This guide covers the Fannie Mae guidelines on conventional loans with a waiting period after mortgage part of bankruptcy. Many of our borrowers are folks with prior bankruptcy, foreclosure, short sale, or deed-in-lieu of foreclosure. Borrowers can qualify for a home loan after bankruptcy and foreclosure. This holds true as long as they meet the minimum waiting period after bankruptcy or foreclosure requirements. Many folks often get confused about the waiting period after mortgage part of bankruptcy.
Waiting periods normally start from the recorded foreclosure date or deed-in-lieu of foreclosure. The waiting period does not start when the homeowner surrenders their keys to their lender—or vacates the property that the mortgage was part of their Chapter 7 Bankruptcy.
This blog covers the mandatory waiting period after mortgage part of bankruptcy and foreclosure on FHA and Conventional loans. We will discuss FHA and Conventional loans since these two mortgage loan programs are today’s most popular home loans. There are many instances where people will include their mortgage as part of their Chapter 7 Bankruptcy.
Start Date on Waiting Period After Mortgage Part of Bankruptcy
The waiting period to qualify for conventional loans after bankruptcy starts from the discharge date of the Chapter 7 Bankruptcy and not the filing date. The waiting period after the short sale starts from the short sale date reflected on the HUD Settlement Statement. There are new changes in the waiting period after mortgage part of bankruptcy that were implemented and launched by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are the two mortgage giants in the United States that set mortgage lending guidelines for Conventional Loans.
Fannie Mae Guidelines on Waiting Period After Mortgage Part of Bankruptcy
These changes in the waiting period after mortgage part of bankruptcy on Conventional loans will help thousands of home buyers. New FNMA Guidelines will help folks who had a mortgage as part of their Chapter 7 Bankruptcy where the foreclosure was not recorded much later qualify for Conventional loans.
There is a four-year waiting period to qualify for a Conventional loan from the Chapter 7 Bankruptcy discharge date. Not the recorded date of the foreclosure. This holds true even though the foreclosure or sheriff’s sale happened much later.
Under the new Fannie Mae Guidelines, the waiting period after mortgage part of bankruptcy is four years from the discharge date. ,
Waiting Period After Mortgage Part of Bankruptcy on FHA Loans
There is a two-year mandatory waiting period after the Chapter 7 Bankruptcy discharge date to qualify for an FHA loan. There is no waiting period to qualify for an FHA loan after Chapter 13 Bankruptcy. However, if the Chapter 13 Bankruptcy discharge has been seasoned for under two years, it must be manual underwriting. Homebuyers can qualify for FHA Loans one year into a Chapter 13 Repayment Plan with Trustee Approval. It needs to be manual underwriting.
Waiting Period After Housing Event To Qualify For Mortgage
There is a three-year mandatory waiting period to qualify for an FHA Loan after the recorded foreclosure date or deed-in-lieu of foreclosure. After the short sale date, there is a three-year mandatory waiting period to qualify for an FHA loan.
There is no mandatory waiting period exists to qualify for an FHA loan after a short sale. This holds true if and only if the homeowner is not late on his or her mortgage payments up to the short sale date.
For borrowers to qualify for an FHA loan after a short sale with no waiting period is if the borrower was timely on all of their mortgage payments up to the short sale date. Suppose you had a mortgage included in Chapter 7 Bankruptcy discharge. In that case, there is a three-year waiting period from the recorded foreclosure date or sheriff’s sale after the Bankruptcy discharge date.
Importance of Deed Transfer After Housing Event
Many lenders are not in a major hurry to transfer the deed of the property out of the homeowners’ name into their name: This is in cases where a homeowner has mortgages as part of their Chapter 7 Bankruptcy. The waiting period start date does not start until the deed of the property has been transferred out of their names after a foreclosure, a deed-in-lieu of foreclosure, or a short sale:
It may take some time to get the homeowner’s name out of the deed. Until the deed to the property has been transferred from the homeowners’ name into the lender’s name or the property was sold, the 3-year waiting period clock did not start yet.
There are cases where people cannot qualify to buy a home with an FHA loan. The waiting period clock did not start ticking because the deed was still in their names. If you have a mortgage as part of your Chapter 7 Bankruptcy, do everything in power to get the deed out of your name into the lender’s name so the three-year waiting period clock has started.
Waiting Period After Mortgage Part of Bankruptcy on Conventional Loans
Great news for Conventional loan borrowers. A four-year mandatory waiting period is required to qualify for a Conventional loan after a Chapter 7 Bankruptcy discharge date. A two-year mandatory waiting period is required to qualify for a Conventional loan after a Chapter 13 Bankruptcy discharge date. There is a four-year waiting period after the Chapter 13 dismissal date. There is a four-year mandatory waiting period to qualify for a Conventional loan after a deed-in-lieu of foreclosure.
The waiting period clock does not begin until the deed has been transferred from the homeowner’s name into the lender’s name. Or the date of the sheriff’s sale or the date the property was sold. The waiting period does not start the day that the homeowner has surrendered the property to the lender or turned in the keys to the foreclosure to the lender.
A four-year mandatory waiting period is required to qualify for a Conventional loan after a short sale. The four-year waiting period clock does not start until the short sale date, reflected in the HUD Settlement Statement. A seven-year mandatory waiting period is required to qualify for a Conventional Loan after a foreclosure. The seven-year waiting period does not start until the recorded foreclosure date, reflected in the county’s recorder of deeds office. Or the date of the sheriff’s sale or the date the property was sold. The date when the homeowner turned in his keys and surrendered the property is not the start of the waiting period.
Cases Where Borrowers Can Qualify For Conforming But Not FHA Loans
Borrowers with a mortgage included in Chapter 7 Bankruptcy can qualify for a Conventional loan four years from the discharged date of Chapter 7 Bankruptcy. This holds true even though the foreclosure and housing event was not recorded and transferred out of your name until after the Chapter 7 Bankruptcy discharge date.
Borrowers who have a mortgage included in the bankruptcy is able to qualify for conventional loans after four years from the bankruptcy discharge date. This opens doors to many homebuyers with mortgages included in the Chapter 7 Bankruptcy.
The foreclosure needs to have been completed and out of the homeowners’ name. The waiting period after the foreclosure or housing event does not matter. Fannie Mae will end the four-year waiting period from the Chapter 7 Bankruptcy discharge date. This differs from HUD’s FHA Guidelines on the waiting period to qualify for an FHA loan if borrowers had a mortgage included in Chapter 7 Bankruptcy. If borrowers had a mortgage included in Chapter 7 Bankruptcy, they only need to wait four years from the discharge date of Chapter 7 Bankruptcy to qualify for a Conventional loan.
