September 20, 2012
A reader asks, “I filed for bankruptcy over 3 years ago. My home was included because I did not sign a reaffirmation agreement. However the bank did not require me to move out because I was not in arrears with the mortgage and never missed a payment.”
“About 18 months ago I was forced to move to be closer to my job due to vision problems. My doctor told me to not drive. I had to move out of the blue and the bank foreclosed a year ago. I was told that foreclosures was necessary to get my name off property but I was not legally responsible for the debt due to bankruptcy. Will the foreclosures prevent me from qualifying for an FHA home loan?”
This is a complex situation and the borrower should definitely get in touch directly with the FHA and/or the lender for more specific guidance regarding the options in this specific case. However, in general:
Borrowers should not expect approval for an FHA home loan for three years after the foreclosure action–the foreclosure must occur before the required waiting period starts counting down.
That said, FHA loan rules as described in HUD 4155.1 Chapter 4, Section C do show an exception
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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