2016 FNMA Guidelines On Conventional Loan After Bankruptcy

Update On 2016 FNMA Guidelines On Conventional Loan After Bankruptcy

There are two types of Bankruptcies. A Chapter 7 Bankruptcy which is also called total liquidation and a Chapter 13 Bankruptcy which is a repayment and restructuring of the debts. You do not need to have a job for a Chapter 7 Bankruptcy and all of the assets that you have gets liquidated and most of your debts gets discharged on a Chapter 7 Bankruptcy. After a Chapter 7 Bankruptcy discharge, a consumer can get a fresh start on their financial life and do not have to worry about debt collectors calling them. All judgments and outstanding unpaid collection accounts gets discharged and the consumer does not have to worry about it anymore. The only debts that cannot be discharged on a Chapter 7 Bankruptcy are government debt such as state and federal income taxes, government backed student loans, and moneys owed to city, county, state, and federal government like fines. All other debts such as medical collections, charge off accounts, non-medical collections, judgments, personal debts, and any unsecured and secured debts gets discharged and the petitioner does not have to worry about it. All wage garnishments and liens due to money owed gets discharged and the consumer starts a fresh financial life.

With a Chapter 13 Bankruptcy, you need to be employed in order to qualify for a Chapter 13 Bankruptcy because a portion of the wage earner’s wages will be allocated and distributed among the petitioner’s creditors. Unemployed people or those not making enough money will not qualify for a Chapter 13 Bankruptcy. Under a Chapter 13 Bankruptcy, a percentage of the wage earner’s income is set aside by the Trustee of the Chapter 13 Bankruptcy and divided up to pay the creditors. This repayment plan is normally for a period of five years and after the five years is up, the remaining debts that is owed to the creditors is totally discharged and the consumer is now debt free.

2016 FNMA Guidelines On Conventional Loan After Bankruptcy require a mandatory waiting for a Conventional Loan mortgage borrower to qualify for a Conventional Loan After Bankruptcy. There is a four year waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharged date. There is a two year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date.

Conventional mortgage lenders do not want to see any late payments after a bankruptcy by mortgage borrowers and re-established credit after bankruptcy is a must. Minimum credit scores required to qualify for a conventional loan is 620 FICO credit scores. With Conventional Loans, the higher your credit scores are, the lower your mortgage interest rates will be so it is very important that you maximize your credit scores to the highest level possible before applying for a Conventional Loan.

2016 FNMA Guidelines On Conventional Loan After Bankruptcy: Mortgage Part Of Bankruptcy

FHA Loans are one of the most popular mortgage loan programs in the United States due to the lenient credit and lending guidelines it offers over Conventional Loans. However, there are times where a home buyer does not qualify for a FHA Loan but will qualify for a Conventional Loan if the home buyer had a mortgage part of a Chapter 7 Bankruptcy . 2016 FNMA Guidelines On Conventional Loan After Bankruptcy states that if a borrower had a mortgage part of their Chapter 7 Bankruptcy, there is a mandatory four year waiting period to qualify for a Conventional Loan even though if the foreclosure is not recorded until a later date after the Chapter 7 Bankruptcy discharged date. This is different with FHA Loans where if the borrower had a mortgage part of bankruptcy, FHA requires a three year mandatory waiting period after the recorded date of the foreclosure on the mortgage that was part of the Chapter 7 Bankruptcy discharge. Most mortgage lenders are not in a major hurry in transferring the deed of the property out of the homeowners name into their name and there are times where it may take years for the actual foreclosure to be transferred out of the homeowners name after the Chapter 7 Bankruptcy discharged date. The three year mandatory waiting period does not start until the foreclosure has been finalized and the deed has been out of the homeowners name and into the name of the lender or date of the sheriff’s sale and recorded on the county recorder of deeds office for FHA Loans. With this new Fannie Mae Guidelines On Mortgage Part Of Bankruptcy, it opens up many doors for home buyers who had a mortgage or mortgages as part of their Chapter 7 Bankruptcy.

If you had prior bankruptcy and/or a mortgage part of your bankruptcy and are looking for a Conventional mortgage lender with little to no lender overlays, please contact me at 262-716-8151 or email me at gcho@gustancho.com.

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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