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:
- Short Sale
- Pre-foreclosure Sale
- Deed in Lieu of 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.