Conforming Loans After Bankruptcy And Foreclosure
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/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

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 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

Back on 29 June 2014, Fannie Mae announced that those homeowners who had a foreclosure included as part of their bankruptcy and the mortgage loan were included in the bankruptcy petition, the waiting period starts effectively 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 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.

Gustan Cho NMLS 873293 is the National Managing Director of NEXA Mortgage, LLC dba as Gustan Cho Associates NMLS 1657322. Gustan Cho and his team of loan officers are licensed in multiple states. Over 75% of the borrowers of Gustan Cho Associates (Gustan Cho Associates) are folks who could not qualify at other lenders due their lender overlays on government and conventional loans. Many mortgage borrowers and real estate professionals do not realize a mortgage company like Gustan Cho Associates exists. We have a national reputation of being a one-stop mortgage company due to not just being a mortgage company with no lender overlays but also offering dozens of non-QM and alternative financing loan programs. Any non-QM mortgage loan program available in the market will be offered by the team at Gustan Cho Associates. Our team of support and licensed personnel is available 7 days a week, evenings, weekends, and holidays.

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