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Thousands who have faced foreclosure in the past wonder how long do I have to wait before I can buy a new home?

Unfortunately the answer is not simple and changes regularly.

For several years I have been explaining that no one can predict the length of time that FHA, Fannie Mae or HUD, or a specific lender will require a homeowner to wait to qualify for a new home loan after a prior foreclosure, short sale or bankruptcy.  Realtors try to scare people into thinking that these periods are set in stone.  This is simply not true.

Realtors, brokers and lenders make a commission when you finance a new home. They have no incentive to make sure you can actually afford the loan.

Usually about every two to three years one or all of these agencies change their policies.   To support my statement in August of 2013, the Federal Housing Administration (FHA) announced its Back to Work Program.  This program looks at the extenuating circumstances that a homeowner faced prior to a foreclosure, short sale or bankruptcy.  In some very limited cases this program will shorten the waiting period for home buyers to one year from two to seven years.

To qualify for the program, home buyers need to show proof that that they suffered an economic event that resulted in a loss of 20% or more of their income for a period of six months or more, and that they have fully recovered financially from this event. In addition, participants must have received counseling from a U.S. Department of Housing and Urban Development (HUD)-approved agency.

This is just one of many programs that exist, or will exist over the next several years.  Don’t let anyone tell you that administrative procedures or law never change.

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Diane L. Drain

Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.

About Diane Drain:

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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