FHA Loans After A Short Sale

December 22nd, 2009 | Category: FHA

For many citizens who have had to short sell their home for whatever reason, one of the most common questions is “how enlarged before I can get a mortgage again?”

HUD has recently announced with an official Mortgagee Letter (09-52) that depending on whether or not you were current at the instance of the short sale will manufacture a difference as to how enlarged you must wait to get a new FHA insured loan.

If you are not current at the day of the short sale of your home:

Borrowers in default on their mortgage at the moment of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the moment of the pre-foreclosure sale. Lenders may build exceptions to that rule under positive circumstances.

If you are current at the moment of the short sale of your home:

Although it is not clear in the letter (surprise, surprise), it is common that lenders will not allow you to get an FHA loan for 2 years from the duration of short sale of your home.

But –

According to the Mortgagee Letter, it unclearly states that you are eligible for another FHA loan whether you were current on your payments at the day of sale and “you didn’t short sale your house to take advantage of market conditions

and purchase at a reduced price a similar or superior property within a fair commuting distance…”

Confusing whether you ask me.

But here is the official wording of it:

FHA guidance on short sales
Borrowers are not eligible for a new FHA mortgage whether 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 fair commuting distance.

For detailed data on converting existing principal residences into rental properties, see 4155.1 4.E.4.g.

Guidance on borrowers current at the moment of short sale
Borrowers are considered eligible for a new FHA-insured mortgage whether:

► They were current on their mortgage and other installment debts at the day of the short sale of their previously owned property, and

►The proceeds from the short sale serve as payment in full.

For detailed knowledge, see “Short Sales” at 4155.1 4.C.2.l.

And whether you have tried unsuccessfully to short sell your home and haven’t been able to get a loan modification, be certain you are aware of how towering the waiting period is to get an FHA loan after a foreclosure.

And as always, whether you have additional questions you can always shout 1-800-CALL-FHA to speak with a representative at FHA directly.

Orginal post by Justin McHood

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