February 7, 2014
After the housing market crisis that started in 2007, many home owners found themselves in trouble on mortgages. Some simply walked away from their loans, others tried to avoid default and foreclosure, while still others initiated short sales or sold their property for the market value at the time which was most likely far less than they expected to get for the property.
Picking up the pieces after something like that can be difficult, and many borrowers wonder if they could be eligible once more for an FHA home loan now that times have changed, markets have improved, and the financial positions of many have also gotten better.
For some, the question is, “Can I get an FHA loan after having a past delinquency or going into loan default on an FHA mortgage?”
Let’s look at what the FHA loan rulebook says about this question. HUD 4155.1 Chapter Four, Section A states, “If the borrower has had past delinquencies or has defaulted on an FHA- insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage.”
That information is found under the heading titled, “Waiting Period for Borrowers With Past Delinquencies, Defaults or Claims on FHA Loans” which also adds, “The three-year waiting period begins when FHA pays the initial claim to the lender. This includes deed-in-lieu of foreclosure, as well as judicial and other forms of foreclosures.”
Judging from the rule as quoted above, the borrower may not know the exact start date of the three-year waiting period without consulting with the lender. It’s best to get that information before thinking about applying for an FHA mortgage as the dates could be very important depending on when the application is submitted.
Borrowers should know that in cases of a short sale, lender standards may vary, but you may find lenders willing to work with a borrower at any time, provided the existing mortgage was not in default or delinquency at the time of the short sale. Those who had short sales and were behind on their mortgage payments will likely have to wait at least 12 months from the time of the delinquency before applying for a new FHA loan–lender standards would apply in these cases.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: