Fannie Mae Guidelines After Bankruptcy And Foreclosure

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Fannie Mae Guidelines After Bankruptcy And Foreclosure

This BLOG On Fannie Mae Guidelines After Bankruptcy And Foreclosure Was UPDATED And PUBLISHED On August 19th, 2019

Fannie Mae Guidelines After Bankruptcy And Foreclosure
Gustan Cho Associates

What Are The Fannie Mae Guidelines After Bankruptcy And Foreclosure

Fannie Mae Guidelines After Bankruptcy And Foreclosure require a mandatory waiting period for homebuyers seeking a conventional loan. There are two separate waiting period requirements depending on the type of Bankruptcy

  • Fannie Mae and Freddie Mac are the two mortgage giants in the United States that set mortgage lending guidelines on Conventional Loans
  • Conventional Loans are called conforming loans because they need to conform to the Fannie Mae And Freddie Mac Guidelines
  • Every mortgage loan program has their own lending guidelines when it comes to qualifying for a home loan after bankruptcy and/or housing event
  • HUD, the parent of FHA, is in charge of setting FHA Guidelines After Bankruptcy And Foreclosure
  • Fannie Mae Guidelines After Bankruptcy And Foreclosure is created and implemented by Fannie Mae and Freddie Mac for Conventional Loans

Fannie Mae Guidelines After Bankruptcy And Foreclosure require the following waiting period after bankruptcy and foreclosure as well as a deed in lieu of foreclosure and short sale.

Fannie Mae Guidelines After Bankruptcy And Foreclosure: Waiting Period After Bankruptcy

what are the Fannie Mae Guidelines After Bankruptcy And Foreclosure: Waiting Period After Bankruptcy

Home Buyers can qualify for a Conventional Loan after a Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

  • There are mandatory waiting period requirements to qualify for a conventional loan after each type of bankruptcy
  • With a Chapter 7 Bankruptcy, the waiting period is four years from the discharged date of the Chapter 7 Bankruptcy
  • There is a two year mandatory waiting period to qualify for a Conventional Loan After A Chapter 13 Bankruptcy discharge date
  • Most Lenders do not want to see any late payments after a bankruptcy and re-established credit as well as a few solid credit tradelines
  • Tradelines are not Fannie/Freddie Guidelines but are lender overlays instituted by each individual lender
  • The Gustan Cho Team at Loan Cabin Inc. has no overlays on government and/or conventional loans
  • Minimum credit scores required to qualify for a conventional loan is 620
  • A prior bankruptcy and/or foreclosure does not affect mortgage rates on a conventional loan
  • Conventional mortgage rates are determined by a borrower’s credit scores, loan to value, type of property
  • The lower the loan to value, the lower the conventional mortgage rates

In this article, we will cover and discuss Fannie Mae Guidelines After Bankruptcy And Foreclosure.

Fannie Mae Guidelines After Bankruptcy And Foreclosure Waiting Period Requirements

what are the Fannie Mae Guidelines After Bankruptcy And Foreclosure Waiting Period Requirements

With FHA Loans, the waiting period after a foreclosure, deed in lieu of foreclosure, and a short sale are all the same.

  • The three-year waiting period after the recorded date and/or sheriff’s sale of a foreclosure and/or deed in lieu of foreclosure to qualify for an FHA Loan
  • There is a three year waiting period after the short sale date reflected on the HUD-1 Settlement Statement to qualify for FHA Loans
  • VA Loans has a two-year waiting period after Chapter 7 Bankruptcy, Foreclosure, Deed In Lieu, Short Sale
  • With conventional loans, it is different with waiting period after foreclosure versus deed in lieu of foreclosure and/or short sale
  • There is a 7 year waiting period after the recorded date of foreclosure and/ or the date of the sheriff’s sale on a regular foreclosure
  • There is a four-year waiting period to qualify for a Conventional Loan after the recorded date of a deed in lieu of foreclosure

There is a four year waiting period from the date of a short sale which has been reflected on the HUD-1 Settlement Statement.

Fannie Mae Guidelines After Bankruptcy And Foreclosure On Mortgage Part Of Bankruptcy

what are the Fannie Mae Guidelines After Bankruptcy And Foreclosure On Mortgage Part Of Bankruptcy

A great advantage of Fannie Mae and Freddie Mac when it comes to qualifying for a Conventional Loan is that borrowers with mortgage part of bankruptcy there is only a four year waiting period from the discharged date of Chapter 7 Bankruptcy. The waiting period is four years from the discharged date even though foreclosure is not recorded after a later date.

  • This is often the problem when people have a mortgage part of Chapter 7 Bankruptcy
  • The mortgage lender is not in a major hurry to get the title transferred out of the name of the homeowner into the lender’s name
  • With HUD, the rules are totally different
  • FHA requires a three year mandatory waiting period from the recorded date of the foreclosure if homeowners had a mortgage part of Chapter 7 Bankruptcy
  • So borrowers with mortgage part of Chapter 7 Bankruptcy on January 10, 2014, and the foreclosure was not recorded until January 10, 2018, they would qualify for Conventional Loans because they have met the four-year waiting period after the discharged date
  • The fact that the foreclosure was not recorded until January 10, 2018, does not matter
  • Fannie Mae and Freddie Mac has a four year mandatory waiting period from the discharged date of Chapter 7 Bankruptcy which the borrowers met the waiting period requirements
  • The four years were up on January 10th, 2018

The recorded date of the foreclosure of January 10, 2018, does not matter for Conventional Loans.

VA Guidelines On Mortgage Included In Bankruptcy

what are the VA Guidelines On Mortgage Included In Bankruptcy

VA Mortgage Guidelines are the same as Conventional Mortgage Guidelines with mortgage part of the bankruptcy.

  • The waiting period is two-year after the discharged date of Chapter 7 Bankruptcy is there was a mortgage included in the bankruptcy
  • The recorded date of the foreclosure/short sale does not matter BUT it needs to be finalized
  • If the mortgage included in the bankruptcy was a VA Mortgage, it may affect the borrowers’ entitlement benefits if they are seeking a VA Loan
  • The mortgage included in bankruptcy cannot be reaffirmed

FHA Case Scenario On Mortgage Part Of Chapter 7 Bankruptcy

what are FHA Case Scenario On Mortgage Part Of Chapter 7 Bankruptcy

However, let’s take the same case scenario with FHA:

  • FHA has a three year waiting period after the recorded date of the foreclosure, in this case scenario, the three-year waiting period clock starts on January 10, 2018
  • This borrower will not be qualified for an FHA loan until January 10, 2021, which is the three years waiting period from January 10, 2018 recorded date of the foreclosure
  • The mortgage part of the Chapter 7 Bankruptcy has no effect on the waiting period requirements like it does for Conventional Loans

Home Buyers who have any questions on Fannie Mae Guidelines After Bankruptcy And Foreclosure and need to qualify with a national direct lender with no overlays, please do not hesitate to contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. Our licensed and support personnel are available 7 days a week, evenings, weekends, and holidays to take your calls and answer any questions.

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