HUD recently released its ruling on when and how soon a borrower may use FHA financing after surviving closing a short sale.
1. A buyer can immediately purchase a home if they executed a short sale on a previously owned residence, IF:
* They were current on their mortgage and other installment debts at the time of the short sale (no 30 day late payments in previous 12 months from time of new loan application for new purchase), OR
* The proceeds from the short sale serve as payment in full.
2. A buyer must wait 3 years from the time of a short sale, IF:
* They did a short sale simply to take advantage of declining market conditions, AND
* They are looking to purchase at a reduced price, a property that is similar or superior and within a reasonable commuting distance from the property that was sold short.
* They were in default at the time of the short sale
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