Did you know that you can use FHA financing the very next day after a short sale? I'm crazy you say? Well, whether or not that is true, FHA DOES allow financing on a property for a borrower who just experienced a short sale event. There are, of course, some obstacles..
FHA does NOT allow borrowers to purchase after a short sale event:
- To simply "take advantage" of declining markets and purchase a home at a lower cost that is similar or superior to their current home within a reasonable commuting distance
-
If the borrower was in default at the time of the short sale. If so, then the standard required waiting period of 3 years applies, with some exceptions
FHA DOES allow borrowers to utilize FHA after a short sale if:
- They were current on their mortgage and all other installment debts when the short sale took place
- The proceeds from the short sale served as 'payment in full'
You and I both know most banks require a borrower to be 90+ days late before they even begin to speak to homeowners. I post this for a couple of reasons, though. One is to bring to the forefront that for those who DO successfully short sale without being late (yes, it is happening out there, however minimally), they may be eligible for a new purchase immediately.
Secondly, in hopes to spark some commentary on suggestions from your experiences about how the borrower can handle their bank so that they can begin the short sale without being late which ultimate destroys their credit for years to come.
What are your thoughts?
Click for answers to frequently asked questions about FHA Mortgages
Read FHA's Mortgagee Letter regarding the use of FHA after a short sale event
http://www.brianwesthomeloans.com
Comments(2)