· meets all other HUD requirements.
For the past several years the waiting period after a short sale, foreclosure, deed in lieu or bankruptcy has been three years with a few exceptions for medical hardships. With this new policy from FHA/HUD, a borrower who can demonstrate an Economic Event may qualify for an FHA mortgage after a waiting period of only one year.
An Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months. The borrower must document the loss of income and show recovery from it.
Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined on page 5 of this ML) for a minimum of twelve (12) months.