FHA And Conventional Guidelines On Mortgage After Bankruptcy

This BLOG On FHA And Conventional Guidelines On Mortgage After Bankruptcy Was Written By Gustan Cho NMLS 873293 

Home buyers and homeowners can qualify for a home purchase mortgage loan or a home refinance mortgage after bankruptcy.

  • Both HUD and Fannie Mae recently announced 2015 mortgage lending guidelines to qualify mortgage after bankruptcy recently. 
  • In general, 2015 FHA guidelines for mortgage after bankruptcy is 2 years from the discharge date of the bankruptcy, which is the same guidelines as 2014 FHA guidelines on waiting period to qualify for mortgage after bankruptcy. 
  • For Fannie Mae, the 2015 Fannie Mae lending guidelines for mortgage after bankruptcy is 4 years from the discharge date of the bankruptcy. 
  • However, Fannie Mae came up with new 2015 Fannie Mae Guidelines where if a homeowner has a mortgage part of bankruptcy, then the waiting period for both the mortgage and bankruptcy starts four years from the bankruptcy discharge date. 
  • Before this new 2015 Fannie Mae Guideline, if you had a mortgage or foreclosure part of bankruptcy, the waiting period was four years from the discharge date of the bankruptcy and/or 7 years from the recorded date of the foreclosure which is reflected on the county records. 
  • Waiting periods for mortgage after a deed in lieu of foreclosure and/or short sale under Fannie Mae Guidelines is 4 years. 
  • FHA treats short sale and deed in lieu of foreclosure the same as a regular foreclosure undelike Fannie Mae and Freddie Mac. 
  • Mortgage underwriters are very cautious when underwriting a mortgage loan applicant with a prior bankruptcy.

What Do Underwriters Look For On Borrowers With Prior Bankruptcy?

FHA And Conventional Guidelines On Mortgage After Bankruptcy and qualification requirements of borrowers:

  • The first thing mortgage loan underwriters will look at when reviewing mortgage loan borrowers with prior bankruptcies is to confirm that the bankruptcy was discharged which means that the bankruptcy is totally complete and fully discharged. 
  • Mortgage underwriters will also look to see that you have met the mandatory waiting period after bankruptcy, which is 2 years from the discharge date for FHA Loans and 4 years for conventional loans. 
  • The filing date of a bankruptcy is different than the discharge date of a bankruptcy. 
  • It normally takes 90 days or more to have a Chapter 7 bankruptcy discharged from the original filing date of the bankruptcy.

Late Payments After Bankruptcy And Foreclosure

Under FHA And Conventional Guidelines On Mortgage After Bankruptcy, there is no written rule that late payments after bankruptcy and foreclosure are deal killers. However, late payments after bankruptcy and/or foreclosure is not viewed favorably and may affect the findings you will get by the Automated Underwriting System.

Here are other factors that play into the equation when it comes to late payments after bankruptcy and foreclosure:

  • Another important factor that mortgage loan underwriters look for is late payments after a bankruptcy discharge. 
  • Most mortgage underwriters do not like late payments after a bankruptcy. 
  • It does not matter how old a bankruptcy discharge is. 
  • One or two late payments after a bankruptcy may not be a deal killer with a good letter of explanation, however, there are mortgage lenders that will flatly deny a mortgage applicant if they have had any late payments after bankruptcy. 
  • If you have a mortgage lender that is telling you that you do not qualify due to late payments after bankruptcy, please contact me at 262-716-8151 or www.gustancho.com. 
  • As long as you get an approve/eligible per DU FINDINGS and/or LP FINDINGS,
  • I can do your mortgage loan since I am a mortgage lender with no mortgage lender overlays .

Re-established Credit After Bankruptcy And Foreclosure

Another important factor that mortgage underwriters look at is re-established credit after bankruptcy.

  • Re-established credit is extremely important. 
  • Many folks who filed bankruptcy and had their bankruptcy discharged have a hard time getting new credit and often times do not even try to get new credit and just purchase their goods with cash. 
  • Unfortunately, this practice is not good when it comes to qualifying for a mortgage after bankruptcy. 
  • Folks who had their bankruptcies just recently discharged should immediately get three to five secured credit cards with at least a $500 credit limit. 
  • Secured credit cards are the best tools to use in re-establishing one’s credit. 
  • Each secured credit card should boost a consumer’s credit report by at least 20 to 30 FICO points and the longer the secured credit card ages, the higher the consumer’s credit scores will be.

Bankruptcy On Your Credit Report

All derogatory credit items will remain on your credit report for a period of 7 years from the date of last activity.

  • However, a bankruptcy will remain on your credit report for a period of 10 years from the discharge date of your bankruptcy. 
  • Once someone files bankruptcy, they will see their credit scores drop by 200 FICO points. 
  • However, a bankruptcy is like a major hangover. 
  • Even though the bankruptcy remains on your credit report for a period of 10 years, as time passes, the bankruptcy will have less and less impact on your credit scores. 
  • Adding new positive credit and being on time with your new credit will offset the negative impact the bankruptcy has on your credit scores.

Related> Mortgage part of bankruptcy

Related> Rebuilding your credit after bankruptcy

Related> 2015 waiting period after bankruptcy and foreclosure

Related> Recent late payments


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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