Mortgage Part Of Bankruptcy

Many homeowners who were victims of the 2008 Real Estate and Mortgage Meltdown were left with homes that were worth less than the value of their homes and could not sell or could not find any alternative to foreclosure.  Others had sub-prime mortgage loans that had initial teaser mortgage rates and/or negative amortization where they had intial low monthly payments and when the teaser mortgage rate expired, their mortgage payment sky rocketed where some homeowners had mortgage payments that were double or sometimes even triple their original monthly mortgage payment.  With the combination of the Great Depression of 2008 and companies laying off millions of workers nationwide, many homeowners were forced to file bankruptcy because they could no longer afford their home loan payments as well as their other monthly bills.  A large percentage of homeowners who filed for Chapter 7 Bankruptcy had their mortgage part of bankruptcy and surrendered their homes to the original mortgage lender.

How Does Mortgage Part Of Bankruptcy Work?

If you surrender your home in your Chapter 7 Bankruptcy, you can include your mortgage part of bankruptcy.  Your mortgage loan balance will be discharged in your bankruptcy discharge and you will no longer owe your mortgage loan balance.  You then surrender the home to your mortgage lender.  However, your mortgage lender may not be in a major hurry to transfer the deed of your home to their names.  This can create an issue when it is time for you to qualify for a home loan in the near future.  There are mandatory waiting periods after bankruptcy and foreclosure that a home buyer needs to meet under federal mortgage lending guidelines.  Waiting periods after bankruptcy and foreclosure depends on the mortgage lending program.  We will cover FHA Loans and Conventional Loan on this article since they are two of the most popular mortgage lending program in the United States.

Mortgage Part Of Bankruptcy On FHA Loans

You can qualify for a FHA Loan after bankruptcy and foreclosure after you meet the minimum waiting period.  There is a two year waiting period after Chapter 7 Bankruptcy from the discharged date of the bankruptcy to qualify for a FHA Loan.  There is a three year waiting period after foreclosure and deed in lieu of foreclosure from the recorded date of the foreclosure or deed in lieu of foreclosure to qualify for a FHA Loan.  There is a three year waiting period to qualify for a FHA Loan after short sale from the date of the short sale which is reflected on the HUD Settlement Statement.

If you have a mortgage part of bankruptcy and need to qualify for a FHA Loan, the waiting period starts from the recorded date of your foreclosure and not the discharge date.  There is a three year waiting period after the recorded date of your foreclosure to qualify for a FHA Loan.  If you have a mortgage part of bankruptcy and the bankruptcy was discharged on January 1, 2010 but your foreclosure was not recorded until January 1, 2015, you need to wait three years from the January 1, 2015 recorded date of your foreclosure which is January 1, 2018 for you to qualify for a FHA Loan.

Mortgage Part Of Bankruptcy For Conventional Loan

There are new regulations and mortgage lending guidelines on conventional loans for 2015.  If you have mortgage part of bankruptcy and you are seeking to qualify for a conventional loan, you need to wait four years from the discharge date of your Chapter 7 Bankruptcy to qualify for a conventional loan.  The foreclosure can be recorded at a later date after the discharge date and you can still qualify for a conventional loan if you have mortgage part of bankruptcy as long as you have surrendered your home at the time of the bankruptcy.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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