Archive for February, 2011

There are different rules that apply to the “seasoning” period since a foreclosure event, amongst different types of loans (CONV, FHA, USDA, VA).
VA Loans offer the lowest such period of time required since the foreclosure . . .i.e just 2 yrs!
FHA is presently at 3 yrs and so is USDA.
Deeds in lieu of foreclosure (where the Veteran homeowner handed the deed back to the lender , walking away from the home) as well as Short Sale are considered no different than a foreclosure for seasoning periods.

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Buyers Converting Their Principal Residence Into A Rental /Purchasing Another Home

A homebuyer who is moving out of his/her present principal residence but plans to rent the home out and use the rental income (future) to qualify for their new house got a nasty shock in late 2008 when Fannie, Freddie and HUD changed the rules . . .those rules demanded the home being converted into a rental had 25% (FHA) or 30% (CONV) equity . . .a tall order for many homeowners.
This basically “put the kibosh” on homeowners’ ability to purchase another home if they already had one.
Well, VA has never adopted this rule . ..and it’s a little –known fact that Veterans getting a VA Loan can use the proposed rental income from the home they’re vacating even if they’re upside down!
Certain other “common sense “ rules apply. . . such as having a good reason for the new purchase.

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Today I had to confirm with my USDA Underwriter that a Veteran based out in Kansas could purchase an *OWNER OCCUPIED* home here in California using the USDA Zero Down loan. And as I indicated, the answer was yes. USDA doesn’t disallow Veterans stationed in other States from purchasing where their family is.
Of course I had to furnish my Underwriter with adequate documents as to the Veteran homebuyer’s home town/residency etc.

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It appears USDA has tightened up their requirements for “GUS”. (GUS stands for Govt Underwriting System and is the automated engine for USDA just like DU/LP is for FHA etc . . )

FICO scores below 640 will receive a “REFER” and will need to be manually underwritten by the Agency. Borrowers must have three major compensating factors and proof that the derogatory credit that is driving their fico below 640 was temporary and beyond the borrower’s control. Divorce is not a qualified reason. Medical, death of wage earner or immediate family member, loss of job or reduction in wages can be. All must have documentation to support.

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