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FHA Waives 3 Years Wait Time for Short Sellers..

This may help a few of ‘Short Sale Sellers’ who  have already “short sold”  their homes…or it can  make a big difference to future Short Sellers who are considering a “short sale”.

FHA has financing for homeowners who are short selling their home and wants to repurchase another home after the short sale is approved and completed thru their current lender.

There are a number of home owners who  will qualify for this program by meeting the “extenuating circumstances” criteria.

In other words…there  will be “life (home ownership) after foreclosure” following their short sale”.

The caveats are:

1) They must be current on their mortgage and all other credit obligations for the 12 months prior to the actual short sale completion date.

Editor Note: Contrary to popular belief ..a “short sale” in and by itself  is a not a credit score killer! The damage to a borrower’s credit score by the  number of lates incurred during the “ramp up” to the short sale.

Also note…there is absolutely no discernible difference between a “short sale” and a “foreclosure action” (or loan mod for that matter) in the eyes ofan underwriter.


FHA/Fannie/ Freddie see all 3 events listed below as equally negative to each other ….thus triggering the  3 year “wait time”:


a) Loan modifications

b) Short sales and deed -in-lieu

c) Foreclosures

2)  Home owners must document “hardship” as defined by:

a) Job loss and subsequent job transfer/ relocation… (a new stream of income will be needed to qualify for the new loan).


b) Catastrophic medical bills (and/ or possible death) incurred by a member of the borrower’s “nuclear family” (i.e. co signer of the current mortgage..child…spouse..or other dependent as listed on the borrower’s tax returns).


3) They must be downsizing  and relocating. Buying a bigger home across the home will not fly.

4) Their current lender(s)  must be willing to approve the short sale of their current residence.

5) Their credit scores need to be above 620 and any outstanding collections (usually medical bills) need to be paid THRU ESCROW (ONLY)  at COE.

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