Just started and looking for feedback on my situation...

[bhunter]

First Id like to say that I feel a bit more relieved that I found this forum. I see a wealth of information being exchanged, and Id like to give thanks in advance for any feedback.

So the common theme that I have gathered thus is that if you're current in payments, chances are you'll get denied for a loan modification. If this is the case, then does it make really make sense to purposely fall behind for the sake of ruining your credit (assuming good credit)? Well, I heard this from some people, and it made me think.

Here a quick snapshot of my situation. I own a FL condo for investment purposes only and rent in the overpriced CA rental market. I wish I could press a button and move my condo to CA. This would solve all my problems. My first loan is with US BANK and I have a HELOC with BOA. As you could guess, this investment went sour and is now valued at 45% less the initial appraisal 3 yrs ago. Over the last 2 years, my HOA doubled, and my payments will double in about 6 years.

Basically, my head is above water, barely, and as you know - it's not fun. Nothing is guaranteed in this economy and it can get worse, especially if my tenet decides to leave or gets laid off, which has already happened twice.

Now here comes my second thought. With the housing market being the way it is, I could afford to own in CA, but only if my FL mortgage payment was properly adjusted to its current value, or vanished completely via short sale or foreclosure (please allow me to make this sound simple).

Since my credit is stellar today, would it make sense to FIRST buy in CA, and THEN apply for a Loan Mod for the FL investment after the fact? This way I take advantage of my good credit while I have it, and then better position myself to modify my FL investment loans. Is this horrible thinking or is it smart? What would you do?

Please let me know any thoughts, advice, the good, bad and the ugly as I am sure I might be overlooking something here with my lack of experience. Again, I am so new to this, I hope I didn't offend anyone and I probably sound like I dont know what im talking about at all, just looking for some direction.

Thanks,
bhunter

[Moe Bedard]

Hi bhunter,


Welcome to the forum and thank you for joining.............

The modifications given are up to the investors on the the loans and they have not been reducing principal for modification options on first mortgages. While there have been modifications done without being late, they are done in a hardship situation and a member was recently told by BofA that declining values unfortunately, are not considered a hardship. As far as buying and bailing..........that is considered material misrepresentation by the FBI who is investigating this type of mortgage fraud.........and the lender that you bailed on could come after future assets for their loss........including the new property.


If considering buying again after a foreclosure/deed in lieu/ or short sale..................

These are the guidelines per FannieMae/ FreddieMac for buying again and the timeframe needed to wait after, foreclosure, deed in lieu, and short sale on conventional loans revised specifically for the market conditions the way they are.



Fannie Mae/ Freddie Mac two private US-based mortgage buyer powerhouses, have set new guidelines to protect business interests and to further safeguard its buyers from foreclosure. The fresh set of policies will affect borrowers who have loan applications submitted after August 1, 2008.

What factors affect the waiting period?

A waiting period is the time from the completion of the foreclosure until the time when buyer decides to purchase a new home. Under the new rules, the length of waiting before one is approved for a conventional loan would depend on two factors – the kind of foreclosure and the extenuating circumstances.

Waiting Period under the Different Kinds of Foreclosure
Given these new considerations, the length of time before one can buy a home depends on the kind of foreclosure:

Foreclosure – 5 -7 years

Foreclosure which has extenuating circumstances – 3-7 years
Deed-in-lieu of foreclosure – 4-7 years
Deed-in-lieu of foreclosure with extenuating circumstances – 2-7 years


Short sale – 2 years

Extenuating Circumstances
Factors beyond a person’s control are called documented extenuating circumstances. Fannie Mae/Freddie Mac lessens the waiting period if a borrower is affected by the following uncontrollable factors:

Death (not the borrower’s)
Job transfer
Sickness
Accidents which result to severe injury

Additional Guidelines:

Fannie Mae/ Freddie Mac, also have additional guidelines for its buyers. Borrowers should look towards buying a primary place of residence. This means that rental or vacation houses are not considered.

Aside from this waiting period, the following may also required by Fannie Mae/ Freddie Mac for some loans:

a FICO score in the required minimum
a 10% down payment



FHA loan guidelines are a little more lenient than conventional guidelines

Foreclosure/Short Sale 3 years after foreclosure has been completed
Chapter 7 Bankruptcy 2 years after charge off
Chapter 13 Bankruptcy 1 year (everything must be paid off)



Veteran Administration (VA) loans typically take up to two years after a foreclosure, short sale or bankruptcy. The borrower(s) must provide proof that there is no outstanding debt. Credit must be re-established along with an explanation letter and full VA entitlement.


Some lenders will not allow a mortgage within 7 years if you are applying with the same lender that the foreclosure or short sale occurred through. They probably have a bad taste in their mouth from the previous mortgage.