer to www.hudclips.org for complete compliance requirements). A second appraisal may be required.
11.  Real Estate Certificate to be signed by buyers, sellers, and selling real estate agent.
12.  Amendatory Clause signed and dated by buyers and sellers, and to state purchase price of ${390000}. (Not applicable on HUD REO’s, when seller is FNMA, Freddie Mac, VA, Rural Housing and other Federal, State, and local government agencies).
13.  A Social Security Number Verification  is required on all loans which receive a case number assignment validation warning or when there is an unemployed borrower/co-borrower.
14.  Executed 92900 A (revised form dated 5/2008) required on all applications dated after 10/1/2008. Page 1 to be completed & signed by lender. Page 2 completed, dated and signed by borrower(s) in section IV and at the bottom of the form.
15.  Provide 10 year warranty and final inspection by HUD Fee Inspection OR Building permit and Cert. Of Occupancy.
16.  Provide Builder’s one year warranty of completion form 92544
17.  Provide a copy of the Case Number Assignment to show as sponsor and a satisfactory CAIVR number for each borrower. Case numbers assigned on or after July 14, 2008 may change the terms of your loan.
18.  Provide a satisfactory FHA Appraisal for ${390000}.
19.  Provide builders Cert. HUD form 92541.
20.  Subterranean Termite Treatment Report NPCA 99a and 99b.
21.  1003–Indicate subject’s physical address (Note: Loan u/w with TBD address)
22.  Executed 92900 A (revised form dated 05/2008) required on all applications dated after 6/18/05. Page 1 to be completed & signed by lender. Page 2 completed, dated and signed by borrower(s) in section IV and at the bottom of the form— (SECTION/BOX # TO BE FILLED OUT)
23.  perform verbal verification of current employment***Note: Loan u/w before/after Business hours
24.  Note: If any changes (income, assets, loan amt) MUST be resubmitted to Total Scorecard and must maintain approve/eligible OR decision may change and/or additional conditions may apply 26.  Provide W2’s for Years {2007 & 2008} to Support $ {8427} Monthly Income
27.  Provide fully executed VOE to evidence base income of ${5578} per month & two years averaged Overtime/Bonus of ${2879} /month broken out and reasonable prospect of continuance***Note: Bonus/OT income must be broken down in VOE or will use Base income only***
28.  Provide fully executed purchase contract with all addendums to support $390000
29.  Provide most recent Bank statement to evidence assets of $8016 as submitted. Document source of all large deposits
30.  All appraisals performed on or after April 1, 2009 require form 1004MC to be included in the appraisal report.
31.  Final Inpsection form 92051. THE FOLLOWING CONDITIONS MUST BE COMPLIED WITH AT CLOSING OR THIS PURCHASE CONTRACT IS NULL AND VOID
1.  Borrower to pay {0} in discount points. If discount points paid by borrower should increase prior to closing, the loan must be reviewed.
2.  HUD-1 to doc borrowers made 3.5% down payment in the amount of $ {13650} . Closing costs and/or pre-paid expenses may not be used to satisfy the minimum down payment requirement of 3.5%. Approval will be null & void if minimum down payment is not met. This is effective for all purchase money mortgages with case number assignments on or after 1-1-09.
4.  Loan was approved at {6.00} % . If the interest rate increases the loan must be reviewed.
5.  Origination Fee is calculated on the loan amount without MIP / Funding Fee. Discount Fee is calculated on loan amount with MIP / Funding Fee.
6.  Provide the fully executed 92900-A. Page 4 must be signed and dated with the same date as the HUD-1.
7.  UFMIP / Funding fee to be financed is {1.75} % rounded down to the nearest whole dollar. Remainder to be paid in cash. Annual MIP factor is {.55} %.
8.  FHA & VA does not allow non-profit entities to use gift funds to homebuyers for paying off installment loans, credit cards, collections or judgments.
9.  Funds derived from seller contributions and/or premium pricing as credits to the borrower must be itemized on the HUD 1 Settlement Statement. Lump sum amount will not be acceptable.
10.  Certification statement signed and dated by all borrowers indicating that they have received a copy of their appraisal and/or conditional commitment (Form HUD- 92800.5B)
11.  Interested party contributions not to exceed $ {11700} or loan must be re-underwritten and commitment may be null and void. No additional lender credits, or seller concessions that have not been approved by Flagstar are permitted. Seller carrybacks, payment assistance or side agreements not disclosed to the lender are not permitted.
12.  Sign and Date Typed Loan Application
13.  Total New House Payment Including Taxes and Insurance Cannot Exceed ${2928}.
14.  Borrower’s Cash Used for Closing, Net of the Original Real Estate Broker’s Deposit (if applicable), Cannot Exceed ${20800}.
15.  If Title Work Shows Any Gas, Oil, or Mineral Rights, Title Company Must Issue a Letter Stating Final Policy Will Insure Over These Rights
16.  All Applicable Riders and Disclosures per Product Descriptions and FNMA/FHLMC Guidelines
17.
18.  Flood Hazard Notice Zone
19.  Title Work to Prove no Delinquent Taxes, Undisclosed Liens, Judgments or Assessments or Approval May Be Null and Void
20.  One General Authorization Form
21.  Any property taxes that are available and due within 60 days of settlement must be paid at closing.
22.  This product is eligible for a Short Form Title Policy. Title work should be presented on the proper ALTA short form with commitment at closing.
23.  Provide Sale of Servicing Disclosure dated within 3 days of application and signed prior to closing.
24.  Provide a fully executed 4506-Tfor each borrower.
25.  All borrowers and settlement agent to sign final HUD-1 Settlement Statement or Certification Addendum to HUD-1 Settlement Statement. For escrow states, all borrowers and settlement agent to sign final HUD-1 settlement statement or one of the following: 1. Certification Addendum to HUD-1 Settlement Statement or 2. Estimated HUD- 1.
26.  Final Truth In Lending discosure must reflect as the Credit if this loan closes in the name of.
27.  Tax impounds must be collected at current tax rate.
28.  Borrower(s) to execute Social Security Number Verification form.
29.  If subject property is a Lender REO, it is mandatory that the Addendum to the HUD 1 Settlement Statement be signed by the foreclosing lender. The loan will be subject to repurchase if fully executed addendum is not included in closing package.
30.  Any Power of Attorney must be approved by underwriter.
31.  This loan is to be closed on a MERS Security Instrument.
32.  Acknowledgment of Receipt of Disclosures Form  to be executed by all borrowers.
M.I. DATA FOR INFORMATIONAL PURPOSES ONLY  -  Absence of data does not negate requirements M.I. Company Name:Certificate num:Coverage amt:
Not Applicable
Option Type:
NOTE:   LOAN CHANGES MAY AFFECT COVERAGE AND PREMIUMS – REFER TO ACTUAL M.I. CERTIFICATE.
This Loan Purchase Commitment to purchase this mortgage is void if this loan bears rates and/or fees above a certain percentage and/or amount which would require a special disclosure as defined by the Riegle Community Development and Regulatory Improvement Act of 1994(Pub 1. 103-325 Stat. 2160) enacted in September 1994, containing the Home Ownership and Equity Protection Act of 1994. Required by 12CFR 226.32(Requirements for certain closed-end home mortgages). The Seller recognizes that the Seller is responsible and liable for all credit and underwriting decisions. The Seller agrees to approve and/or to close the mortgage loan. The Seller understands that is only acting as an investor to purchase the mortgage loan subject to requirements. } –
Roger Chandler Cell 858-405-0381

Popularity: 5% [?]

Similar Posts:

1. How To Buy A Home After A Short Sale | New FHA Guidelines The Department of Housing and Urban...
2. 2010 IS The Year Of The Short Sale | Harris Real Estate University CDPD Short Sale Training Seth Wheeler, Senior Advisor to the Treasury...
3. New Bank Of America Short Sale Process Coming? | Real Estate Short Sale Training This post should not surprise any of...