I’ve just received the following email from one of my local lender contacts. This is an interesting development regarding FHA underwriting guidelines. Check it out…
If your buyer had a short sale 3 years ago, and can document that the short sale was the result of a verifiable financial hardship (death of a spouse, loss of a job that forced a move, a divorce, etc..), then FHA is allowing for this buyer to obtain financing for a new home, on a case by case basis. Using this 3 year rule they would also be eligible for the 1st time home buyer credit.
I do not believe that an increase in interest rate would be an acceptable financial hardship.
This is the first indication that I have seen that there maybe some leeway being given to those people who found themselves losing their home to circumstances beyond their control. The challenge here is the fact that this is going to be decided on a case by case basis so until a file is underwritten we will not know whether the loan can be approved.