2010 FHA policy change. What you need to know for the benefit of your client post short sale-

As we leave 2009 and charge into 2010 HUD has introduced new guidelines for FHA in regards to financing after a Short Sale. Short sales are defined as the lender is accepting less than the total amount due on the property financed.

Borrowers are NOT eligible for a new FHA mortgage if they pursued a short sale agreement on their current principal residence simply to take advantage of declining market conditions, and or purchase, at reduced price, a similar or superior property within a reasonable commuting distance.

Borrowers ARE eligible for a new FHA mortgage IF:
- They were current on their mortgage and 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.

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are NOT eligible for a new FHA mortgage for 3 years from the date of the pre-foreclosure sale.

The changes listed above are in effect now for all FHA mortgages. As always, if you or anyone you know would like more details on Short Sales or FHA mortgages in the Bay Area please feel free to contact me anytime.

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