A Jumbo Home Loan is classified as any loan amount that exceeds the county high balance loan limit under which the transaction will occur. Jumbo loans will represent the most stringent loan product type qualification. Banks that make Jumbo loans are looking for increased credit scores debt, payment reserve requirements and lower debt to income ratio requirements compared to non-Jumbo loans.
When it comes to a mortgage incident which is defined as a recorded notice of default, loan modification, short-sale or foreclosure within seven years, many Jumbo lenders will require the borrower to wait a full seven years from the incident to provide a new loan.
What is a Notice of Default and how does a Bank Discover that you have one?
A public notice that is filed by a mortgage lender with the county courthouse where the property is located. The notice of default represents the first steps towards foreclosures. In most circumstances, a notice of default cannot be filed until the homeowner is at least ninety days late on a mortgage payment. During a loan process, a mortgage bank will request a report from a third party company that will scan the county records of any address associated with a borrower’s name searching for any public record like a notice of default. Many Jumbo lenders will apply the same waiting period for someone with a “Notice of Default” to that of a short sale. Most Jumbo lenders will require a minimum of four years from a short sale and there are some that will require seven years.
How will a Jumbo Lender look at a Loan Modification?
A loan modification is a change to the terms of an existing mortgage. This could include a reduction in interest rate, conversion from an adjustable rate to a fixed rate, loan balance reduction, or an extension of the loan term. Many Jumbo lenders will look at a loan modification in the same manner of a short-sale and will enforce minimum waiting periods of four years or even seven years. In some situations of loan modification, the lender providing the modification will rotate within the credit report a “modification to original terms.” This language will be immediately recognized by an underwriter. In some circumstances, when a loan is modified there is not any language placed within the credit report and in those situations, there is a good chance an underwriter will not identify the loan modification and not apply any waiting periods to the new mortgage transaction.
What is the Short-Sale Waiting Period for a New Jumbo Loan?
One of the more frustrating aspects of the mortgage industry is that they are not universal guidelines. If you ask three different mortgage lenders the same question related to obtaining a new loan after a short sale, it is very possible you will receive three different answers. A mortgage loan officer can only represent the loan products that he or she has access to and simply because one loan officer does not have access to a specific product, does not mean another loan officer will not be able to provide you with the loan program that you are seeking you will simply need to find a lender that specialized in the product that you looking for.
There are many Jumbo lenders that will require a minimum of seven years from a short-sale to issue a new mortgage loan. There are some Jumbo lenders that will allow a borrower to purchase or refinance a home with four years from a short sale subject to the re-establishment of credit and confirmation that the only tradeline that was negative was the mortgage.
What are the Jumbo loan qualification Requirements related to Foreclosure?
Most Jumbo lenders will follow Fannie Mae and Freddie requirements and will require a minimum seven years from a foreclosure to secure a new home loan. Oh way
Why are Jumbo Guidelines So Strict Related to a Short sale or Foreclosure?
In most situations, banks do not hold onto or “service” the loans that they fund. The sell off the loans to companies that specialize in the servicing or collecting mortgage payments. The business model for most mortgage banks is to; originate the home loan, then sell the loan and then use that money to make more mortgages. The servicers buying Jumbo loans establish the guidelines for the types of Jumbo loans that they will purchase and the overwhelming majority will require a minimum of four years from a short-sale or seven years from a foreclosure.
What are your options for a Jumbo loan with a Short-Sale less than four years or recent Foreclosure?
It has been estimated that over seven million home owners experienced either a short-sale or foreclosure between 2007-2014. For many of these homeowner’s the decision to short sale or foreclose was based on various financial circumstances resulting from the economic melt-down that cumulated in late 2008. Many of these homeowners were able to improve their personal financial positions as the economy began to recover and started looking into the availability of home loan options but found most Jumbo loan options to be limited or not available whatsoever.
In a response to this demand, several smaller mortgage banks and Credit Unions created portfolio loan products that meet the needs of borrowers seeking mortgage financing with a previous short-sale or foreclosure. Smaller banks and Credit Unions have the flexibility to provide portfolio loan programs because their business model is not limited to the bundling and selling their loans in the same manner as the other mortgage banks. These institutions have the flexibility to create their own loan programs and will provide home loan options for people who have experienced a recent short sale, loan modification of foreclosure.
Jumbo Loan Programs for Someone with a Short sale or Foreclosure within the past 7 Years
Portfolio lending options are available for someone who has experienced a short-sale or foreclosure in as little as one day from the mortgage incident. Financing up to a loan amount of $1,500,000 with a minimum down payment of 20% is available with a minimum credit score of 660. A combination of two+ years from the short-sale or foreclosure and a down-payment of 25% will result in a lower-interest-rate. These loans will also require a minimum of six months of payment reserves.
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I really enjoyed working with Chad Baker and the rest of the team. This was our first time buying a home in California and we started with unnecessary assumptions based on our previous experience as home-owners in a different state. Chad and his team were available throughout the whole process, explaining the state differences, answering all our phone calls and emails quickly and directly, and providing detailed weekly status reports so that all parties including agents knew exactly where we were in the process. Chad was very experienced and provided customized loan products for us to consider, which definitely facilitated our transaction. I recommend the Chad Baker team! ”
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Chad and his team were very attentive to all of my needs, they called , emailed and checked in often. No question was left unanswered! Maria was a superstar! taking all my calls no matter the time or day and walking me through every process. The follow through was amazing and I am just so happy that my realtor referred them to me. I was originally referred to another lender that pretty much had no time for me nor did they even bother to try and find me the right loan since I am a widow with one income and a first time buyer with so so credit. I am completely happy with my loan and everything they did for me! Thank you Chad, Maria and Karina for all you did!