FHA Mortgage Qualifying After A Short Sale
Any Short Sale within three (3) years of the case assignment requires a manual underwrite. An FHA mortgage applicant who is in default at the time of short sale/restructure or pre-foreclosure or late on any mortgage or installment obligations within 12 months of the short sale is not eligible for a new FHA insured mortgage for three (3) years from the date of pre-foreclosure sale to Case# assignment.
Manual Underwrite Only: FHA mortgage applicant current at time of short sale must have Ox30 mortgage and installment debt pay history for the preceding 12 month period. FHA mortgage applicant with prior FHA mortgage lenders Short Sale are not permitted. If there is any forgiveness for a prior FHA mortgage lenders loan. the FHA mortgage applicant is not eligible.
Pre-Foreclosure Sales, also known as Short Sales, refer to the sales of real estate that generate proceeds that are less than the amount owed on the Property and the lien holders agree to release their liens and forgive the deficiency balance on the real estate.
(2) Standard FHA Mortgage Lenders must document the passage of three (3) years since the date of the Short Sale. If the Short Sale occurred within three (3) years of the case number assignment date, the Mortgage must be downgraded to a Refer and manually underwritten. This three-year period begins on the date of transfer of title by Short Sale.
(3) Required Documentation- If the credit report does not verify the date of the transfer of title by Short Sale, FHA Mortgage Lenders must obtain the Short Sale documents.