They have a unique situation…they had moved into their rental property in Fairfield, CA after they did a short sale on their primary residence in Vacaville, CA. That property is also under water, so I needed to find out how they would be able to buy a new home in Bay Area while still owning a property that was upside down.
As soon as they contacted me, I contacted a few of the loan consultants that I work with to see if they would be able to help them get a loan for a new property.
On December 1, 2010. Margalit Ir, Mortgage Loan Officer at Bank of America stated:
The guidelines at Bank of America to purchase a property after a short sales is as follows:
Loan to Value > 80% will be 5 years from the date of the short sale
Loan to value < 80% will be 2 years from the date of the short sale.
Credit must be re-established with good repayment history. Rental Income can only be considered if rent has been received for two years and is declared on the 1040 Tax returns. Schedule E.
I also spoke to Delmy Steward, a great Sr. Loan Consultant at J.W. Bradley. She responded to their scenario of getting a loan after doing a short sale as follows:
I will check into it but I think we need 3 years from the date of a short sale/foreclosure. They are viewed the same on the guidelines. I do VA loans also and they do require a 3 year period from the short sale/foreclosure …
Since they are occupying a home that is upside down and does not have 30% equity even if they put on the application they will rent it out, we can’t use rental income to offset payment. They will have to qualify with the old and new payment . I will have run their credit to be sure where they stand.
Both Delmy Steward and Margalit Ir are fantastic very resourceful loan agents who can work quickly and often get loans done when others cannot.
If you or someone you know would like to speak to Delmy Steward or Margalit Ir about getting pre-qualified or preapproved for a loan, Margalit Ir can be contacted by phone at (925) 208-2475 and via email at margalit.a.ir@bankofamerica.com ; her website is http://mortgage.bankofamerica.com/margalitair . . Delmy Steward can be reached by phone at 925-864-7717 and via email at delmy.steward@wjbradley.com.
Another possibility is FHA financing after completing a short sale. If the short sale was non-deficient and the seller had not been late on any of their mortgage payments, and a few other guidelines, there is an FHA loan program that does loan to people right away after doing a short sale. Given the current California housing market and the fact that most of the properties for sale in Livermore, Alameda County, Contra Costa County, Solano County, the tri-valley, and East Bay, Bay Area are either short sales or foreclosures, a person using the special FHA financing after doing a short sale would likely need to rent or live in some sort of transitional housing for a few months until a new property could be identified and purchased. There is definitely a benefit to using FHA financing…with its very low 3 1/2% down payment, so the inconvenience of transitional housing may be worthwhile for many.
I will keep you posted to let you know how things turn out with my great clients.
Are you considering buying a home in California before or after doing a short sale? Have you already bought a home after completing a short sale? Did you use conventional or FHA financing? Who did your loan? Did you get a loan from a bank or a mortgage broker? I would love to hear about it!
