Wow, am I glad I found your site. I live in Southern California and am thinking about short selling my one bedroom co-op condo. I bought the place before I was married and had a baby. My husband’s name is not on any of the paperwork. Technically, we are not in distress since we have never been late, have money in the bank (about $7K), have a decent APR but want to move since our daughter is getting a little old to share a bedroom with us.

I bought the property in 2006 for $222K. I currently owe $150K on the mortgage and another $23K on a HELOC with the same lender from Pennsylvania. A similar unit in my building recently sold for $150K.  I think we will be close to covering the mortgage amount but would be completely short on the HELOC.  Do you think the bank will accept this short sale and would we be able to buy another property? We wanted to buy a house with an FHA loan right afterwards.

Also, if the bank does accept the offer what would be the best way to have it reported on my credit report.

THANKS A MILLION!

Rebecca (more…)

I am a realtor and met with a lady about selling her house.  She purchased it, with and FHA loan in 2004.  She moved to a new home in 2008 and rented it out (a no-no).  She now wants to sell it, due to bad renters and is losing money each month on it.  Problem is she is upside about 40K.  She was 4 months behind and the bank is modifying the loan to get her caught up, but, she still wants to sell.  The bank knows it is FHA.  Will they (wells fargo) work with her on a short sale.  I understand the rules if it was owner-occupied, but, it isn’t.  Any thoughts?

Jim (more…)

I’ll try to make this short. My wife and I were discharged from a Chapter 7 almost a year ago (we’re in Colorado). We kept our home, did not reaffirm 1st (ARM) or 2nd (HELOC) mortgages.

After almost one year we are upside down in the home (value $150K, owe $210K). We starting to struggle. 2nd mortgage will not subordinate for a refinance, even though they are discharged and have no equity position. We are unable to keep up on badly needed repairs, etc., and definitely will fall behind if rates rise.

We have decided to give back the home (we’ll have no liability due to the BK). Wondering if we should do a short sale to prevent a foreclosure on our credit reports, or if it matters. 1st has not reported to credit reports in a year, but second has been reporting current payments, even though we have had lates (are they allowed to report after BK when not reaffirmed?).

We are going to stop making all payments to 1st and 2nd to save for a new home, possibly starting short sale process soon. Will we be able to buy a more modest home in 1-2 years? We will rent until then.

Casey (more…)

Hey Paul!! 

I thought many of your readers may be due a refund from HUD if they had a FHA mortgage.   With an FHA loan, it is my understanding that you pay for insurance upfront.  Many people can get a portion of the insurance premium refunded back to them.  My husband and I sold our house before our year of insurance premium was used.  It has now been 5 years and we are getting $1137 back.  Thanks Uncle Sam! Here is the link

Amanda

Paul,

Would I qualify for an FHA loan? I lost my job and had to Short Sale my home, I received official release by letter of all liability in July 2007.

Is it a 2 year or 3 year waiting period?  Are short sales “officially” considered foreclosures as of today?  Most importantly, do you know of an underwrite who can help me with a loan???

Desperate here, rented for 2 years here in Henderson. I can’t afford a Conventional 10% down.

Love you website – I’d appreciate your help.

Jayne (more…)

Due to a failed business we filed bankruptcy before we were late for even a single mortgage payment. AFTER the discharge the lender foreclosed. Thanks to my monitoring an subsequent disputes there is not a single mention of foreclosure on our credit reports.

We are 2 years post bankruptcy and are applying for an FHA loan. The issue of foreclosure has come up (you have to be 3 years post foreclosure).

Can they use the foreclosure to deny us a loan when the lenders themselves are not allowed to mention foreclosure after the discharge because it violates the bankruptcy code?

Thanks!

Melissa (more…)

MORTGAGEE LETTER 2009-15

TO:  ALL APPROVED MORTGAGEES

SUBJECT:  Using First-Time Homebuyer Tax Credits for the Downpayment 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers.  FHA supports this important Administration initiative to promote homeownership.  This mortgagee letter provides:

• Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website.  Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website at irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.
• Guidance on how Federal, state, and local government agencies, nonprofits instrumentalities of government and FHA-approved nonprofits may assist homebuyers that are eligible for the tax credit.

I.  About the First-Time Homebuyer Tax Credit (from the IRS website)
(Please check the IRS website to ensure you have up-to-date information)

Amount of the tax credit:

Generally, the credit is the smaller of:

• $8000 or
• 10% of the purchase price of the home
• A phase-out of the credit begins when the taxpayer’s modified adjusted income exceeds $75,000 or $150,000 if married filing jointly, and is eliminated completely at $95,000 or $170,000 if married filing jointly.
• As a “refundable” tax credit, taxes owed by or refunds due to the taxpayer are factored into the calculation.

Claiming the tax credit:

Filing form IRS 5405 [available at irs.gov/pub/irs-pdf/f5405.pdf ], “First-Time Homebuyer Credit” along with filing:

• The 2008 tax return (if not yet filed)
• An amended 2008 tax return (if already filed)
• The 2009 tax return

Eligibility for the tax credit

• First-time homebuyers, defined by IRS as those not having had any ownership, including that with a spouse if married, during the three-year period ending on the date of purchase.
• Owner-occupants who purchase a principal residence and close on the mortgage before December 1, 2009.
• First-time homebuyers must purchase the property from a source unrelated to them, i.e., they cannot purchase the house from a spouse, parent, grandparent, child, or acquire the property by gift or inheritance and obtain the tax credit.

II. FHA Guidance

The Tax Credit:  Secondary Financing: 

Entities that can offer tax credit advances with second liens.

• Federal, state, and local governmental agencies and nonprofit instrumentalities of government.
• FHA-approved nonprofits.

Additional information about these entities:

• Government agencies and instrumentalities of government are described in handbook HUD-4155.1 REV-5, paragraphs 1-13 A and B.
• FHA-approved nonprofits can be found, per each Homeownership Center jurisdiction, at: hud.gov/offices/hsg/sfh/np/np_hoc.cfm

How the secondary financing works:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.  The second lien may not exceed the total needed for the downpayment, closing costs and prepaid expenses.
• The tax credit advance must provide that if the borrower does not repay the amount borrowed by the designated deadline, that principal and interest payments begin automatically.
• If payments on the tax credit advance are required, they must be included in qualifying the borrower and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• If payments on the tax credit are deferred, the deferment must be for a minimum of 36 months in order for the payment to not be included in the qualifying ratios.
• The tax credit advance second mortgage must not provide for a balloon payment before ten years.

The Tax Credit: Short-Term Loan: 

Entities that can offer the tax credit advance with short-term loans:

• Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.

How the short-term tax credit advance loan works:

• The amount that may be borrowed in this manner may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405.
• Fees and charges for the tax credit advance loan are not to exceed a nominal amount necessary for preparing and administering the loan.

If you have any questions regarding this mortgagee letter, please call FHA’s Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner

I’m about to put my house up for short sale, the mortgage is just in my name.  Can my husband get a mortgage in his name while our house is up for sale?

Peg (more…)

If you are currently in a chapter 13 can you qualify for an FHA mortgage? 

The chapter 13 plan was approved but with the debtor surrendering the 2 properties that have NOT been offically foreclosed.

Can the trustee help the debtor by not letting the mortgage company pursue foreclosure since the properties are surrendered and the mortgage companies did not object to the confirmation plan?

Also there was a pending lawsuit that made it difficult beyond the debtor’s control to hold the properties thus surrendering and moved toward confirmation of debtor’s plan.

FHA guidelines stupilate that you can’t have any foreclose property for 3 years but will consider if the foreclosure happened beyond the debtor control. The debtors original filings have all been to pay back 100% to creditors but couldn’t due to lawsuit.  The debtor has strong employment and hasn’t missed any payments to chpter 13. 

Any advise????

Ana (more…)

Please help. Our mortgage officer made it look like we are commiting fraud and our loan was denied. This is long winded, but detail is important here. I was renting the basement from my now husband in a 55 or older condo that he was grandfathered into.

Last year he decided to buy a home and sell the condo because his mother is ill, he wanted to take care of his parents as well as me and my children. The condo does not allow kids. He began looking for a new home and put the condo on the market.

I filled out a rental agreement last year. In that year oops we fell in love and ran off and got married. His mothers health declined even more and his parents moved into the condo with us. The condo said I had to leave… no kids.

We found the perfect house that will house his parents in the basement but they would stay in the condo until it sold. The loan officer first asked me to sign another rental agreement saying that one was out of date, so I did. His debt ratio was not good  but his credit is near perfect so we added his parents to the loan. We kept my name off because my credit is horrible.

Our loan was denied stating fraud because I filled out a rental agreement and I am his wife. The rental agreement should have been pulled prior to turning it in to the underwriter because with his parents on the loan we qualified without.

Now we do not know what to do at this point.  We have four working adults in the house, perfect credit, and a denial because of a loan agreement that was neglected. Any advice would be helpful.

Dina (more…)