Conforming Loans After Bankruptcy And Foreclosure Mortgage Guidelines

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Conforming Loans After Bankruptcy And Foreclosure Mortgage Guidelines

This BLOG On Conforming Loans After Bankruptcy And Foreclosure Mortgage Guidelines Was UPDATED On January 17th, 2019

By Gustan Cho

Fannie Mae and Freddie Mac are the two mortgage giants that set conforming mortgage guidelines.
    • Conventional Loans, also referred to as conforming loans, are not government loan
    • However, banks and lenders who originate and fund conforming loans need to abide and follow Fannie Mae and/or Freddie Mac Guidelines in order for them to be able to sell the loan on the secondary market to Fannie/Freddi

Fannie Mae And Freddie Mac Changes On Conforming Loans After Bankruptcy And Foreclosure Guidelines

Fannie Mae has made major changes with regards to waiting periods after the following:
    • Bankruptcy
    • Foreclosure
    • Deed in lieu of foreclosure
    • Short sale
    • Mortgage Part Of Chapter 7 Bankruptcy
    • There is a two year waiting period to qualify for Conforming Loans After Chapter 13 Bankruptcy Discharged Date
    • There is a four year waiting period to qualify for conforming loans after short sale and/or deed in lieu of foreclosure
    • There is a seven year waiting period to qualify for conventional loans after a regular standard foreclosure
  • There is a four year waiting period to qualify for conventional loans after Chapter 7 Bankruptcy discharged date

This new Fannie Mae guidelines can be viewed both as positive and negative by conventional mortgage applicants who need to qualify for home loans. The FHFA also increased conforming loan limits to $484,350 effective January 2019.

Fannie Mae Guidelines On Mortgage Part Of Chapter 7 Bankruptcy

Back in 29 June, 2014, Fannie Mae announced that those homeowners who had a foreclosure included as part of their bankruptcy and the mortgage loan was included in the bankruptcy petition, the waiting period starts effective of the date of the bankruptcy discharge date. This is the case even though the lender has not transferred the deed of the home into their names until at a later date.
    • Before this new Fannie Mae rule, even if  borrowers had a mortgage loan part of Chapter 7 bankruptcy, the waiting period to qualify for Conforming Loans After Bankruptcy And Foreclosure did not start until the homeowners name was transferred into the name of the lender and recorded in the county’s recorder of deeds offic
    • There are thousands of folks who had their mortgage loan included as part of Chapter 7 bankruptcy years ago but the  lender refuses to transfer the deed into their nam
    • These  people’s waiting period did not even begin ye
    • But now with Fannie Mae’s new waiting period guidelines on having a foreclosure part of their bankruptcy, things will chang
    • Now they can qualify to purchase a hom
    • The mortgage cannot be re-affirme
  • The housing event needs to be finalized

Changes In Qualifying For Conventional Loan After Short Sale And Deed In Lieu

There are new changes to qualify for a conventional loan after a short sale and deed in lieu of foreclosure.

  • It used to be where a person who had a prior short sale or deed in lieu of foreclosure can qualify for a conventional loan 
  • This holds true as long as they have a 20% down payment and re-established credit after the short sale and deed in lieu of foreclosure
  • However, this Fannie/Freddie Guidelines came to a halt starting August 16, 2014
  • The two year waiting period after a short sale or foreclosure with 20% down payment was total totally eliminated
  • The new waiting period to qualify for a conventional loan after a short sale and/or deed in lieu is now a 4 year waiting period
  • Currently, conventional mortgage loan applicants with 5% down payment can qualify for conforming loans after deed in lieu of foreclosure and/or short sale after a four year waiting period
  • Fannie Mae guidelines in qualifying for a conventional loan after a short sale or deed in lieu of foreclosure, the waiting period is 4 years but only a 5% down payment is required
  • The 20% down payment and 10% down payment requirement has been eliminated back in 2014

Qualifying For Conforming Loans After Bankruptcy And Foreclosure

Home Buyers who need to qualify for Conforming Loans After Bankruptcy And Foreclosure with a direct lender with no lender overlays on government and/or conventional loans can contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

Related> Fannie Mae’s new short sale guideline to take effect August 16th

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