One of the more frequent questions or myths we hear is that one simply may obtain a co-signer to purchase a home within the first three years after a short sale (for this discussion, a short-sale, a foreclosure and a deed-in-lieu of foreclosure all carry the same weight with underwriting).
The answer is no. These are the problems:  Credit history and/or public records will indicate the account(s) were not paid as agreed with the previous mortgage company(s).  The Uniform Residential Loan Application (the mortgage application utilized in the USA) requires completion of the section titled DECLARATIONS.
There are two questions in the DECLARATIONS that require you to admit or deny your involvement in a foreclosure, deed-in-lieu of foreclosure or judgment. A judgment or contingency judgment very well may follow any of the above referenced events. Judgments or contingent judgments are not uncommon following a short sale.
So the problem is that one cannot even be on a mortgage application following a short-sale, foreclosure or deed-in-lieu of foreclosure for up to three years. For further information on timing, see this previous post.
The bottom line is that those willing to co-sign must, in fact, be the purchaser of the property. They must have the income to make the mortgage payments without your income to help them qualify. Until sufficient time has passed or until other actions are completed, one cannot be on a home loan application at all.
In a future post, we will discuss mortgage assumptions, wrap deeds and other similar models. Until such time ask yourself this question. What do you truly gain by buying someone’s problem? Do so only with the advice and consent of a Real Estate Attorney.
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