FHA Considers Waiving 3-Year Foreclosure Waiting Period


Posted on Sep 10, 2012

From 2006 to 2011, the FHA's share of the purchase mortgage market increased 5-fold.

For 2012 and beyond, that share should increase.

The FHA is considering new, looser mortgage guidelines that would waive its standard "waiting period" after a significant derogatory credit event. Changes would allow home buyers with recent bankruptcy, foreclosure or short sale would be cleared to buy homes immediately.

The current guidelines are:

  • Foreclosure : Must wait 3 years before eligible for FHA-insured financing
  • Short Sale In Default : Must wait 3 years before eligible for FHA-insured financing
  • Chapter 7 Bankruptcy : Must wait 2 years before eligible for FHA-insured financing

Under the FHA's expected new plan, these waiting periods will be waived in full.

Soon, FHA-insured loans may be available to home buyers who may have been recently foreclosed upon; for whom a short sale was necessary; or for whom a Chapter 7 bankruptcy was discharged yesterday.

The FHA's new waiver on foreclosures, short sales and bankruptcies would add to the national pool of home buyers, creating buy-side demand for housing and upward pressure for home values nationwide.

 

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