New law extends penalty time for short-sellers

Q: We had to short-sale our home in Henderson on May 2, 2012. We are two months past our two-year penalty and have been looking for another home to buy. Our lender just informed us that even though we have completed our penalty phase, we are possibly going to be hit with another two-year penalty because of a new change in the federal government laws. This law was supposed to be enacted on Aug. 17. We just heard about this law yesterday.

Please help us and others who have done their just due. My lender was not quite sure about how the new law would affect people like us. Thank you so much.

—Marsha C., Henderson

A: I’m sorry to hear about your circumstances, as these new rules will affect you and many others.

When the federal government makes such changes, I don’t know if the people involved always consider or understand the effect they’ll have on the end user — potential homeowners like you and your family.

Our nation’s largest lenders have had so many changes to their program guidelines lately that it makes it hard for people to keep informed about these issues and to plan their lives accordingly.

In today’s mortgage industry, most of the loans written nationwide are ultimately sold to Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage). These entities are often called government-sponsored enterprises, or GSEs. Fannie and Freddie conduct their business under the direction of the Federal Housing Finance Agency, or FHFA. The U.S. Department of Housing and Urban Development oversees the Federal Housing Administration. Fannie and Freddie work separately but watch what the other agency does.

As government and industry officials have suggested, these changes to Fannie Mae and Freddie Mac loans are coming in an effort to reduce risk for future borrowers and investors. When they change these program guidelines, lenders need to do so as well, or they can’t sell their loans to Fannie Mae and Freddie Mac.

After dealing with the Great Recession and the tenuous recovery we’re making, I was surprised to see these stricter program guidelines being implemented now. I think these changes could hurt our economy when things are still fragile, especially here in Nevada.

Unfortunately for people in your situation, these changes apply to new mortgage loans locked in on Aug. 16 or later. You needed to lock in a loan (not just apply for a loan) by Aug. 15 to take advantage of the previous waiting periods.

The big change in all this relates to conventional financing. Unless you have extenuating circumstances, the amount of time for a would-be homeowner who had previously sold a home in a short sale to wait before being considered for another conventional mortgage loan is now four years; it had been two years. The borrower must also contribute a down payment of at least 10 percent of the total loan amount. Anything less than 10 percent down requires a seven-year wait after a short sale – which occurs when a lender agrees to sell a home for less than what the borrower owes on the mortgage.

In general, after completing a short sale, wait times for mortgage loans are now:

■ three years for an FHA loan

■ two years for Veterans Affairs loans of less than $700,000, or four years for VA loans over $700,000

■ four years for conventional loans, with a down payment of at least 10 percent

The wait times to get another mortgage loan after losing a home in a foreclosure are similar. But to be sure, you should check with your lender.

These are generalities. There may be nuances and extenuating circumstances for each loan, so again, it’s best to check with your lender.

Heidi Kasama is the 2014 president of the Greater Las Vegas Association of Realtors and has been a local realtor for more than 11 years. GLVAR has more than 11,000 members. Email questions to ask@glvar.org. For more information, visit www.lasvegasrealtor.com.