Just when I thought the FHA loan program was heading the way of
the dinosaur, HUD decides to reduce the waiting period for FHA financing after
an adverse credit event to one year. This gives hope to people who
had a recent foreclosure, bankruptcy or short sale and believed they were locked
out of the real estate market for as many as two more years. Of
course there are several conditions that must be met for the buyer to qualify
for this program, but any move to help those most impacted by the Great
Recession is a step in the right direction.
To qualify for this program a buyer must: 1)
demonstrate that the adverse event (bankruptcy, foreclosure, short sale) was due
to a reduction in income or job loss that was beyond their direct control. 2)
That this income loss was at least 20% of their previous income and the loss
lasted for a minimum of six months. Finally, the buyer must
demonstrate that they have fully recovered from this adverse financial event
through the maintenance of good credit (no late payments) for the last twelve
months.
Obviously this is great news and I would encourage you to have
your “sidelined” buyers call me for a complimentary evaluation of whether they
would qualify for this novel program. I am hopeful
the relaxing of the FHA loan guidelines will be followed soon after by Fannie
Mae and Freddie Mac adopting a similar policy for conventional financing
programs.
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