Ok.......feel free to comment....cause I know we can't get a straight answer anywhere. I am currently in a position where I am relocating, filed C7 and have a home I can't sell. I have been and will continue to be current on the payments, I included my home in BK and have been somewhat approved for a short sale.
In my case, my 2 years post BK is up in Dec 2011 and if I complete a short sale before then, I should qualify for an FHA mortgage. I did some research and here's what I found. Obviously, you need to maintain good credit with no lates. You also need a hardship for the short sale when you are current on your payments...mine was relocation and having a house included in BK didn't hurt.
Straight from the FHA Handbook 4155.1,
4.C.2.f. Previous Mortgage Foreclosure
A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years
•his/her previous principal residence or other real property was foreclosed, or
•he/she gave a deed-in-lieu of foreclosure.
Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.
Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower's loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.
Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.
4.C.2.g. Chapter 7 Bankruptcy
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have
•re-established good credit, or
•chosen not to incur new credit obligations.
An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower
•can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and
•has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.
Note: The lender must document that the borrower's current situation indicates that the events which led to the bankruptcy are not likely to recur.
4.C.2.h. Chapter 13 Bankruptcy
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that
•one year of the pay-out period under the bankruptcy has elapsed
•the borrower's payment performance has been satisfactory and all required payments have been made on time, and
•the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
TOTAL Scorecard Accept/Approve Recommendation
Lender documentation must show two years from the discharge date of a Chapter 13 bankruptcy. If the Chapter 13 bankruptcy has not been discharged for a minimum period of two years, the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter.
Reference: For more information on the TOTAL Scorecard recommendations, see the TOTAL Mortgage Scorecard User Guide .
l. Short Sales
A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to
•take advantage of declining market conditions, and
•purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.
Borrower Current at the time of Short Sale
A borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage, all
•mortgage payments on the prior mortgage were made within the month due for the 12-month period preceding the short sale, and
•installment debt payments for the same time period were also made within the month due.
Borrower in Default at the time of Short Sale
A borrower in default on his/her mortgage at the time of the short sale (or pre-foreclosure sale) is not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
Note: A borrower who sold his/her property under FHA's pre-foreclosure sale program is not eligible for a new FHA-insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale.
Exception: A lender may make an exception to this rule for a borrower in default on his/her mortgage at the time of the short sale if the
•default was due to circumstances beyond the borrower's control, such as death of primary wage earner or long-term uninsured illness, and
•a review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower's control that caused the default.
References:
•For detailed information on converting existing principal residences into rental properties, see HUD 4155.1 4.E.4.g.
•For information on short payoffs, see HUD 4155.1 3.B.1.f.
In my case, my 2 years post BK is up in Dec 2011 and if I complete a short sale before then, I should qualify for an FHA mortgage. I did some research and here's what I found. Obviously, you need to maintain good credit with no lates. You also need a hardship for the short sale when you are current on your payments...mine was relocation and having a house included in BK didn't hurt.
Straight from the FHA Handbook 4155.1,
4.C.2.f. Previous Mortgage Foreclosure
A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years
•his/her previous principal residence or other real property was foreclosed, or
•he/she gave a deed-in-lieu of foreclosure.
Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.
Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower's loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.
Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.
4.C.2.g. Chapter 7 Bankruptcy
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have
•re-established good credit, or
•chosen not to incur new credit obligations.
An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower
•can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and
•has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.
Note: The lender must document that the borrower's current situation indicates that the events which led to the bankruptcy are not likely to recur.
4.C.2.h. Chapter 13 Bankruptcy
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that
•one year of the pay-out period under the bankruptcy has elapsed
•the borrower's payment performance has been satisfactory and all required payments have been made on time, and
•the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
TOTAL Scorecard Accept/Approve Recommendation
Lender documentation must show two years from the discharge date of a Chapter 13 bankruptcy. If the Chapter 13 bankruptcy has not been discharged for a minimum period of two years, the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter.
Reference: For more information on the TOTAL Scorecard recommendations, see the TOTAL Mortgage Scorecard User Guide .
l. Short Sales
A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to
•take advantage of declining market conditions, and
•purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.
Borrower Current at the time of Short Sale
A borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage, all
•mortgage payments on the prior mortgage were made within the month due for the 12-month period preceding the short sale, and
•installment debt payments for the same time period were also made within the month due.
Borrower in Default at the time of Short Sale
A borrower in default on his/her mortgage at the time of the short sale (or pre-foreclosure sale) is not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
Note: A borrower who sold his/her property under FHA's pre-foreclosure sale program is not eligible for a new FHA-insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale.
Exception: A lender may make an exception to this rule for a borrower in default on his/her mortgage at the time of the short sale if the
•default was due to circumstances beyond the borrower's control, such as death of primary wage earner or long-term uninsured illness, and
•a review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower's control that caused the default.
References:
•For detailed information on converting existing principal residences into rental properties, see HUD 4155.1 4.E.4.g.
•For information on short payoffs, see HUD 4155.1 3.B.1.f.