We get many questions about FHA home loans following bankruptcy, foreclosures, or short sales. The FHA loan rules for new loans following a short sale can be a bit complicated as much depends on the status of the original loan prior to the short sale. What does the FHA say about getting a new loan in the wake of such a transaction?
The FHA addresses short sale issues in Chapter Four of HUD 4155.1. Section C states,
“A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to
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