We just answered a question from a Veteran that went something like this, "I sold a home last year that had two mortgages. The first mortgage was paid in full, the second mortgage was not. Can I get a VA Loan now that it's been more than 12 months?"
There are two really, really important facts that we need before we can answer the Veteran's question.
The first one is - why did you short sale the home? Strategic Short Sales are not going to sit well with an underwriter, and could be the basis for denying the loan.
Additionally, since it's been 12 months, we need to know if there were any late payments on the mortgage prior to the Short Sale. If there were missed payments, then VA will make us wait three years before we can do another VA Mortgage Loan.
Since it was a first mortgage that was paid in full, it is unlikely that the Veteran has a delinquent FHA, VA or USDA mortgage loan balance showing. If there WAS a delinquent Government loan balance - you would not be eligible for another Government Insured Loan.
The Veteran in this case has a credit score of 660, and the second mortgage does not show a deficiency balance owed, but it does clearly show on the credit report as a short sale. The reason for the move was because the Veteran lost their job in Florida and relocated to NC with a job they've now held for over a year (same line of work). In this case, the Veteran never missed a payment on the mortgage - they simply did not have cash (they'd been living on savings while looking for a job) to cover the $25,000 short on the second mortgage.
In a case like this - 12 months must pass from the time of the short sale, and the application for a VA loan. Our underwriters require that we get some sort of statement from the Second Mortgage Holder indicating that they are not going to file a deficiency balance against the Veteran... we ARE able to make this loan.
If you've had a short sale, and you want to know if you can now purchase a new home in North Carolina - call Steve and Eleanor Thorne, FFSI, 919-649-5058 - we have the best mortgage rates and the lowest fees available!
Very good information Eleanor. I think lenders are going to be cutting some of these short sale sellers some slack in the near future. Especially if they tried to do the right thing but were caught up in circumstances beyond their control. Your guy is a perfect example of someone whoo should qualify for a mortgage.
Very helpful. Thanks for sharing.
So difficult in today's marketplace to know all the new rules thanks for clarifying .
Very Good information! I am sure we will see more of this in our area as we are next to an Air Force Base.
This is an very interesting senario. I will keep this in mind if I find a someone in the same situation.
Eleanor,
Thanks for the information. I help many VA borrowers who often need to short sale the VA loan. The question often comes up about VA eligibilty after a VA short sale. It would be great if you could blog about the rules of getting a new VA loan after a short sale.
Thanks.
Very timely information for my market, so I re-blogged this post. I'd love to re-blog it on my outside blog, giving you credit as a guest blogger, so let me know if that's okay.
Please re-blog in places that will help others, would appreciate a link back.
Dave - the biggest "rules" about getting a VA Loan after a Short Sales are:
This is great information, Eleaor. I read it on Margaret's Blog and otherwise I would have missed it. I am going to Suggest, because I think this is helpful for people who are trying to recover from a shortsale.
I too saw Margaret's reblog. Eleanor - you always have such great information that people can use! I too hit the suggest button!