Yes; here's why:
Short Sale Lender(s) normally require an "arms-length" transaction in the initial short sale transaction (short seller to new buyer). Including the Seller, the property may not be sold to anyone the seller has a close personal or business relationship with including family, friends, or in some cases, even neighbors.
The Seller is normally required to sign a contract addendum/statement confirming a transactionâ€™s â€œarms-lengthâ€ status. An example of the text is as follows:
"SELLER AND BUYER EACH REPRESENT THAT THE SALE IS AN " ARMS LENGTH" TRANSACTION AND THE SELLER AND BUYERS ARE UNRELATED TO EACH OTHER BY FAMILY, MARRIAGE OR COMMERCIAL ENTERPRISE."
Since in your case the initial short sale transaction has occurred you have every right to purchase you father's past home if the seller is interested.
Veronica Rogers - Realtor
Real Estate Ebroker