New FHA Guidelines allow Idaho Short Sale sellers to buy immediately after a short sale
With all the talk about Idaho Short Sales and Idaho Bank Owned Real Estate there has also been talk about how anyone selling a home using the short sale process would have their credit damaged and would be unable to buy a home for 3 years using any kind of government financing after executing an Idaho Short Sale. This has been drilled into us by Realtors and mortgage lenders right?
Well along comes FHA with a new announcement. Click FHA Short Sale Guidelines for new purchases to read the sweeping changes.
Actual language from the guidelines reads:
FHA Guidance on Short Sales Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence to take advantage of declining market conditions, and purchase, at the reduced price, a similar or superior property within a reasonable commuting distance. Reference: see 4155.1 4.E.4.g
And here is the FHA allowed exception:
Guidance on Borrowers current at the time of Short Sale Borrowers are considered eligible for a new FHA-insured mortgage if they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and the proceeds from the short sale serve as payment in full. Reference "Short Sales" at 4155.1 4.C.2.1
To put this in simple terms FHA is basically rewarding borrowers by allowing them to purchase a home using FHA financing immediately after doing an Idaho Short Sale if they made their payments on time and did not miss any scheduled payments. Many short sale sellers have been advised to stop making the payments on their homes. If a seller desires to pursue FHA financing they may want to reconsider this advice of not making payments based on this new sweeping FHA Guideline.
Borrowers CAN use a new FHA insured mortgage if they were current on their previous loan, all other debts at the time and the short sale was approved by their mortgage lender.
The bottom line is this: missed payments equals no FHA financing for 3 years. FHA will make an exception to the rule if the default was due to circumstances beyond the borrower's control such as the death of the primary wage earner.
Anyone eligible for the Home Affordable Foreclosure Alternative Program (HAFA) would not be eligible for a new FHA-insured mortgage for three years because to qualify for HAFA offers incentives only for seriously delinquent borrowers.
Have questions? Always consult a qualified Attorney and or Certified Public Accountant for advice.