Deed In Lieu Of Foreclosure

A deed in lieu of foreclosure is an alternative to foreclosure where you and your mortgage lender come to an agreement where you will surrender title and the keys to your home in lieu of a home foreclosure.  In return, the mortgage lender will not come after you for the deficiency and a deficiency judgment is avoided against you. A deed in lieu of foreclosure is treated the same as a foreclosure when it comes to FHA mortgage loan mandatory waiting period mortgage lending guidelines.

Foreclosure Waiting Period Starts From Recorded Date

Waiting periods are three years from the recorded date of the foreclosure or deed in lieu of foreclosure in order to qualify for a FHA insured mortgage loan.  The waiting period time clock does not start until the date of the sheriff’s sale or the actual date the deed was transferred out of the homeowner’s name into the name of the mortgage lender and recorded at the county recorder’s office.  Many homeowners who got foreclosed on or had a deed in lieu of foreclosure think that the waiting period starting date begins when they sign the paperwork and turn in their keys.  This is absolutely not the case and if your currently going through a deed in lieu of foreclosure or had a recent foreclosure, make sure that your name is out of the deed and recorded as such at your county’s recorders office.  There are many cases where homeowners thought that they transferred over the deed to their homes and thought that their waiting periods have started but are finding out that the deed is still in their names and that the waiting period did not even begin yet.

Conventional Loan After Deed In Lieu Of Foreclosure

The waiting period is the same for FHA loans whether the homeowner had a foreclosure or deed in lieu of foreclosure.  FHA mortgage lending guidelines state that the home buyer needs to pass a three year waiting period from the recorded date of the foreclosure or deed in lieu of foreclosure.  Remember that the waiting period starts from the recorded date when the homeowners name has been transferred out and the mortgage lenders name has been added on the deed of the home and recorded at the county recorder’s office.  With conventional loan programs, there is a huge difference when it comes to mandatory waiting periods on foreclosures versus deed in lieu of foreclosures.

Home Loan After Foreclosure

If a home buyer has had a previous foreclosure, THERE IS A MANDATORY WAITING PERIOD OF 7 YEARS AFTER THE RECORDED DATE OF THE FORECLOSURE FOR THE HOME BUYER TO QUALIFY FOR A CONVENTIONAL LOAN.  This is a very long time for someone to qualify for a conventional loan unlike the more generous FHA mortgage lending guidelines of 3 years waiting period after the recorded date of the foreclosure and/or deed in lieu of foreclosure.  However, there is only a TWO YEAR WAITING PERIOD TO QUALIFY FOR A CONVENTIONAL LOAN AFTER A DEED IN LIEU OF FORECLOSURE IF THE HOME BUYER CAN MAKE A 20% DOWN PAYMENT;  THERE IS A FOUR YEAR WAITING PERIOD TO QUALIFY FOR A CONVENTIONAL LOAN AFTER A DEED IN LIEU OF FORECLOSURE IF THE HOME BUYER CAN PUT A 10% DOWN PAYMENT.  REMEMBER, THE WAITING PERIOD IS 7 YEARS WAITING PERIOD TO QUALIFY FOR A CONVENTIONAL LOAN AFTER A FORECLOSURE.  There is a huge waiting period difference between a foreclosure and an deed in lieu of foreclosure when it comes to conventional loan financing whereas with a FHA loan, the waiting period is the same whether it is a foreclosure or deed in lieu of foreclosure.

No Overlays On Conventional Loan After 2 Years Waiting Period

If you had a deed in lieu of foreclosure and are  a conventional mortgage loan borrower with a 20% down payment for a home purchase and have passed the mandatory 2 year waiting period in Illinois, Florida, Wisconsin, California, Indiana and are looking for a conventional loan mortgage lender with no overlays, look no further.  I have helped many conventional loan borrowers who had prior deed in lieu of foreclosures with 20% down payments get conventional loan mortgage approvals in Illinois, Florida, Wisconsin, California, and Indiana.

Conventional Mortgage Lender Overlays

Getting a conventional loan after two years after a deed in lieu of foreclosure and/or short sale is very difficult.  Even though Fannie Mae guidelines state that a conventional loan borrower CAN QUALIFY FOR A CONVENTIONAL LOAN AFTER A TWO YEAR WAITING PERIOD AFTER A DEED IN LIEU OF FORECLOSURE AND/OR SHORT SALE, the majority of conventional loan mortgage lenders have strict conventional mortgage loan overlays when it comes to granting a conventional loan mortgage approval after two years waiting period after a deed in lieu of foreclosure and/or short sale.

Overlays On Conventional Loans

You might get an automated approval per the Fannie Mae’s Automated Underwriting System but most conventional mortgage lenders may have one or more of the following mortgage lender overlays:

1.  Rental verification.  Some conventional lenders will ask up to 24 months rental verification even though DU FINDINGS does not ask for verification of rent.

2.  Re-established credit a minimum credit tradelines:  Many mortgage lenders who consider doing conventional loan for conventional loan borrowers who had a prior deed in lieu of foreclosure and/or short sale after the two year waiting period with 20% down payment will require that they have minimum amount of seasoned credit tradelines even though DU FINDINGS does not require any credit tradelines.  Conventional loan programs do not have mandatory credit tradeline requirements.  One particular mortgage lender asks for a minimum of 4 credit tradelines that has been seasoned for two years.  No worries.  I have wholesale mortgage lenders that will give you a conventional loan approval with no overlays.  As long as you get an approve/eligible per DU FINDINGS, that is your final approval.

3.  Many wholesale mortgage lenders will have additional waiting period overlays for conventional loan after a deed in lieu of foreclosure and/or short sale.  Even though the mandatory minimum waiting period for a conventional loan is two years after a deed in lieu of foreclosure and/or short sale, many wholesale mortgage lenders require 3 year waiting periods and some as much as a 4 year waiting period after a deed in lieu of foreclosure, and/or short sale with 20% down payment.  Again, no worries.  If you are a conventional loan borrower with a prior deed in lieu of foreclosure and/or short sale with a 20% down payment in Illinois, Florida, Wisconsin, California, Indiana, contact me at 262-716-8151 or at www.gustancho.com .  Again, as long as you get an approve/eligible per DU FINDINGS, I am affiliated with wholesale mortgage lenders with no mortgage lender overlays.  Fannie Mae mortgage lending guidelines is all we follow.

 Conventional Loan After Short Sale

The same conventional loan guidelines apply for conventional loan borrowers who had a prior short sale as those qualification mortgage lending requirements for those who had a prior deed in lieu of foreclosure..  If you had a short sale in the past and you have waited two years after the short sale date, you can qualify for a conventional loan as long as you have a 20% down payment for your home purchase.  Again, I specialize in conventional loan programs with no mortgage lender overlays in Illinois, Florida, Wisconsin, California, and Indiana so as long as a conventional loan borrower gets an automated approval, that is their final conventional loan approval.  Similar to deed in lieu of foreclosures, most conventional loan mortgage lenders will have mortgage lender overlays.  The most problematic mortgage lender overlays on conventional loans with a borrower having a prior short sale is when the conventional loan mortgage lender has additional waiting period such as a 3 year or 4 year waiting period after a short sale even though Fannie Mae’s conventional loan mortgage lending guidelines are 2 year waiting period after a short sale as long as the conventional loan borrower has a 20% down payment on their home purchase.  Again, no worries, because there are conventional loan mortgage lenders with no mortgage lender overlays, like myself, that will just go off the DU FINDINGS.

Short Sale: No Waiting Period If You Were Current On Mortgage Payments

There is no mandatory waiting period after you had a short sale if you were current on your monthly mortgage payments until the date of your short sale.  This waiting period exemption on short sales applies for both FHA loan programs and Fannie Mae conventional loan programs.  Unfortunately, many homeowners who do short sales are told by the ir mortgage lenders to skip a mortgage payment for the short sale to be effective.  This is a catch 22 situation.  If you are thinking about doing a short sale on your home, keep this in mind and see if you can keep your mortgage payments current until the date of the short sale so you are exempt of any waiting period requirements after your short sale.

2015 Update On Conventional Loan After Deed In Lieu of Foreclosure And Short Sale

New 2015 Conventional Loan Lending Guidelines to qualify for a conventional loan after a deed in lieu of foreclosure and short sale has been extended to four years with 5% down payment and re-established credit.  The 2 year waiting period after deed in lieu of foreclosure and short sale with 20% down payment to qualify for a conventional loan is no longer available.

Gustan Cho

www.gustancho.com

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.