by Calculated Risk on 9/02/2013 03:56:00 PM

From Nick Timiraos at the WSJ: New Lifeline for Home Buyers

A recent rule change lets certain borrowers who have gone through a foreclosure, bankruptcy or other adverse event—but who have repaired their credit—become eligible to receive a new mortgage backed by the Federal Housing Administration after waiting as little as one year. Previously, they had to wait at least three years before they could qualify for a new government-backed loan.

To be eligible for the new FHA loans, borrowers must show that their foreclosure or bankruptcy was caused by a job loss or reduction in income that was beyond their control. Borrowers also must prove their incomes have had a "full recovery" and complete housing counseling before getting a new mortgage.

We started seeing "bounce back" buyers in 2011 (see: After Foreclosure: The Bounce Back Buyers). As Timiraos noted, the standard FHA waiting period is 3 years. The waiting period is 7 years for a conventional loan following a foreclosure (4 years for a conventional loan following a short sale).