This BLOG On Mortgage After Foreclosure Lending Guidelines On Home Purchase Was UPDATED On January 20th, 2019

The 2008 Real Estate and Mortgage Collapse has affected millions of homeowners.

• The Great Recession of 2008 affected millions of hard-working American workers
• Millions of American workers lost their jobs, lost their businesses, or had a substantial reduction in income
• They could no longer afford their mortgage loan payments and subsequently had to foreclose on their homes
• Millions of homeowners who thought they had equity in their homes have seen most or all of their equity in their homes vanish literally overnight
• Home values plummeted throughout the country

Many homes in California, Florida, Georgia, Colorado, Kentucky, New Jersey, Pennsylvania, Ohio, Michigan, Illinois, Texas, and Indiana have lost over 50% of their values.

Homeowners With Underwater Mortgages

A large percentage of homeowners had mortgage loan balances that were higher than the value of their homes.

• Foreclosure rates hit a historical high
• A large percentage of mortgage loan borrowers had subprime mortgage loans with teaser rates
• The introductory rate on a negative amortization
• When the mortgage loan adjusted to the new mortgage rates, it doubles or tripled sometimes
• Homeowners could no longer afford their new adjusted mortgage rate payments and were forced to foreclosure

Never in history were foreclosure, deed in lieu of foreclosure, short sale, and bankruptcy rates have been as high as it has been from 2008 until mid-2013.

Extenuating Circumstance Due To Unemployment With Mortgage After Foreclosure

The recession might be over technically but the economy is still bruised.

• Unemployment numbers may be reduced according to economic reports but many workers have given up looking for jobs
• Many skilled workers are underemployed where they are now in jobs that they are overqualified for
• The mortgage industry has lost over half of its workforce
• Many in the real estate and construction fields still remain unemployed or have left the field altogether

Those who have recovered and had a prior foreclosure can now qualify for a mortgage after foreclosure.

Qualifying For FHA Mortgage After Foreclosure

FHA has the most lenient qualification requirements in qualifying for a mortgage after foreclosure.

• There is a mandatory three-year waiting period to qualify for an FHA mortgage after foreclosure
• The waiting period starts from the recorded date of the foreclosure or the date of the sheriff’s sale and not the day you turned in your keys

The waiting period starts when the deed of your home has been transferred out of your name and into the name of the lender.

Mortgage With Bad Credit

Besides the waiting period requirements, the borrower needs at least a 580 FICO credit score to qualify for a 3.5% down payment FHA loan.

• Mortgage underwriters expect the borrower to have re-established credit and no late payments in the past 12 months
• Borrowers with credit scores of under 600 FICO may need to provide verification of rent

Conventional Mortgage After Foreclosure

Conventional Loans have a tougher stance when it comes to a mortgage after foreclosure.

• There is a 7-year mandatory waiting period to qualify for a conventional mortgage after foreclosure
• The waiting period starts from the recorded date of the foreclosure which is reflected on the recorder of deeds office and/or public records

Mortgage Part Of Bankruptcy

If you have had your mortgage part of your bankruptcy, the waiting period starts from the discharge date of your bankruptcy and not the recorded date of your foreclosure.

• If you had a mortgage part of bankruptcy, you can have your foreclosure recorded after the discharge date of your bankruptcy
• There is a mandatory 4-year waiting period to qualify for a conventional loan if you had mortgage part of the bankruptcy

No Waiting Period After Foreclosure With NON-QM Loans

Gustan Cho Associates offers non-QM loans.

• There is no waiting period after foreclosure with non-qm loans
• 10% to 20% down payment is required with non-qm loans
• No private mortgage insurance required
• Down payment and mortgage rates on non-qm loans is dependent on borrowers credit score
• No maximum loan limit 

Borrowers who need to qualify for non-QM mortgages with a direct lender with no overlays can contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.