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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