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ONE YEAR Waiting Period for FHA Loans After Short Sales

The FHA recently changed its post foreclosure and post short sale waiting period from three years to one year for eligible borrowers.  Their new "Back To Work-Extenuating Circumstances Program" reduces the waiting period for people who had a foreclosure or completed a short sale or deed in lieu of foreclosure during the recession as a result of a decrease or loss of income.

Prior to the introduction of the program, FHA had a three year waiting period after a foreclosure, short sale, or deed in lieu of foreclosure, and a two year waiting period after a Chapter 7 or Chapter 13 Bankruptcy.  However, now borrowers who experienced a qualified "adverse economic event" and have since recovered may be eligible for the new program.  A qualified economic event may include:Post Short Sale Road To Recovery

  • Short Sale
  • Pre-foreclosure Sale
  • Deed in Lieu of Foreclosure
  • Foreclosure
  • Loan Modification
  • Loan Forbearance
  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy

In addition to recovering financially, you must attend a HUD-approved home ownership counseling course.

Additional requirements include:

  • You must be able to document at 20% decrease in household income
  • The decrease in income must have been six months or longer and must have occurred around the same time as the economic event.
  • You must demonstrate satisfactory credit history since the economic event, showing on-time payments for the period following the economic event.
  • You may need to demonstrate good credit history prior to the financial hardship that led to the economic event, with credit that was damaged as a result of that financial hardship.

Other conditions may apply, but this is a huge opportunity for anyone who experienced a short sale, foreclosure, or other similar event recently but is now financially able to buy a home again.

Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and find out 8 Things You Must Know Before You Attempt a Short Sale.
Phone:  (206) 905-8590

Copyright (c) 2013 by The David Monroe Team at Keller Williams Western Realty.

Published Thursday, November 21, 2013 10:05 AM by David Monroe

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