You know the adage, “If it sounds too good to be true, it probably is?” Well, with the new FHA short sale guidelines announced in December strategic mortgage defaults may well be too good to be true.
When I blogged about Phoenix homeowners who could afford to pay their mortgages but were walking away anyway (or selling the home short) because they were so upside down (i.e. owed more than the home was worth) I talked to a number of experts, including a Phoenix Arizona real estate attorney and Scottsdale Arizona mortgage banker who told me that the FHA was guaranteeing mortgages for borrowers who had recently done a Phoenix short sale as long as those borrowers had not missed any payments.
Not any more.According to the new guidelines for Phoenix FHA loans:
“Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to
- Take advantage of declining market conditions, and
- Purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.”
The new FHA rules should make Phoenix short sales -- when they’re strategic defaults -- much less enticing to homeowners because FHA loans make up the vast majority of new mortgage originations in Maricopa County. In other words, if you’re going to default on your Phoenix mortgage, you should plan to rent for 2-3 years before you can buy another Phoenix home or Scottsdale home.
Visit www.MyPhoenixMLSBlog.com to learn more about the new FHA rules for Phoenix short sales and hear from a Phoenix real estate mortgage lender who talked with the FHA.
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