May 13, 2015
A reader asks, “I had a foreclosure in 9/12/2012. I have applied for a reverse mortgage several months ago. The loan officer told me that I would have to wail until sept 2015 to re-apply. Is there any way I can overcome this dead line.”
There are some vagaries with this reader question that require addressing, but we’ll answer the basic query first.
FHA loan rules state that exceptions are possible to the minimum “seasoning period” or mandatory waiting time to apply for an FHA loan, but this requires the borrower to meet certain criteria. It would also require the willingness of the lender, which in the case of this particular reader question, does not sound possible with that particular financial institution based on what was shared above.
In order to qualify for an exception the borrower would need to show the reasons for the foreclosure no longer exist, and that the borrower has established good credit and reliable payment history on all financial obligations since the foreclosure action.
If the lender is not willing to offer a loan even with these things submitted, there is nothing the borrower can do but move on and try somewhere else; the applicant would need to shop around for a participating FHA lender willing to work with the borrower’s circumstances.
The reader mentions wanting to apply for a reverse mortgage, which the FHA loan program does offer as a Home Equity Conversion Mortgage loan or FHA HECM.
However, FHA HECM loans are for qualified borrowers aged 62 or older who either own the home outright or are very close to doing so. It’s not clear whether the borrower owns a home outside the foreclosure mentioned in the question, but in any case, an FHA HECM loan would be subject to the same seasoning period rules printed in HUD 4155.1.
A borrower who does not meet the age requirement for a HECM loan or the ownership requirement would not be eligible to apply for a HECM loan until such time as those requirements are both met.
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.
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