Home Loan Approval After Short Sale

When can I buy after a short sale?  This is a riddle all too many homeowners are trying to answer today.  In Arizona mortgage balance often exceeds home value putting many in a tough spot.  The majority of loan options available today come custom fit with guidelines that prohibit short sellers from buying right after their short sale.   There are exceptions.  Here is a success story about one of those exceptions.

VA financing does not have an official guideline for buying after a short sale.  In fact, if a buyer has an “extenuating” circumstance a VA buyer may use their VA loan benefits to buy right after short selling.  Two weeks ago I received a call from a client full of desperation looking for a miracle.  They had been turned down by multiple lenders and they were clinging to the hope that I could help them.

They shared their situation with me and during their journey to me, they had crossed paths with a short sale.  In fact, their short sale is only 1 year behind them.    During the application/interview one of my standard questions is ” are you a military veteran?”  They answered “yes, does that help?”    “Absolutely” I told them!

I put together a very detailed file and then clearly documented (and then over-documented) the circumstances surrounding their short sale (this is the key to buying after a short sale.  Then came the moment of truth – submitted the file into underwriting for the final verdict (approval or denial).  48 hours later I had the decision in my hand.  Denied!  I am not very skilled in accepting no when I believe in a cause and so i escalated this file to an underwriting supervisor for further review.  24 hours, later we had a full loan approval!  I was ecstatic!

Then came the best part.  The phone call to deliver the good news to my clients.  The moment I said “I have great news, you are approved for a new VA loan” I could tell by the sniffly silence that emotion had overcome my them.  What a great moment!  It is not everyday we get to impact someone that way.  She had true tears of joy, relief and excitement!

Never say never!  If there is a way to approve a client we will find it!

By Jeremy House

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