Bankruptcy And Foreclosure Mortgage Guidelines For Home Buyers

Gustan Cho Associates
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Bankruptcy And Foreclosure Mortgage Guidelines For Home Buyers

This BLOG On Bankruptcy And Foreclosure Mortgage Guidelines For Home Buyers Was Published On May 21st, 2019

Bankruptcy And Foreclosure Mortgage Guidelines on government and conforming loans have mandatory waiting period requirements.

  • Bankruptcy And Foreclosure Mortgage Guidelines on loan programs are different
  • FHA, VA, USDA, Fannie Mae, Freddie Mac has its own mandatory Bankruptcy And Foreclosure Mortgage Guidelines
  • However, NON-QM Loans offered by Gustan Cho Associates at Loan Cabin Inc. has no waiting period Bankruptcy And Foreclosure Mortgage Guidelines
  • What this means is there are no mandatory waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale to qualify for a home mortgage

In this blog, we will discuss Bankruptcy And Foreclosure Mortgage Guidelines on government, conventional, and non-qm mortgages.

Re-Establishing Credit After Bankruptcy And Housing Event

A bankruptcy or foreclosure is not the end of the world.

  • Many consumers who have filed bankruptcy and/or had a housing event recoup themselves
  • Bankruptcy and/or foreclosure will plummet consumer credit scores more than 100 points
  • However, the credit score drop is temporary
  • Even if consumers do nothing, credit scores will eventually go back up as the bankruptcy and/or foreclosure ages
  • However, the trick to getting high credit scores and re-establishing credit score is by getting three to five $500 credit limit secured credit cards
  • Many who get three to five secured credit cards after their bankruptcy discharge and/or foreclosure can have 700 plus FICO credit scores in about a year. The credit score impact of the bankruptcy and/or foreclosure will have less of an impact on consumer credit scores as the bankruptcy and/or foreclosure ages

The easiest and fastest way of re-establishing credit after bankruptcy and/or housing event is by getting 3 to 5 secured credit cards.

Bankruptcy And Foreclosure Mortgage Guidelines
Gustan Cho Associates

Qualifying For Mortgage After Bankruptcy And Foreclosure

Home buyers can qualify for a mortgage after bankruptcy and/or foreclosure.

Gustan Cho Associates will accept borrowers with late payments after bankruptcy and/or foreclosure.

HUD Bankruptcy And Foreclosure Mortgage Guidelines

HUD is the parent of FHA. The U.S. Department of Housing Development has its own Bankruptcy And Foreclosure Mortgage Guidelines:

  • There is a two year waiting period requirement after Chapter 7 Bankruptcy discharge date
  • Waiting period requirement is 3 years after foreclosure, deed in lieu of foreclosure, short sale to qualify for FHA Loans
  • Borrowers can qualify for FHA Loans during chapter 13 bankruptcy repayment period one year into the repayment plan with Trustee Approval and manual underwriting
  • There is no waiting period to qualify for FHA Loans after Chapter 13 Bankruptcy discharge date
  • Any bankruptcies seasoned less than 2 years need to be manually underwritten

VA Bankruptcy And Foreclosure Mortgage Guidelines

The U.S. Department of Veterans Affairs has the following VA Bankruptcy And Foreclosure Mortgage Guidelines:

  • Two-year waiting period after Chapter 7 Bankruptcy discharge date
  • Two-year waiting period after foreclosure, deed in lieu of foreclosure, short-sale
  • Borrowers can qualify for VA Loans during Chapter 13 bankruptcy repayment period one year into the repayment plan with Trustee Approval and manual underwriting
  • There is no waiting period to qualify for VA Loans after Chapter 13 Bankruptcy discharge date
  • There is no waiting period to qualify for VA Loans after Chapter 13 Bankruptcy discharge date
  • Any bankruptcies seasoned less than 2 years need to be manually underwritten
Gustan Cho Associates

USDA Bankruptcy And Foreclosure Mortgage Guidelines

USDA Bankruptcy And Foreclosure Mortgage Guidelines and waiting period requirements are the following:

  • There is a 3 year waiting period after chapter 7 bankruptcy discharge date to qualify for USDA Loans
  • There is a 3-year waiting period for foreclosure, short sale, and pre-foreclosure

Fannie Mae And Freddie Mac Bankruptcy And Foreclosure Mortgage Guidelines

Here are the waiting period requirements on conventional loans:

  • There is a four-year waiting period after a chapter 7 or 11 bankruptcy to qualify for conventional loans
  • There is a four-year waiting period after a deed in lieu of foreclosure and short-sale to qualify for conventional loans
  • There is a seven-year waiting period to qualify for conforming loans after a standard foreclosure
  • There is a two-year waiting period after Chapter 13 Bankruptcy discharged date to qualify for conforming loans
  • There is a four-year waiting period after a Chapter 13 dismissal date to qualify for conventional loans
Gustan Cho Associates

Mortgage Included In Chapter 7 Bankruptcy

When a mortgage was included and discharged through a bankruptcy, the following waiting period requirements apply:

  • With conventional and VA Loans, the waiting period requirements start from the discharged date of the bankruptcy and not the recorded housing event date
  • There is a four-year waiting period after a Chapter 7 Bankruptcy discharged date to qualify for conventional loans and a two-year waiting period on VA Loans
  • The date of the foreclosure, deed in lieu of foreclosure, short-sale does not matter if the mortgage debt was included in the bankruptcy
  • With FHA Loans, the waiting period starts on the recorded date of the foreclosure, short-sale, deed in lieu of foreclosure

NON-QM Bankruptcy And Foreclosure Mortgage Guidelines

There is no waiting period requirements on non-qm loans after bankruptcy and/or housing event. The housing event does need to be finalized. It cannot be pending and in limbo. Non-qm mortgage rates are higher than traditional government and conventional loans. 10% to 20% down payment is required. Amount of down payment depends on the borrower’s credit scores and seasoning of the bankruptcy and/or housing event. Mortgage rates depend on the borrower’s credit scores, down payment, and seasoning of the bankruptcy and/or housing event. The lower the credit scores the larger the down payment. Recent late payments are allowed on non-qm loans. Minimum credit score required is 500 FICO. NON-QM Loans are for home purchase and refinance transactions. Cash-out refinance transactions are allowed. Gift funds permitted. Mortgage late payments in the past 12 months is allowed. For more information on non-qm mortgages, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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