Hello. My clients completed a short sale w/ BOA in June 2010. The home had PMI & was an FHA loan. They received their 1099C last week. They want to know when they can legally purchase a new home w/o worry that someone would come back after them. They're doing a lease to own on a new house from their parents, but for all practical purposes are acting like they own the property. Is now ok to transfer the home into their name or should they wait until 2012 so there's more period between the two? The parents are financing the new mortgage so there's no credit recovery required.... Thanks, Maggie
Btw, they live in FL
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Actually, Maggie, they can purchase right away! Shocked! Here's the caveat...they cannot use a bank or GSE sponsored program for 2 years, minimally. They can certainly buy with cash, private money, privately negotiated terms, have property gifted to them, whatever, just not able to go to the bank for a LOAN for a period of time. You must still work on raising your credit.
Look for a qualified real estate attorney experienced in "lease option" or "subject to" types of purchase agreements. Title can transfer, or not. Talk to the attorney. Attorneys and accountants have advised on strategic defaults using the above techniques with their much wealthier clients. I'm not an attorney, but have participated in getting a homeowner into properties very soon after a short sale. Good Luck!
I have been told by a creditable CPA/Attorney that the receipt of a 1099C means that the bank has forgiven the debt. The bank can not both forgive the debt and then come after the seller later for a deficiency.
Check with your financial professional as this is something you do not want to guess about.
As far as when can they purchase again, there is no legal time constraint. If you can find a seller or a lender who will work with you, go for it. The time period is determined by the lender, not the law.
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