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Old 04-26-2009, 05:42 AM
 
3,576 posts, read 6,284,382 times
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Just doing some browsing on the internet.

Noticed that Fannie/Freddie allow those who have gone through a short sale to rebuy a home in 2 years.

Short sales and Foreclosure should be treated almost identically in terms as risk factors.

The end game is the same:

1. The homeowner failed to pay as originally agreed
2. Their credit hit is the same in both situations (short sale and foreclosure).

Does the government not learn from their mistakes?

There should be legislation barring people from buying another home for at least 5 years with a short sale.

2 years is too short of a time in order to qualify for financing (via the FHA method).

I know there are micro economies being built around pushing people through short sales.

1. Banks: because they can save about 10% on their lost instead of going through foreclosure.

2. Realtors: because they most likely will get paid their full commission (yes I understand short sales involve a lot more work for realtors than regular transactions)

3. The distressed homeowners selling: although their credit can be shot with a short sale, they know with the proper credit maneuvers, they can rent for 2 years and still get their credit scores back to at least the 600s. They won't get the best rate in 2 years but at least they qualify for FHA loans.

Two years as "punishment" for bad financial decisions is not a long enough deterrent. Especially in this housing crisis. Most people believe the housing crisis will be over in 2 years. You will have the same people trying to rebuy similar homes they sold at distressed prices...only this time, they got their 50-150K underwater mortgage fogiven and rebuying at much lower prices.
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Old 04-26-2009, 01:19 PM
 
Location: OK
2,765 posts, read 6,793,264 times
Reputation: 1946
Not everybody who defaults on a mortgage is a scumbag who lived beyond their means and therefore couldn't pay their mortgage.

There are situations beyond people's control such as illness or job loss that caused these short sales and people can usually stabilize their finances in 2 years.
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Old 04-26-2009, 01:31 PM
 
26,590 posts, read 56,786,220 times
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Quote:
Originally Posted by Schousse View Post
Not everybody who defaults on a mortgage is a scumbag who lived beyond their means and therefore couldn't pay their mortgage.

There are situations beyond people's control such as illness or job loss that caused these short sales and people can usually stabilize their finances in 2 years.
Those same things cause foreclosure.
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Old 04-26-2009, 06:14 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,371,175 times
Reputation: 958
I haven't personally heard of any lender, including the lenders I broker to, that will do 2 years out of a short sale. My bankline as well as wholesale lenders are treating short sales as foreclosures, so the 5 year rule for FNMA and the 3 year rule for FHA are still applying.
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Old 04-28-2009, 10:01 AM
 
1 posts, read 3,205 times
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We lost our flooring business in AZ last year due to the housing "crash", we have four children, and live in a house with a mortgage of $2700.00, we can no longer afford our house and since the home values have dropped we cannot sell it, we are going to be out of here is two weeks, so should we then be "PUNISHED"?
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Old 04-28-2009, 11:07 AM
 
1 posts, read 3,184 times
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I do believe Fannie and Freddie have shortened their "wait time" to two years only for people who have certain circumstances. Otherwise, it is treated as if it was a foreclosure. Those circumstances stated are along the lines of serious illness/disability or transfer/relocation of job. There are plenty of people in unique situations and I believe Fannie and Freddie recognize that.
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Old 04-28-2009, 11:42 AM
 
Location: Tucson, AZ - The mountains are free here.
641 posts, read 1,842,118 times
Reputation: 326
I think I can kind of see where the OP is coming from with this -- this is a really bad situation and things like this are never easy to come to terms with.

I think a lot of irresponsible people got a lot of loans from irresponsible banks, but not everyone was - like someone else said - a scumbag looking for a good deal.
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Old 04-28-2009, 12:43 PM
 
26,590 posts, read 56,786,220 times
Reputation: 13073
Quote:
Originally Posted by collulu View Post
We lost our flooring business in AZ last year due to the housing "crash", we have four children, and live in a house with a mortgage of $2700.00, we can no longer afford our house and since the home values have dropped we cannot sell it, we are going to be out of here is two weeks, so should we then be "PUNISHED"?
Your story is no different than so many others who lost homes due to unfortunate circumstances, but the answer in short is that yes, you should be "punished."

Take the hit, and spend the next five years rebuilding your credit and saving for a downpayment on a new home. You are not entitled to home ownership. Nobody is, and the sooner we all realize that, the better off we'll all be.
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Old 09-02-2009, 11:34 AM
 
Location: MN
4 posts, read 15,527 times
Reputation: 11
We had two weeks to pack up and move to another state, as my husband's company said he was gonna be laid off if he didn't take this transfer. Put the house on the market and it sold as a short sale 8 months later. Now we have to wait three years before getting another mortgage. This urks me that- before this short sale we ALWAYS paid on time, this job transfer was not our doing,,but now we cannot get a mortgage due to short sale showing on our credit. We are good people and pay our bills on time(i'm a bookkeeper so i know better not to pay our bills)... but when the company says your being transferred in two weeks - then what are you to do?
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Old 09-02-2009, 11:59 AM
 
4,967 posts, read 12,568,692 times
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It is my understanding that a short sale IS treated exactly the same as a foreclosure when it comes to qualifying for a new mortgage. I verified this with one of my wholesale underwriters a while back.

I believe it is 3 years for FHA and 4 years for conventional (Fannie/Freddie).

edit: Or, maybe 5 years for conventional as Daddy points out.
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