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Fannie Mae Mortgage Included In Bankruptcy Guidelines

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Fannie Mae Mortgage Included In Bankruptcy Guidelines

This BLOG On Fannie Mae Mortgage Included In Bankruptcy Guidelines Was PUBLISHED On August 7th, 2019

Fannie Mae Mortgage Included In Bankruptcy Guidelines
Gustan Cho Associates

BANKRUPTCY AND FORECLOSURES

If you file for a Chapter 7 bankruptcy and it is discharged, mortgage applicants need to meet mandatory waiting period on government and conventional loans.

Here are the mandatory waiting periods after bankruptcy to qualify for home loans:

  • HUD requires 2 year mandatory waiting period after Chapter 7 Bankruptcy discharged date
    • Borrowers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan
    • Need Trustee Approval
    • Chapter 13 does not have to be discharged to qualify for FHA Loans
    • Needs to be manual underwriting
  • VA requires 2 year mandatory waiting period after Chapter 7 Bankruptcy
    • VA Guidelines on Chapter 13 is exactly the same as FHA
    • Borrowers can qualify for VA Loans after 12 payments into Chapter 13 Repayment
    • Need Trustee Approval
    • There is no wait period after Chapter 13 discharged date to qualify for VA Home Loans
  • Fannie Mae and Freddie Mac Requires 4 year waiting period to qualify for conventional loans after Chapter 7 Bankruptcy
    • 2 year wait period after Chapter 13 discharged date
    • 4 years after Chapter 13 dismissal date
  • USDA requires a three year waiting period after bankruptcy, foreclosure, deed in lieu, short sale

In this article, we will cover and discuss Fannie Mae Mortgage Included In Bankruptcy Guidelines.

Mortgage Waiting Period Guidelines After Housing Event

what are the Mortgage Waiting Period Guidelines After Housing Event

There are two waiting periods on government and conventional loans are wait period after bankruptcy and foreclosure.

Here are mandatory waiting period after housing events:

  • HUD requires 3 year waiting period to qualify for FHA Loans after the following:
    • Foreclosure
    • Deed In Lieu Of Foreclosure
    • Short Sale
  • VA requires two year waiting period to qualify for VA Loans after the following:
    • Foreclosure
    • Deed In Lieu Of Foreclosure
    • Short Sale
  • Fannie Mae and Freddie Mac requires the following waiting period after housing event on conventional loans:
    • Four years after deed in lieu of foreclosure and/or short sale
    • Seven years after foreclosure

Fannie Mae Mortgage Included In Bankruptcy Guidelines Versus Government Loans

Fannie Mae Mortgage Included In Bankruptcy Guidelines Versus Government Loans

Fannie Mae Mortgage Included In Bankruptcy Guidelines on conventional loans is different than government loans.

  • Fannie Mae Mortgage Included In Bankruptcy Guidelines state if someone had a mortgage included in bankruptcy, the waiting period is 4 years from discharged date
  • The mortgage cannot be re-affirmed
  • The housing event does not have to be finalized
  • As long as the mortgage and/or mortgages was included in bankruptcy
  • Fannie Mae Mortgage Included In Bankruptcy Guidelines goes by the 4 year waiting period after discharged date

VA Loans Has Same As Fannie Mae Mortgage Included In Bankruptcy Guidelines

VA Loans Has Same As Fannie Mae Mortgage Included In Bankruptcy Guidelines

VA has the exact same guidelines as Fannie Mae Mortgage Included In Bankruptcy Guidelines.

  • Borrowers can qualify for VA Loans in 4 years if they had mortgage included in bankruptcy
  • If the mortgage included in bankruptcy was a VA Loan, then it may affect their VA eligibility entitlement 

If someone had mortgage included in bankruptcy, there is a mandatory waiting period of three years from the recorded date of the housing event.

  • The discharged date of bankruptcy does not matter
  • Lets take an example
  • If a borrower had a mortgage included in bankruptcy in March 2010 but the property did not foreclose until December 2018, this borrower will not qualify for FHA Loan until 3 years from December 2018
  • Therefore, this borrower will not qualify for FHA Loan until December 2021

This borrower will qualify for conventional loan since the four year after bankruptcy discharged date has passed.

Other factors required by borrowers is timely payments since the bankruptcy discharged date.

Other Benefits With Conventional Versus FHA Loans

what are the Other Benefits With Conventional Versus FHA Loans

Besides the benefits of Fannie Mae Mortgage Included In Bankruptcy Guidelines, there are other reasons why borrowers may need to go with Conventional versus FHA Loans.

  • Income Based Repayment (IBR) is allowed with Conventional but not FHA Loans
  • There are many home buyers with large student loan balances
  • FHA requires 1.0% of outstanding student loan balance to be used a borrower’s hypothetical debt on DTI Calculations
  • IBR Payments are not allowed
  • However, Fannie Mae and Freddie Mac allows IBR student loan payments as long as it reports on all three credit bureaus

Homebuyers or homeowners who need a direct lender with no overlays on government and/or conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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