Colorado Springs Vintage Homes Blog

Short Sale borrowers can buy again

New rules for FHA borrowers who previously had a short sale

Since Colorado Springs, like many places in the US have their share of homeowners who have done short sales, I was really glad to see that HUD released some new guidelines about Short Sale Borrowers and information on when they may be eligible for a FHA loan.  There are many reasons to do a short sale (12 Acceptable Reasons for a Short Sale) , and in my opinion, some are legitimate and some are not.   These new rules give some clear guidelines.

Here’s a recap of document published on December 19, 2009:

Here is the actual language from the new FHA Guidelines:

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 simply to take advantage of declining market conditions, and purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.

Here is the exception from the new FHA Guidelines:

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.

Here’s there summary from the new FHA Guidelines:

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.

This is my Interpretation:  If the homeowner/ borrower didn’t miss any payments prior to doing the short sale and their overall credit history will allow, they can buy immediately following a short sale using FHA financing.

Download the new guidelines (available to download here)

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To find out more information about Colorado Springs, Call ……

Kathy (719-287-1049)   KTorline@msn.com

Related Articles

• Colorado Springs Homes, 4 things to know about a short sale – Part I of Short Sales Series
• Avoid Foreclosure, Know Your Options – Part II of Short Sales Series
• Colorado Springs Home Foreclosures – 11 benefits of a short sale – Part III of Short Sales Series
• The final step in the Colorado Foreclosure process – Part IV of Short Sale Series
• How long does it take to do a Colorado Springs Short Sale? - Part V in Short Sale Series
• What are the credit consequences on a short sale? – Part VI of Short Sale Series
• Are there tax ramifications to a Colorado Springs short sale? — Part VII of Short Sale Series
• What you MUST know about short sales on FHA loans – Part VIII of Short Sale Series
• How do you price a Colorado Springs short sale? – Part IX of Short Sale Series
• 21 reasons short sales fail – Part X of Short Sale Series
• 8 Things You Must Know About VA Short Sales – Part XI
• Oh no, don’t tell me you have other liens on your short sale property – Part XII
• Short Sales can be Successful
• 12 Acceptable Reasons for a Short Sale
• Abandoned pets are foreclosure victims

Tags: colorado springs short sales, FHA Loan, FHA loan guidelines, FHA loans for short sales

This entry was posted on Saturday, January 16th, 2010 at 9:00 am and is filed under Foreclosures and Short Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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