Posts Tagged “seasoning since foreclosure”

Did you know you can remain in Bankrtupcy and still purchase a home with FHA financing? Also, some buyers are eligible for FHA financing just 1 day after short sale ? Watch this informative video (40 mins) when you have time.

 

 

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What Are FHA Rules For Buying A Home After Short Sale?

HUD that oversees FHA came out with the Mortgagee Letter in Dec 2009 which essentially gave FHA’s blessing for buyers who were forced to short sell their homes to be able to buy a home just 1 day after short sale!

Here’s the rules

Buyers are NOT eligible if

They are exploiting declining market conditions to be able to purchase a home of similar or superior size within a reasonable commuting distance. This means ‘moving up’ is not allowed.
They were behind on their mortgage at any time in the 12 months leading up to the short sale.

Buyers ARE eligible if:

They were forced to short sell their home due to some situation beyond their control such as death of a wage earner, relocation, job or income loss, onset of sickness or illness etc.
They were on time on their mortgage payments for the 12 months preceding the short sale and had only a 1 x 60-day mortgage late in the 24 months preceding the short sale.
There’s no deficiency balance resulting from the short sale. In other words the Lender settled for less than full balance.
The loan involved in the short sale cannot have been an FHA loan.

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Client called today with a not-so-unusual scenario. They had been declined by a Bank on this . .
They lost their home in foreclosure 5/29/2008, filed Bankruptcy in 10/2008 and the BK was discharged 6/4/2009.
In their Bankruptcy filing their attorney had listed the balance of the foreclosed-on mortgage. The bank denied their loan stating that the filing of the BK to include the mortgage made it to where 3 yrs had to expire from the BK discharge date.
Can they qualify for FHA financing now ?
The answer is:
The bank is wrong.
The three year time-clock to satisfy the ‘seasoning since foreclosure’ requirement of FHA, begins from the date of the Trustee sale (or in Judicial Foreclosure states such as Oklahoma, from the Court ordered sale date) -Well this client is past that 3 yr period (5/29/08).
The fact that the BK included the deficiency balance of the foreclosure (which would have prevented the Lender from trying to collect on it) doesn’t negate the 3 yr seasoning.
The BK is 2 yrs old (from Discharge date) and therefore they are eligible for FHA financing. :)

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How Long After Bankruptcy, Foreclosure, Short Sale Can I Buy a home?

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There are different rules that apply to the “seasoning” period since a foreclosure event, amongst different types of loans (CONV, FHA, USDA, VA).
VA Loans offer the lowest such period of time required since the foreclosure . . .i.e just 2 yrs!
FHA is presently at 3 yrs and so is USDA.
Deeds in lieu of foreclosure (where the Veteran homeowner handed the deed back to the lender , walking away from the home) as well as Short Sale are considered no different than a foreclosure for seasoning periods.

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