HUD came out with updated guidance to lenders that will significantly impact borrowers/ buyers that had a foreclosure, short sale or bankruptcy in their past that was a direct result of an Economic Event. If lenders can document that the Economic Event was the result of a Loss of Employment or significant loss of Household income beyond the borrowers control and has demonstrated full recovery from the event, then the buyer/ borrower(s) would now have a 1 year seasoning requirement from the event instead of the present published guidelines of 3 years. The Economic Event is defined to have been a 20% or more loss of income for a period of at least 6 months. Documentation of this event will be required. During the 1 year seasoning time, the borrowers must demonstrate a 12 month good payment record with their established credit history and also complete HUD approved housing counseling prior to the close on a new purchase.
