• 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/Freddie

The Federal Housing Finance Agency (FHFA) is in charge of Fannie Mae and Freddie Mac:

• FHFA sets conforming guidelines like HUD, the parent of FHA, sets FHA Guidelines

In this article, we will cover and discuss conforming loans after bankruptcy and foreclosure.

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

• 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 a 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

• 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 office
• 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 name
• These  people’s waiting period did not even begin yet
• But now with Fannie Mae’s new waiting period guidelines on having a foreclosure part of their bankruptcy, things will change
• Now they can qualify to purchase a home
• The mortgage cannot be re-affirmed

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 qualifying 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 a 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 have 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 us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.