I am often asked if I go through a bankruptcy or short sale my house how long will it take before I can obtain a mortgage. Well, last Friday the FHA published a letter which will allow buyer’s who had a life event that caused the foreclosure or short sale to apply for a mortgage after one year. There are requirements that have to be met and this will not apply to everyone but is good news for some.
If you are considering a short sale I have experience and can help. I have the Certified Distressed Property Expert (CDPE) designation. I have been successful but there is no guarantee…if you want further information about whether you qualify under this program you should contact a mortgage broker or bank as I don’t handle mortgages.
From the FHA website:
Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower
- can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event as defined in this ML,
- has completed satisfactory Housing Counseling, as described in this ML, and
- meets all other HUD requirements.DefinitionsAn Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months.
The Onset of an Economic Event is the month of Loss of Employment/Income.
Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined on page 5 of this ML) for a minimum of twelve (12) months.
The term borrower includes borrowers and co-borrower.
Borrower Household Income means the gross income of the borrower and all Household Members, as defined below, for purposes of assessing loss of income. The gross income of each Household Member must be computed in accordance with FHA income requirements.
Note: Household Member, for the purpose of this ML, means an individual residing at the borrower’s primary residence at the time of the Economic Event and who was a co-borrower on the borrower’s previous mortgage.