Mandatory waiting period to qualify for a mortgage after foreclosure
For those who had a prior foreclosure and are ready to purchase another home, they need to consider that there is a 3 year mandatory waiting period. The 3 year mandatory waiting period is the date of the County Sheriff’s Sale or the date the deed was transferred out of your name, and not the date you turned your keys in or the date you moved out. This date is important because there are thousands of folks who have turned in the keys several years ago but the deed is still in their names so the waiting period clock did not even start for those folks. Banks are in no hurry to transfer the deed over to them.
Waiting period to qualify for a mortgage if you are co-signer on foreclosed mortgage
If you were a co-signer on a mortgage loan and the house you co-signed the mortgage got foreclosed on, you now have a foreclosure on your record. Even though you had no interest in the home or even saw or visited the home and all you did was help out the buyer of the property by co-signing, if the property got foreclosed on, you are not eligible until the three year waiting period has elapsed. Remember that the 3 year waiting period clock starts ticking the day that the actual deed was transferred out of the borrowers name into the name of the lender or the date of the sheriff’s sale.
Will FHA shorten waiting period to qualify for a mortgage after foreclosure?
There are rumors that FHA is thinking about reducing the waiting period or even eliminating it altogether for those who filed bankruptcy and/or had foreclosures. Again, as of today, nothing is solid but just talk. I have never heard of any mortgage loan borrowers getting a waiting period waiver from any FHA lender. The waiting period is pretty much non-negotiable. For those who had a foreclosure, the wait time is 3 years and for those who filed bankruptcy, the wait time is 2 years from the date of the discharge of the bankruptcy. Foreclosures stays on your credit report for 7 years, Chapter 13 bankruptcies stay on your record for 7 years, and Chapter 7 bankruptcies stay on your record for 10 years. Judgments stay on your credit report for 7 years.
UPDATE on FHA waiting period to qualify for a mortgage after foreclosure: FHA Back to Work Mortgage Program
This mortgage blog article has been updated since it was originally written and published. FHA now has introduced the FHA Back to Work Extenuating Circumstances due to an Economic Event on August 15, 2013 where it shortens the waiting period after a bankruptcy and/or foreclosure to one year after the economic event.