FHA Loan After Foreclosure And Bankruptcy Pennsylvania

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This BLOG On FHA Loan After Foreclosure And Bankruptcy Pennsylvania Was UPDATED And PUBLISHED On November 18th, 2020

The Commonwealth of Pennsylvania is one of the fastest-growing states in the United States. Home values throughout the state have been rising since 2013 with no sign of a correction. With mortgage rates being the highest in ten years, there is still a shortage of homes in the state of Pennsylvania.

The Federal Housing Administration, commonly known as FHA, is part of the United States Department of Housing and Urban Development.

  • FHA, a governmental agency, is not a lender
  • FHA has nothing to do with the origination, processing, underwriting, funding, and servicing of mortgage loans
  • What are FHA Loans then?
  • FHA Loans are residential mortgage loans that are insured by the Federal Housing Administration to approved private banks and mortgage companies
  • FHA insures banks and mortgage companies in the event borrowers on their home loans
  • FHA will partially cover the loss lenders take when borrowers default the property goes into foreclosure
  • However, all lenders need to follow FHA lending guidelines in order for loans to be insurable by the Federal Housing Administration
  • Homebuyers can qualify for FHA Loan After Foreclosure and Bankruptcy as long as they follow FHA guidelines after bankruptcy and foreclosure

In this article, we will discuss and cover FHA Loan After Foreclosure And Bankruptcy Pennsylvania.

Qualifying For FHA Loan After Bankruptcy

FHA Loan After Foreclosure

Homebuyers can qualify for FHA Loan After Bankruptcy after two years from the discharge date of their Chapter 7 Bankruptcy.

  • The waiting period does not start until the actual discharged date of the Chapter 7 Bankruptcy and not the date the bankruptcy was filed
  • FHA expects no late payments after the Chapter 7 Bankruptcy discharged date
  • Re-established credit after bankruptcy is required
  • The best way of rebuilding credit after filing a Chapter 7 Bankruptcy is by getting several secured credit cards

Three to five secured credit cards are recommended with at least a $500 credit limit that can do wonders in raising credit scores and re-establishing credit.

FHA Loan During Chapter 13 Bankruptcy Period

Homebuyers can qualify for FHA After Chapter 13 Bankruptcy one year into the Chapter 13 Bankruptcy with the approval of the Bankruptcy Court.

  • The mortgage loan borrower needs to have been timely with all monthly scheduled payments to their creditors
  • Verification of rent will be required
  • VOR is required because qualifying for a mortgage loan after Chapter 13 Bankruptcy is all manual underwrites

If borrowers have no verification of rent and are living with family, a letter of explanation is required and a letter by the landlord family member stating the borrower is living rent-free is required.

Qualifying For FHA Loan After Short Sale

Homebuyers can qualify for FHA Loan three years from the date of their short sale.

  • The waiting period date to qualify for FHA Loan After Short Sale starts from the date the HUD was signed and the short sale was closed

FHA expects no late payments after a short sale and re-established credit from the borrower and/or borrowers.

Qualifying For FHA Loan After Foreclosure And Deed In Lieu Of Foreclosure

How to qualify for an FHA loan after a short sale

Homebuyers can now qualify for FHA Loan After Foreclosure and Deed In Lieu Of Foreclosure three years from the recorded date of the foreclosure that is reflected on county records and/or the date of sheriff’s sale of the property.

  • Many homeowners who had a foreclosure and/or deed in lieu of foreclosure many years ago do not qualify for FHA Loan After Foreclosure or Deed In Lieu Of Foreclosure

This because they just turned in the keys to their lender but the lender has not transferred the deed out of their names into the lender’s name.

Case Scenario

Here is a case scenario:

  • the homeowner could have turned in their keys on January 1. 2010
  • the lender did not sell the property until January 1, 2015
  • or did not transfer the deed out of the homeowner’s name into their names and recorded it on January 1, 2015
  • the three-year waiting period did not start until January 1, 2015
  • the homeowner will not be eligible to qualify for an FHA Loan until January 1, 2018

Mortgage Part Of Bankruptcy For FHA Loans

Borrowers with prior mortgage part of bankruptcy, there is a two-year waiting period to qualify for a FHA Loan from the discharge date of the bankruptcy. Then there is a three-year waiting period to qualify for an FHA Loan from the recorded date of the foreclosure.

  • Even though mortgage balance got discharged through Chapter 7 Bankruptcy, the waiting period will not start until the lender has transferred the deed out of homeowners name into their name or until the home has sold

Mortgage Part Of Bankruptcy For Conforming & VA Loans

What is the Case Scenario

Borrowers with a prior mortgage part of bankruptcy, there is a four-year waiting period to qualify for a conventional loan from the discharged date of Chapter 7 Bankruptcy. This holds true even though the foreclosure was recorded at a later date. Conventional guidelines on mortgage part of bankruptcy are quite different than qualifying for an FHA Loan After Bankruptcy.  Borrowers with a mortgage part of a bankruptcy or need to qualify for a mortgage loan after a foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Borrowers can also email us at gcho@gustancho.com. GCA Mortgage Group has a national reputation of being able to do loans other lenders cannot because of  zero lender overlays on government and conforming loans.

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