FHA to Reduce Waiting Period for Borrowers Who Experienced Foreclosure

FHA-Mortgage2-528x396FHA to Reduce Waiting Period for Borrowers Who Experienced Foreclosure… The Federal Housing Administration better known as FHA has made a popular decision today that will come as welcomed news to any borrowers who may have experienced a foreclosure recently or may find themselves in a foreclosure in the coming years. Up to this date ALL borrower’s who had there house foreclosed would have to wait 36 months or 3 years before they could finance the purchase of another home with an FHA mortgage and would have to wait 60 months or 5 years to finance the purchase of a new home with a conventional loan. But as of Today FHA will Reduce Waiting Period for Borrowers Who Experienced Foreclosure under specific guidelines.

The Federal Housing Administration (FHA) is going to allow borrower who have had a Foreclosure, Bankruptcy, Deed-In-Lieu or Short-Sale to renter the housing market and finance the purchase of a home with an FHA loan in as little as 12 months from the final date of action from the default if they fall under the specific guidelines. Meaning they have to have lost their home as a result of an economic hardship. For any borrower’s who went through a financial hardship FHA realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

Now in order to be eligible for this guideline and the more lenient approval process the borrower must be able to provide certain financial documents that show specific credit impairments and financial hardships were from loss of employment and/or loss of income that was beyond the borrower’s control. In addition the lender must also be able to verify the loss of income was at least 20% for a time period lasting at least 6 months.

Borrower’s must also show they have fully recovered from the event that caused the credit impairments and financial hardship and must also complete housing counseling. This means the borrower(s) must reestablish satisfactory credit for at least 12 months to satisfy the recovery requirement. Satisfactory credit include 12 months of timely payments on things such as mortgage, rent, or credit accounts etc…