Conventional Loan After Foreclosure Requirements

What Are Conventional Loan After Foreclosure Requirements?

Conventional Loan After Foreclosure Requirements mandate that the mortgage loan borrower pass the mandatory waiting period of 7 years from the date of the sheriff’s sale or the date the deed of the property was transferred out of the homeowner’s name into the name of the lender. The waiting period clock does not start until the the deed has been transferred out of the homeowner’s name. Many people think that the seven year waiting period to qualify for a conventional loan starts the date that they left the property and surrendered the keys to the lender, however, this is not the case. There are times where the lender has not transferred the deed of the property in their days even years after the homeowner has left the subject property and their waiting period did not even start.

Conventional Loan After Foreclosure Requirements: Foreclosure Versus Deed In Lieu

Fannie Mae and Freddie Mac are the two mortgage giants that sets the standards and guidelines on conventional loans. Fannie Mae and Freddie Mac classifies foreclosures into two different categories and the waiting periods to qualify for a conventional loan are different between those who have a foreclosure versus deed in lieu of foreclosure.

There is a seven year mandatory waiting period after the sheriff’s sale date and/or the recorded date of a foreclosure that is reflected on public records to qualify for a conventional loan per Fannie Mae and Freddie Mac mortgage lending guidelines. There is a four year waiting period to qualify for a conventional loan after a deed in lieu of foreclosure from the date of the sheriff’s sale and/or recorded date of the deed in lieu of foreclosure which is recorded in the county’s recorder of deeds office and reflected on public records. There is a four year waiting period after a short sale to qualify for a conventional mortgage loan. The four year waiting period clock starts from the date of the HUD-1 Settlement Statement which is the date the short sale home closed.

HUD, the United States Department of Housing and Urban Development, is the parent of the Federal Housing Administration, FHA, and sets the standards for FHA Loans. FHA does not separate the waiting periods to qualify for a FHA Loans between foreclosures and deed in lieu of foreclosures. The mandatory waiting period to qualify for a FHA Loan after a foreclosure and deed in lieu of foreclosure is the same, which is a three year mandatory waiting period after the date of the sheriff’s sale and/or the date where the deed of borrower’s name was transferred out of their names into the name of the mortgage lender.

Also, with FHA Loans, there is a mandatory three year waiting period after a short sale in order to qualify for a FHA Loan.

Mortgage Part Of Bankruptcy

One great news with conventional loans is that a borrower can qualify for a conventional loan in four years from the discharged date of their Chapter 7 Bankruptcy if they had a mortgage part of their bankruptcy. Unlike FHA, the foreclosure can be recorded after the Chapter 7 Bankruptcy discharged date and that will not matter with regards to the waiting period. For example, if Borrower A had their home mortgage of $300,000 part of their Chapter 7 Bankruptcy and that Chapter 7 Bankruptcy was discharged on January 1, 2012 but the foreclosure was not transferred out of the homeowners name until January 1, 2016, Borrower A will qualify for a conventional loan on January 1, 2016 because the mortgage was part of his Chapter 7 Bankruptcy and the Chapter 7 Bankruptcy was seasoned for four years. Even though the foreclosure was not out of the homeowners name until four years later, borrower A is qualified for a conventional loan. With FHA, the 3 year waiting period after foreclosure time clock will start the date the foreclosure was transferred out of Borrower A’s name which was January 1, 2016 and Borrower will not qualify for a FHA Loan until 3 years from January 1, 2016 which will be January 1, 2019.

If you are a home buyer with a mortgage part of bankruptcy and need to qualify for a conventional loan and have been at least four years from the discharged date of your Chapter 7 Bankruptcy, please contact me at 262-716-8151 or email us at gcho@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.

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