Getting back into a home after a foreclosure or short sale

There’s good news for anyone who has suffered a foreclosure, short sale, bankruptcy or deed-in-lieu: FHA recently announced that if you lost your job or had a decrease in income of 20 percent or more for at least six months that caused you to lose your home, you may be able to qualify for a new loan after just 12 months.

We sat down with That Real Estate Show’s lending expert, Lisa “the Lender” Brown to talk about the ramifications of this change.

Rod Lakin: This seems like a pretty big change for an issue that a lot of Valley residents had to deal with over the last three years. Do you expect this will have a significant impact on Phoenix’s real estate market?

Lisa the Lender: Yes, it really could have a significant impact. We’ve already talked a lot about the so-called “boomerang buyers,” who are getting back into the market after waiting three years to apply for a new home loan. Now, this change could speed up that process by two years for those who qualify, and that number of boomerang buyers could increase even more.

Rod Lakin: The waiting period for foreclosed homeowners used to be three years, correct?

Lisa the Lender: Yes, and what FHA is now admitting is that not all borrowers who had a catastrophic financial event are not worthy of buying a new home or qualifying for financing sooner than that traditional three-year waiting period.

Rod Lakin: For those who want to pursue this, will the financial hardship clause be difficult to qualify for?

Lisa the Lender: It could be, because lenders will be strict with documentation requirements to support the loss of income. My advice is to get organized and prepared with as much information as possible before meeting with your lender.

Rod Lakin: Are there any other requirements?

Lisa the Lender: Yes. Prospective borrowers must take a housing counseling class to qualify for new financing under this program. Borrowers’ credit must have recovered to a certain degree after the event and still meet minimum FHA credit standards.

Rod Lakin: Is this a good sign that lending requirements might be easing up a bit?

Lisa the Lender: That’s our hope! ow that the market is recovering, this could be a good first step towards qualifying more people for homes and getting more buyers back into the market.

Rod Lakin: Are we going to talk about your dating life at all in this interview?

Lisa the Lender: Uh, no? Isn’t that something Diane Brennan, host of That Real Estate Show, would ask?

Rod Lakin: She made me do it.

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Listen for more Phoenix real estate news with realtors Diane Brennan and Rod Lakin on That Real Estate Show Saturdays at 3 p.m. on News/Talk 92.3 KTAR.