Conforming Loans After Deed In Lieu Versus Foreclosure Guidelines

This Article Is About Conforming Loans After Deed In Lieu Versus Foreclosure Guidelines

Homebuyers and homeowners can qualify for a conventional loan after a housing event. A housing event is a foreclosure, a deed in lieu of foreclosure, or a short sale. Fannie Mae and Freddie Mac have a waiting period requirement after a housing event. The waiting period is different after a deed in lieu of foreclosure and/or a short sale versus a standard foreclosure. Government loans have the same deed in lieu of foreclosure and foreclosure waiting period requirements. What this means is government loans treat a deed in lieu of foreclosure, foreclosure, and short sale the same and have the same waiting period requirements. However, conventional loans have different waiting period requirements on a deed in lieu of foreclosure and short sale versus a standard foreclosure. In this article, we will discuss and cover the waiting period requirements after a deed in lieu of foreclosure and short sale versus a standard foreclosure.

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When borrowers can no longer afford mortgage payments or no longer want their home they can request a mortgage lender that if they can offer a deed in lieu of foreclosure instead of the lender foreclosing. Deed In Lieu Of Foreclosure and Short Sales are alternatives to foreclosure. Both Fannie Mae and Freddie Mac have different qualification requirements for Conforming Loans After Deed In Lieu Versus Foreclosure. The waiting period to qualify for Conforming Loans After Deed In Lieu Versus Foreclosure is four years. It is four years after a short sale to qualify for conventional loans. However, the waiting period is seven years after a foreclosure to qualify for conforming loans. A deed in lieu of foreclosure is when a homeowner transfers the deed of their home to their mortgage lender. In return, the mortgage lender will not foreclosure on a home. Foreclosures can be extremely time-consuming and costly for the lender.

Benefits Conforming Loans After Deed In Lieu Versus Foreclosure

The biggest advantage of qualifying for Conforming Loans After Deed In Lieu Versus Foreclosure is that homeowners save tons of time and hassles. Homeowners avoid going through the foreclosure process and the auctioning of home at the sheriff’s sale. Another major of a deed in lieu of foreclosure versus a full regular foreclosure is that borrowers get to avoid a deficiency judgment. Lenders will not sue borrowers for the upside-down a loss or write-off the lender will get from the sale of property and the amount of mortgage balance owed to the lender. In lieu of giving the lender the deed of the property, a lender will not go after a homeowner on any deficits. Whereas with a regular foreclosure, the lender can come after the homeowner for the deficit. The United States Congress has extended a law that benefits homeowners who  have gone through a housing event such as a deed in lieu of foreclosure called the forgiveness of debt act. This act forgives tax forgiveness for the debt that was written off.

Deed In Lieu Of Foreclosure Versus Foreclosure

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A homeowner will always come out ahead with a deed in lieu of foreclosure versus a regular foreclosure. A better alternative to a deed in lieu of foreclosure for a distressed homeowner is a short sale.  A short sale is when a lender gives homeowner permission to sell a home at a value lower than the balance of a mortgage loan. Both short sales and deed in lieu of foreclosures have a major negative impact on credit scores. However, although credit scores may drop as much as 200 points initially, credit scores will gradually improve over time. As deed in lieu of foreclosure and/or short sale ages, the less of an impact it will have on credit scores. Once the deed in lieu of foreclosure is finalized, get yourself three secured credit cards and those credit cards will spike up credit scores. Each secured credit card will boost credit scores by at least 30 or more points. Credit scores will rapidly increase as secured credit cards ages.

When Can I Qualify For Another Conforming Loan After A Deed In Lieu Versus Foreclosure

Conventional Mortgage Borrowers can qualify for a conventional loan after 4 year waiting period after a deed in lieu of foreclosure and/or short sale with a 5% down payment and re-established credit. For an FHA loan, foreclosure, deed in lieu of foreclosure, and short sale are all 3-year waiting periods from the recorded date of a deed in lieu of foreclosure and foreclosure. There is a four-year waiting period to qualify for Conventional Loans After Short Sale. The waiting date starts from the HUD settlement date for short sales.

Mortgage After Foreclosure

Home Buyers can qualify for a mortgage after foreclosure. Borrowers who need to qualify for a mortgage after foreclosure and/or bankruptcy with a mortgage company licensed in multiple states with no lender overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]

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