Applying for a VA Mortgage After A Short Sale:
July 17, 2014
If you’re searching for answers to when you might be eligible for a VA Mortgage after a Short Sale you’ve likely seen or heard things like , VA requires a 2 year wait or you maybe eligible for a VA Mortgage in less than 1 year if you were not late on the mortgage payments leading up to the Short Sale. The truth of the matter is this, VA DOES NOT have specific, written, guidelines regarding Short Sales so lenders apply FHA and Fannie Mae Short Sale guidelines to their VA Mortgage requirements.
I have been able to approve and fund VA Mortgage after a Short Sale for Veterans less than 1 year from their short sale when there were no late payments on the mortgage leading up to the short sale and just over 1 year when there were late payments on the mortgage. We have to review the VA Mortgage underwriting guidelines to see why there is a difference.
Here are the actual VA Mortgage underwriting guidelines:
http://benefits.va.gov/warms/pam26_7.asp
Chapter 4 pages 43- 45
Adverse Data
Reestablished Credit: In circumstances not involving bankruptcy, satisfactory credit is generally considered to be reestablished after the veteran, or veteran and spouse, have made satisfactory payments for 12 months after the date the last derogatory credit item was satisfied. For example, assume a credit report reveals several unpaid collections, including some which have been outstanding for many years. Once the borrower has satisfied the obligations, and then makes timely payments on subsequent obligations for at least 12 months, satisfactory credit is reestablished.
So it makes sense that if a Veteran was late on their mortgage payments leading up to the Short Sale, they would have to wait 12 months to be eligible for a VA Mortgage after a Short Sale to show they’ve re-established their credit.
Here is additional guidance from VA and I’m told VA will update their guidelines to reflect this information soon.
“If a veteran’s overall credit record is good, we do not think the fact that he/she did a Short Sale, should be a bar to obtaining new credit. Nor do we think a mandatory waiting period is necessary, similar to the waiting period after a foreclosure or bankruptcy.
We think a Short Sale just reflects the historical collapse of the real estate market. If the borrower’s overall credit is satisfactory, a lender can still determine the Veteran is a satisfactory credit risk. Hopefully, the payments on the mortgage were paid timely, but even if there were some delinquent payments, they should just be viewed from the perspective of all the borrower’s credit. VA’s position on Short Sales is as long as there is no remaining deficiency balance owed (that can become a judgment lien), and the veteran has resolved his credit issues, they are eligible for a new VA Mortgage after a Short Sale.”
You have to find the right lender to help you when Applying for a VA Mortgage after a Short Sale. I have the investors that actually follow VA’s guidelines so I can get your VA Mortgage closed even if you’ve had a Short Sale.
If you have questions or you want to see how much you qualify for, feel free to call me at (877)228-9069 or fill out the form below.
