Ready for some big news?
On Friday, the Federal Housing Administration (better known as FHA) announced they will allow borrowers who’ve gone through foreclosure, short-sales, deeds-in-lieu or bankruptcy to reenter the duplex and housing markets as quickly as 12 months after the event.
Normally, duplex buyers would have to wait at least three years to get another FHA insured loan. However, this new guideline allows for certain borrowers who lost their properties as the result of an economic hardship to qualify even earlier.
In other words, if the borrower’s financial hardship was the result of a recession-related event, FHA will consider them.
This should allow for thousands of people who wanted to participate in the housing recovery, but couldn’t because of a job loss, to enter the market.
To qualify, borrowers must show documents that demonstrate that credit issues were from a job loss or loss of income that was beyond their control. The buyer must be able to prove an income loss of more than 20 percent, which lasted for more than six months.
Of course, borrowers must be able to demonstrate they’re currently employed, and have had “satisfactory credit” for at least 12 months. This is defined as 12 months of good payment history on a mortgage, rent, or credit cards.
The new guideline is effective until September 30, 2016. It is subject to “bank overlays”. In other words, it will available only if a lender agrees to follow FHA’s guidelines.