How Long do Potential Buyers Have to Wait after Foreclosure, Bankruptcy or Short Salele

Howlong do potential buyers need to wait after a Bankruptcy, Foreclosure or ShortSale before obtaining financing?

This is a frequent question these days.
Below is a summary, by loan type, of the waiting period to obtain financing post a BK, Foreclosure or Short Sale.

Conventional

 Chapter 7 Bankruptcy → 4 years from discharge date
 Chapter 13 Bankruptcy → 2 years from discharge date
 Foreclosure →5 years from completion date
 Deed-In-Lieu of Foreclosure → 4 years from completion date
 Short Sale → 2 years from completion date

FHA

 Chapter 7 Bankruptcy → 2 years from discharge date
 Chapter 13 Bankruptcy → 1 year of the payout must elapse & payment performance must be satisfactory buyer must receive permission from the court to enter into a mortgage
 Foreclosure → 3 years from completion date
 Short Sale → 3 years from completion date

VA

 Chapter 7 Bankruptcy → 2 years from discharge date
 Chapter 13 Bankruptcy → 1 year of the payout must elapse & payment performance must be satisfactory; buyer must receive permission from the court to enter into a mortgage
 Foreclosure → 2 years from completion date
 Short Sale →No specific information on this yet, assume foreclosure rule of 2 years

USDARural

 Bankruptcy (Ch.7&Ch.13) → 3 years from discharge date
 Foreclosure → 3 years from completion date
 Short Sale → No specific information on this yet, assume foreclosure rule of 3 years

FHA Changes coming January 2010

FHA Changes coming January 1st,2010

Appraisals

Appraisals will be valid for 120 days now – old rule was 6 months (168 days)

FHA Appraisals can be transferred from one lender to another per the borrowers request.

FHA recognizes that the second lender may need to order a new appraisal but only under limited conditions
- The underwriter for the second lender finds material defect with the original appraisal
- The original appraiser is on the second lenders exclusionary list
- The first lender fails to provide a copy of the appraisal in a timely manner, which causes potential harm to the borrower through events outside the borrowers control. The events would be rate lock expiring, or purchase contract, close of escrow expiring or foreclosure proceedings.

Weekly Mortgage Update

Strong Economic Data Pushes Mortgage Rates Higher

With just minor exceptions, all of the economic data released this week beat the consensus forecast, indicating that the economy is improving more quickly than expected. While current inflation levels remain low, faster economic growth generally leads to higher future inflation, which is negative for mortgage rates. As a result, mortgage rates ended the week higher.

Early in the week, stronger than expected manufacturing and housing data convinced economists to revise higher their forecasts for economic growth, and Friday’s Employment data supported the improved economic outlook. Against a consensus forecast for a loss of -300K jobs, the economy lost -247K jobs in July, and the May and June data was revised to show fewer job losses as well. This was the 19th straight month of job declines, but it was the smallest level of losses since August 2008. The July Unemployment Rate fell to 9.4% from 9.5% in June, its first decline in 15 months. In addition, wages and the length of the average workweek increased. Overall, this report revealed unexpected improvement in nearly every area.

This week’s housing market data also came in stronger than expected. June Pending Home Sales rose 4%, the fifth consecutive monthly increase. Pending Home Sales are a leading indicator for future housing market activity, meaning that Existing and New Home Sales reports may show improvement in coming months. According to the chief economist of the National Association of Realtors (NAR), affordable home prices, low mortgage rates, and a rush to take advantage of the $8,000 first-time homebuyer tax credit have helped increase home sales.

Tax Credit Procedure

One Of my client had a hard time getting hr tax credit from the IRS ans kindly shared this with me. Thanks Breigh.

HERE IS WHAT YOU NEED TO PROPERLY FILE FOR THE FIRST-TIME HOMEBUYER CREDIT:

FORM 5405 – First-Time Homebuyer Credit FOR 2008
FORM 1040X Amended US Individual Income Tax Return (This is what I was missing because the 5405 said I needed to attach it to the “1040″ NOT the 1040X)
On this form, there is a block to check if the new address shown is different from the last return. THIS TAKES CARE OF THE CHANGE OF ADDRESS!

Send all this to the IRS Regional Address you sent you taxes to in 2008. And don’t forget to sign the forms.
HERE IS WHAT YOU NEED TO PROPERLY FILE FOR THE FIRST-TIME HOMEBUYER CREDIT:

FORM 5405 – First-Time Homebuyer Credit FOR 2008
FORM 1040X Amended US Individual Income Tax Return (This is what I was missing because the 5405 said I needed to attach it to the “1040″ NOT the 1040X)
On this form, there is a block to check if the new address shown is different from the last return. THIS TAKES CARE OF THE CHANGE OF ADDRESS!

Send all this to the IRS Regional Address you sent you taxes to in 2008. And don’t forget to sign the forms.
HERE IS WHAT YOU NEED TO PROPERLY FILE FOR THE FIRST-TIME HOMEBUYER CREDIT:

FORM 5405 – First-Time Homebuyer Credit FOR 2008
FORM 1040X Amended US Individual Income Tax Return (This is what I was missing because the 5405 said I needed to attach it to the “1040″ NOT the 1040X)
On this form, there is a block to check if the new address shown is different from the last return. THIS TAKES CARE OF THE CHANGE OF ADDRESS!

Send all this to the IRS Regional Address you sent you taxes to in 2008. And don’t forget to sign the forms.

Weekly Mortgage Update 7/31/09

Auction Results Push Mortgage Rates Lower

Mortgage investors were more focused on this week’s Treasury auctions than on the economic data. Overall, demand remained healthy for US Treasury securities, and mortgage rates ended the week a little lower. Major economic reports on Gross Domestic Product (GDP), Durable Orders, and Chicago PMI manufacturing contained mixed results and were roughly neutral for mortgage rates.

While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week’s record supply of government debt. The auctions got off to a rocky start, with demand falling back to average levels for the 2-yr and 5-yr auctions. Strong foreign demand for the 7-yr Treasuries eased investor concerns, however, and mortgage rates improved after the auction. China, in particular, holds about $800 billion in US Treasury securities and is an enormous buyer. Chinese officials were in Washington this week meeting with US economic leaders, and the Chinese expressed concern that US budget deficits would reduce the value of its US Treasuries. Analysts believe that reduced buying from China caused the weaker than expected demand for the 2-yr and 5-yr auctions, but they fully participated in the 7-yr auction. With the US government issuing record amounts of new debt, investors will be closely watching for changes in China’s purchasing policy. Any perceived reduction in China’s demand would likely push long-term interest rates, including mortgage rates, higher.

This week’s housing market data was generally positive. June New Home Sales jumped 11%, the third straight month of increases. Inventories of unsold new homes fell to an 8.8-month supply from a 10.2-month supply in May. The May Case-Shiller index of home prices in 20 metropolitan areas rose 0.5% from April, following 34 straight months of declines. While the results varied greatly in different parts of the country, the increase in average prices provided support for the analysts who believe that the housing market has bottomed.

 

Weekly update 7/24/09

Stock Rally Offsets Positive Inflation News

Early in the week, a forecast from the Fed that inflation should remain low for the next couple of years moved mortgage rates lower. The economic news later in the week was less favorable for mortgage rates, however. Strong earnings reports produced a rally in the stock market, which pushed mortgage rates higher. In the end, mortgage rates finished the week essentially unchanged.

In testimony before Congress on Tuesday, Fed Chairman Bernanke provided an update on the Fed’s outlook for economic conditions. Of note, Bernanke predicted that inflation will not be a concern any time soon, which was good news for mortgage rates. While he expects economic growth to turn positive later this year, he suggested that the labor market may be weak for several years. As a result, the fed funds rate will likely remain near zero for “an extended period”.

The June Existing Home Sales report contained positive news for the housing market. In June, Existing Home Sales rose for the third straight month, climbing 4%. The inventory of unsold existing homes fell to a 9.4-month supply from a 9.8-month supply in May. The national median home price rose 4% from May. According to the National Association of Realtors (NAR), home sales were helped by the first-time homebuyer tax credit and “historically high affordability conditions”.

Downpayment assistance to 22% of home value

YOur Way Home Arizona Down Payment Assistance Program -upto 22% assistance to loan of $346,250.

Some highlights of the program

Income limits are household which includes all people living in the house over 18- this ia $55,350 for a 1 person household, $63,250 for a 2 person housedold, $79,100 for a 4 person household.

No non-occupant coborrowers must be owner occupied
Must put down 3% (1% must be of their own funds/2% can be gifted)
22% additional down given through this program- silent second- no payment or interest

Seller can contribute toward closing costs
Borrower must attend an APPROVED housing counseling class.

They will do a review appraisal at their cost on all appraisals
They do their own inspection of the property

Plan on a 45-60 day close of escrow

Doesn’t have to be first time homebuyer
If they own other real estate they can’t use this program if they resided in their other home as their primary residence in the preceding 12 months
The 22% down second is forgiven under these terms: 1) they occupy the property 2) retain ownership for the term of the second 3) don’t transfer ownership. It also depends on the amount of money borrowed.
They will not subordinate to future refinance transactions
Only available on foreclosed  properties- no short sales!
Seller agrees to a price reduction if the appraised value minus 1% is lower than the purchase price

Example of the price reduction:

Example #1

Purchase contract= $100,000 sales price

Appraised value= $100,000

Bank must agree to a $99,000 sales price which is 1% less than appraised value and is lower than the purchase price

Example #2

Purchase contract= $100,000 sales price

Appraised value= $105,000

1%= $1050

$105,000 -$1050=$103,950- this exceeds purchase price so contract price doesn’t change

Income limits are household which includes all people living in the house over 18
DEBT RATIOS are 31/43 firm
No non-occupant coborrowers
Owner occ only
Must put down 3% (1% must be of their own funds/2% can be gifted)
22% additional down given through this program- silent second- no payment or interest- our cltv will be 97% in most cases
Seller can contribute toward closing costs
Borrower must attend an APPROVED housing counseling class. Yourwayhomeaz will announce in the next few weeks the approved agencies we can use
They will do a review appraisal at their cost on all appraisals
They do their own inspection of the property- see the Minimum Property Standards attachment
Plan on a 45-60 day COE
Doesn’t have to be first time homebuyer
If they own other real estate they can’t use this program if they resided in their other home as their primary residence in the preceding 12 months
The 22% down second is forgiven under these terms: 1) they occupy the property 2) retain ownership for the term of the second 3) don’t transfer ownership
They will not subordinate to future refinance transactions
Only available on REO properties- no short sales!
Seller agrees to a price reduction if the appraised value minus 1% is lower than the purchase price

Example of the price reduction:

Example #1

Purchase contract= $100,000 sales price

Appraised value= $100,000

Bank must agree to a $99,000 sales price which is 1% less than appraised value and is lower than the purchase price

Example #2

Purchase contract= $100,000 sales price

Appraised value= $105,000

1%= $1050

$105,000 -$1050=$103,950- this exceeds purchase price so contract price doesn’t change

YOur Way Home Arizona Down Payment Assistance program
Income limits are household which includes all people living in the house over 18
DEBT RATIOS are 31/43 firm
No non-occupant coborrowers
Owner occ only
Must put down 3% (1% must be of their own funds/2% can be gifted)
22% additional down given through this program- silent second- no payment or interest- our cltv will be 97% in most cases
Seller can contribute toward closing costs
Borrower must attend an APPROVED housing counseling class. Yourwayhomeaz will announce in the next few weeks the approved agencies we can use
They will do a review appraisal at their cost on all appraisals
They do their own inspection of the property- see the Minimum Property Standards attachment
Plan on a 45-60 day COE
Doesn’t have to be first time homebuyer
If they own other real estate they can’t use this program if they resided in their other home as their primary residence in the preceding 12 months
The 22% down second is forgiven under these terms: 1) they occupy the property 2) retain ownership for the term of the second 3) don’t transfer ownership
They will not subordinate to future refinance transactions
Only available on REO properties- no short sales!
Seller agrees to a price reduction if the appraised value minus 1% is lower than the purchase price

Example of the price reduction:

Example #1

Purchase contract= $100,000 sales price

Appraised value= $100,000

Bank must agree to a $99,000 sales price which is 1% less than appraised value and is lower than the purchase price

Example #2

Purchase contract= $100,000 sales price

Appraised value= $105,000

1%= $1050

$105,000 -$1050=$103,950- this exceeds purchase price so contract price doesn’t change

Weekly update July 17th

Stock Rally Pushes Mortgage Rates Higher

While the economic data released during the week generally matched expectations, the outlook for future economic growth improved due to strong earnings reports, tame inflation data, and a revised forecast from the Fed. Stronger economic growth was good news for the stock market, and the Dow rose over 500 points. It was unfavorable for the bond market, however, and mortgage rates ended the week moderately higher.

On Wednesday, the Fed released its minutes from the June 24 FOMC meeting, and most of the news was negative for mortgage rates. The minutes revealed an upward revision to the Fed’s forecast for economic growth and inflation in 2009 and 2010. In addition, Fed officials expressed a strong reluctance to increase any further the program to purchase mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices. When the Fed initially announced its MBS purchase program in November, mortgage rates immediately dropped, and they dropped again significantly when the Fed announced an increase in the program in March. The Fed has a substantial involvement in MBS markets, and any change in this program would have a major impact on mortgage rates.

The housing sector data released during the week showed improvement. June Housing Starts rose 4% to the highest level in seven months. Building Permits, a leading indicator, jumped 9%. The national Association of Home Builders (NAHB) sentiment index increased to the highest level since September 2008. According to the NAHB, the first-time homebuyer tax credit, low mortgage rates, and “attractive” home prices are helping home sales.

Weekly Update

Strong Treasury Auctions Lower Mortgage Rates

With a light schedule for economic data, Treasury auctions had the greatest impact on mortgage rates during the week. Strong demand for the auctions and declines in the stock market helped mortgage rates end the week lower.

In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to pay for all the stimulus programs. The risk is that investors will require significantly higher yields to continue purchasing an expanding supply of bonds. Strong demand from both domestic and foreign investors at this week’s 3-yr, 10-yr, and 30-yr Treasury auctions eased those concerns. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which are the basis for the level of mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. The willingness of investors to purchase longer-term bonds (including Treasuries and MBS) at the current low rates is very encouraging.

Also this week, there was mounting speculation about the passage of a second round of fiscal stimulus before the end of the year. Given the weaker than expected June Employment data, the political pressure is increasing to take additional steps to create jobs. If another stimulus package is passed, the increase in the supply of debt required to pay for it could pressure mortgage rates higher.

New Condominium Eligibility Requirements

HUD ( the Dpeartment of Housing and Urban Development) have issued new requirements regarding condo’s

1. projects must have two or more units

2. projects must have hazard and liability insurance and where needed flood insurance

3.No more thatn 25% of the property’s total square footage can be used for commercial purposes

4.no more than 10% of units may be owned by one investor

5. no more than 15% of the total units can be in arrears

6.At least 50% ot toal units must be sold prior to endorsement on a unit

7. At least 50% of units must be owner -occupied

8. Legal phasing is permitted in multiphased projects- the owner occupancy is calculated on each phase

9.Fha concentration – where there are four or more units no more than 30% of total number of units can be FHA insured.

10 . Reserve Study – must be less than 12 months old and must indicate there are adequate funds for capital expenditure and maintenance.