Mortgage Guidelines In Buying Again After Bankruptcy And Foreclosure

Mortgage Guidelines In Buying Again After Bankruptcy And Foreclosure

This BLOG On Mortgage Guidelines In Buying Again After Bankruptcy And Foreclosure Was UPDATED On January 11th, 2018

Buying Again After Bankruptcy And Foreclosure is possible with government and conventional loans.

  • There are Mortgage Guidelines In Buying Again After Bankruptcy And Foreclosure with regards to mandatory waiting periods
  • Every loan program has waiting periods for borrowers buying again after bankruptcy and foreclosure

FHA Guidelines In Buying Again After Bankruptcy And Foreclosure

  • There is a two year waiting period for borrowers to qualify for a FHA Loans after discharged date of Chapter 7 Bankruptcy
  • Borrowers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan
  • There is no waiting period to qualify for FHA Loans After Chapter 13 Bankruptcy discharged date
  • There is a three year waiting period for borrowers to qualify for a FHA Home Loans after recorded date of foreclosure and/or deed in lieu of foreclosure, or short sale date
  • For short sales, the three year waiting period is over from the date of the HUD settlement statement/closing of  the short sale
  • For a foreclosure, or deed in lieu of foreclosure, the three year waiting period is over from the RECORDED DATE OF THE FORECLOSURE OR DEED IN LIEU OF FORECLOSURE and not the date that the foreclosure paperwork was signed

VA Guidelines In Buying Again After Bankruptcy And Foreclosure

VA Loans are the best mortgage loan program in the U.S. Unfortunately, only Veteran Borrowers with an honorable discharge and a certificate of eligibility (COE) are eligible to qualify for VA Home Loans. Most lenders have lender overlays on VA Loans. The Gustan Cho Team at USA Mortgage is a direct lender with no overlays on VA Loans. The Department Of Veteran Affairs (VA) has much more lenient guidelines on VA Loans than any other loan program. VA understands that Veterans deployed overseas may have more issues with paying their bills on time.

Here are the general VA Mortgage Guidelines:

  • 100% Financing with zero money down on home purchase
  • VA does not require minimum credit scores
  • The Gustan Cho Team at USA Mortgage has ZERO OVERLAYS on VA Loans
  • VA does not have a maximum debt to income ratio requirement
  • As long as the veteran borrower has an approve/eligible per Automated Underwriting System, The Gustan Cho Team at USA Mortgage will approve and fund the loan as long as the veteran borrower can meet the condition of the AUS
  • VA allows up to 4% sellers concessions so no closing costs for most veteran home buyers
  • 2 year waiting period after Chapter 7 Bankruptcy discharged date to qualify for VA Loans
  • 2 year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for VA Loans
  • Outstanding collections and charge off accounts do not have to be paid and/or satisfied to qualify for VA Loans
  • VA borrowers can qualify for VA Loans one year into Chapter 13 Bankruptcy Repayment Plan
  • There is no waiting period to qualify for VA Loans after Chapter 13 Bankruptcy Discharged Date

When Does The Waiting Period Starts In Buying Again After Bankruptcy And Foreclosure

  • The recorded date of the foreclosure or deed in lieu of foreclosure is the date that the actual property transfer happened and recorded  in county’s recorder of deeds office
  • Mortgage Borrowers cannot apply for a mortgage application prior to these dates but many mortgage loan borrowers do because their mortgage loan originators tell them its alright
  • Please have loan officer double check with their underwriting department to make sure they check their Guidelines And Overlays so borrowers do not have to sign mortgage documents twice and change your mortgage application date

Mortgage Application Date: Mortgage Application Date Needs To Be After Your Waiting Period Is Over

For example, say a homeowner had a deed in lieu of foreclosure in April 15, 2010 but the deed in lieu of foreclosure was recorded in February 13, 2011.

  • The three year waiting period is over on February 13, 2014
  • Many home buyers are eager to purchase a home prior to the three year waiting period so they enter into a purchase contract and schedule a closing say 30 days from today, February 21, 2013
  • Mortgage loan originator will probably not be able to get a Fannie Mae Automated Underwriting System Approval until February 1, 2013
  • Mortgage Applicants can get a DU FINDINGS approve eligible in the beginning of the month since DU does not recognize the actual day
  • However, mortgage application date needs to be on or after February 13, 2014 since that is the actual date of the end of mandatory waiting period
  • If mortgage application date is prior to the three year waiting period anniversary date, you mortgage application will get kicked back and need to complete and new mortgage application packet along with the proper disclosures with the correct mortgage application date

Loan Programs With No Waiting Period After Bankruptcy And Foreclosure

HUD launched the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan programs back in August 2013. The FHA Back To Work Program shortened the waiting period to one year waiting period after the following:

  • Bankruptcy
  • Foreclosure
  • Deed in lieu of foreclosure
  • Short sale

This loan program launched by HUD turned out to be a total disaster. Only a fraction of the tens of thousands of mortgage borrowers who applied for this program made it to the closing table. 100% of the borrowers went through more stress during the FHA Back To Work Mortgage Program than any other life’s stress. To be eligible for the HUD Back To Work Mortgage Program, the mortgage loan borrower needed to be unemployed which resulted in a 20% reduction of their overall housing income for at least six months prior to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale

  • The mortgage loan borrower was required to take a one hour HUD APPROVED housing counseling course
  • The mortgage application date and the real estate purchase contract date cannot be until 30 days after the date of the HUD approved counseling certificate
  • Any mortgage application date prior to the 30 day waiting period of the HOUSING COUNSELING CERTIFICATE DATE will be denied and mortgage application date needs to be modified which means a complete new mortgage application and disclosures needs to be completed

No -Waiting Period After Housing Event With Non-QM Loans

Again, the FHA Back To Work is no longer in existence. However, The Gustan Cho Team at USA Mortgage has non-qm loans where there is no waiting period after a housing event. There is a one year waiting period after Chapter 7 Bankruptcy discharged date. 20% down payment is required on non-qm loans and mortgage rates are higher than traditional government and/or conventional loans. To find out more about loan programs with no waiting period after housing events or to qualify for mortgage with direct lender with no overlays on government and conventional loans, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. Our team of loan officers are licensed in multiple states and are available 7 days a week, evenings, weekends, and holidays.

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