By Hudson Sangree
(MCT)—Homeowners who were laid off and lost their homes to foreclosure could qualify for a new mortgage in as little as a year under an unprecedented federal rule change that slashes the usual waiting period between financial disaster and buying a new house.
Normally, homeowners who were foreclosed on must wait three years before they can qualify for a loan backed by the Federal Housing Administration. FHA loans require only a 3.5 percent down payment and have more lenient lending standards than conventional loans, though borrowers have to carry long-term mortgage insurance. Getting a conventional loan after foreclosure can take up to seven years.
The new changes allow borrowers who meet a set of strict criteria to qualify for an FHA loan only 12 months after losing their house for failure to make payments.
“To get A-paper institutional financing so soon after a foreclosure is unheard-of,” says Brent Wilson, with Comstock Mortgage in Sacramento, Calif. “It should increase the buyer pool throughout the country.”
The FHA announced the changes Aug. 15 in a letter to lenders titled “Back to Work: Extenuating Circumstances.” Officials say it was meant to acknowledge the reality of the recession, with its mass layoffs, and to help people return to homeownership.
Copyright© 2016 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com