FHA Borrowers Could Be Eligible to Purchase Even If They Did A Short Sale

By
Real Estate Agent with TIM LORENZ - Elite Home Sales Team DRE# 00919781

FHA allows borrowers to be eligible for a new FHA loan even if they just recently sold their principal residence with a short sale. Almost every lender will tell you there is a 3 year waiting period as most lenders will not allow this program to be used due to credit overlays they have. PrimeLending does allow this program to be used. However, there are specific guidelines that must be met for borrowers to purchase again without a waiting period.

 

Guidelines that must be met in order to purchase sooner than 3 years FHA

 

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 condition
  •  Purchase at a reduced price a similar or superior property within a reasonable commuting distance
  • All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale
  • All installment debt payments for the same period were also made within the month due

Borrowers in default of their mortgage at the time of their short sale (or pre-foreclosure sale) are not eligible for a new FHA mortgage for three years from the date of the pre-foreclosure sale.

 

As you may have determined already from reading these guidelines that interpretation is subjective to how an underwriter views a borrower's reasoning and motivation. It is prudent to secure loan approval prior to making an offer on any property.

 

 

Comments (8)

Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

Thanks Tim for all the good information and heads up on the short sale issue I am trying to learn all I can for sure.

Apr 25, 2012 01:50 PM
John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Tim,  It may not be a fit for the larger majority of short sellers but any program that can help those deserving of it is a win, win.  Good to know! Thanks

Apr 26, 2012 01:20 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Your welcome Joyce.

Apr 26, 2012 02:00 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

John

It is a win win.

Apr 26, 2012 02:01 AM
Maria Morton
Platinum Realty - Kansas City, MO
Kansas City Real Estate 816-560-3758

Tim, this could be good news for buyers who qualify after a short sale.

Apr 27, 2012 02:02 PM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Sounds like a lot of opportunity to many previous short sale sellers in my market!  Good news if they can meet those guidelines!

Apr 28, 2012 06:04 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Why yes that is what could happen Marie.

Apr 28, 2012 09:10 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Renee

The opportunity just keep coming.

Apr 28, 2012 09:10 AM