Conforming Guidelines On Mortgage Part Of Bankruptcy

This Article Is About Conforming Guidelines On Mortgage Part Of Bankruptcy

Conforming Guidelines On Mortgage Part Of Bankruptcy :

Conforming Guidelines On Mortgage Part Of Bankruptcy is different on Conventional Loans than it is on FHA, VA, and USDA loans:

  • Fannie Mae and Freddie Mac has much looser mortgage lending guidelines when it comes to the recorded date of the foreclosure when it comes to the mortgage part of the bankruptcy 
  • Qualifying for a new conventional mortgage loan after the mandatory waiting period with a prior mortgage included in bankruptcy is easier than other loan programs
  • With all mortgage loan programs, homebuyers can qualify for a home loan after a bankruptcy and foreclosure
  • However, there are mandatory waiting periods after bankruptcy and foreclosure to qualify for a mortgage loan

In this article, we will be discussing Conforming Guidelines On Mortgage Part Of Bankruptcy. We will discuss and cover qualifying for both conventional and FHA loans and the mandatory waiting periods for borrowers with a prior mortgage included as part of bankruptcy.

Conforming Guidelines On Mortgage Part Of Bankruptcy: Fannie Mae And Freddie Mac

Fannie Mae and Freddie Mac are the two entities that govern and set standards for conforming mortgage loans, also known as conventional loans. Conventional Loans are also referred to as conforming loans because they need to conform to Fannie Mae and/or Freddie Mac Standards.

Conforming Guidelines On Mortgage Part Of Bankruptcy is as follows:

  • For borrowers who had a mortgage and/or mortgages as part of Chapter 7 Bankruptcythe waiting period to qualify for a conventional loan is four years from the discharge date of Chapter 7 Bankruptcy
  • As long as the mortgage and/or mortgages, if there were more than one property in the Chapter 7 Bankruptcy, were part of the Chapter 7 Bankruptcy, the four-year waiting period time clock begins from the discharge date of the Chapter 7 Bankruptcy
  • The mortgage cannot be reaffirmed

The foreclosure, deed in lieu of foreclosure, or short can be recorded at a later date and it does not matter with conventional loans.

FHA Guidelines On Mortgage Part Of Bankruptcy

What could be the FHA guidelines on the part of the bankruptcy regarding the mortgage?

For borrowers with a mortgage and/or mortgages part of Chapter 7 Bankruptcy, the mandatory waiting period to qualify for an FHA loan is three years from the date of the recorded date of the foreclosure, deed in lieu of foreclosure, and/or short sale date on the mortgage that was part of Chapter 7 Bankruptcy.

  • Even though the mortgage was part of your Chapter 7 Bankruptcy, the discharge date of the bankruptcy does not count
  • The waiting period clock does not start until the mortgage and/or mortgages that were included as part of your Chapter 7 Bankruptcy was transferred out of the homeowner’s name and into the name of the mortgage lender and/or the date of the sheriff’s sale

Those who have a mortgage and/or mortgages as part of their Chapter 7 Bankruptcy should be diligent after the bankruptcy discharge date to make sure that the lender gets their name out of the deed to the home.

Qualifying For Mortgage After Bankruptcy And Foreclosure

Home Buyers can now qualify for home loans after bankruptcy and foreclosure.

Lenders understand that consumers can go through periods of extenuating circumstances such as the following:

  • Bad credit due to unemployment
  • Business loss
  • Divorce
  • Medical issues

Bankruptcies and Foreclosures happen to the best of all of us due to extenuating circumstances.

  • Homeownership is possible after bankruptcy and/or foreclosure
  • However, most mortgage lenders do not want to see any late payments after someone has gone through bankruptcy and/or foreclosure and/or short sale

Lenders want to see re-established credit after bankruptcy and foreclosure and timely payments.

Conforming Guidelines On Mortgage Part Of Bankruptcy Versus Lender Overlays

Which means consistent guidelines for some mortgages in connection with bankruptcy and lenders' overlays

Home Buyers who had a mortgage part of bankruptcy. But the foreclosure was not recorded until a much later date after the discharged date of their Chapter 7 discharged date can now qualify for a conventional loan four years from the discharged date of their Chapter 7 Bankruptcy.

  • Unfortunately, most lenders will tell borrowers that they will still go off the recorded date of the deed of the mortgage note
  • Or the date of the sheriff’s sale and that they need to wait 7 years from the recorded date of the foreclosure
  • This often happens where even though the borrower may meet all of Fannie Mae and/or Freddie Mac Lending Guidelines
  • But due to the mortgage lender overlaysborrowers may not qualify with all lenders
  • Lenders do not need to just go off Fannie Mae and Freddie Mac lending guidelines
  • They can have additional lending requirements (Overlays) on top of the minimum guidelines set by Fannie Mae and Freddie Mac which are conforming mortgage overlays

Borrowers who were told that they do not qualify for a conventional loan after four years from the discharge date of Chapter 7 Bankruptcy with mortgage part of bankruptcy by the lender, look no further. Contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.

Gustan Cho Associates is a mortgage company licensed in multiple states with no mortgage lender overlays on government and conventional loans. GCA Mortgage Group has no mortgage lender overlays on FHA Loans. Our team of loan officers at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

2 Comments
  1. Thomas Allison

    I have a 585 credit score and in contract on a house valued around $175,000 with a sales agreement for $140,000. We have $7,000 cash right now towards the downpayment. But we need to close by 11/25/20 due to the nature of my work I will be working 7 days a week after that. I have all documentation ready to send to you to get this accomplished, except appraisal.

  2. William Simpson

    I would like to find out more about buying property and building a home. Or find a home with some land. Thank you

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