FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

There are major differences with FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy. Fannie Mae and Freddie Mac are the two mortgage giants that is in charge of Conventional Loan Requirements. Conventional Loans are often referred to as conforming loans because they need to conform to Fannie Mae and Freddie Mac mortgage lending guidelines. Fannie Mae and Freddie Mac FHA, Fannie Mae, and Freddie Mac have mandatory waiting periods after the following to qualify for their mortgage programs:

  • Waiting period after bankruptcy
  • Waiting period after foreclosure
  • Waiting period after deed in lieu of foreclosure
  • Waiting period after short sale

We will cover both FHA and Conventional Mortgage Guidelines on qualifying for a mortgage after a bankruptcy and foreclosure. But many borrowers are confused on the waiting period in qualifying for FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy. What if you have a mortgage or multiple mortgages as part of your Chapter 7 Bankruptcy?

Waiting Period To Qualify For FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

Before we cover FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy, we will go over both the waiting period after a bankruptcy and foreclosure mortgage guidelines on both FHA Loans and Conventional Loans

Here are the FHA Guidelines in qualifying for a FHA Loan after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale:

  • There is a two year waiting period to qualify for a FHA Loan after the discharged date of a Chapter 7 Bankruptcy
  • Borrowers one year into a Chapter 13 Bankruptcy Repayment Plan can qualify for a FHA Loan one year into the Chapter 13 Bankruptcy Repayment Plan with the approval of the Chapter 13 Bankruptcy Trustee. FHA Borrowers who just got a discharge on their Chapter 13 Bankruptcy can qualify for a FHA Loan right after a Chapter 13 Bankruptcy discharge date with no waiting period. However, if the Chapter 13 Bankruptcy discharge has not been seasoned for two years, the file needs to be downgraded to a manual underwrite
  • There is a three year waiting period to qualify for a FHA Loan after the recorded date of the foreclosure and/or deed in lieu of foreclosure or the date of the sheriff’s sale. The three year waiting period time clock starts from the recorded date of the foreclosure or deed in lieu of foreclosure that is reflected on the county recorder’s office or the date of the sheriff’s sale where the name of the borrower is transferred out to the name of the lender or new home buyer
  • There is a three year waiting period after a short sale to qualify for a FHA Loan. The waiting period clock starts from the date of the short sale which is the date of the closing of the short sale.

Here are the Fannie Mae and Freddie Mac Guidelines in qualifying for a FHA Loan after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale:

  • There is a four year waiting period to qualify for a Conventional Loan after the discharged date of a Chapter 7 Bankruptcy
  • There is a four year waiting period to qualify for a Conventional Loan after a short sale or deed in lieu of foreclosure.
  • The four year time clock to qualify for a Conventional Loan after a short sale starts from the date of the short sale reflected on the HUD-1 Settlement Statement, which is the date of the short sale closing
  • There is a four year waiting period to qualify for a Conventional Loan after a deed in lieu of foreclosure. The four year time clock starts from the actual recorded date of the deed in lieu of foreclosure or the date of the sheriff’s sale which is reflected on the county records
  • There is a seven year waiting period to qualify for a Conventional Loan after the recorded date of a foreclosure which is reflected on the county recorder of deeds office

Qualifying For A FHA Loan After Bankruptcy With Mortgage Part Of Bankruptcy

If you have a mortgage part of your Chapter 7 Bankruptcy, you can qualify for a FHA Loan three years after the recorded date of your foreclosure.

Here is how it works:

  • Case scenario: Say you had a mortgage part of your Chapter 7 Bankruptcy and it was discharged on January 2010
  • Your mortgage balance is now zero because your mortgage was part of your bankruptcy but the deed is still on your name and not the lender
  • Say the home was finally foreclosed January 2017 so the deed was transferred out of your name
  • To qualify for a FHA Loan, you would have to wait three years after the recorded date of the foreclosure, which mean you need to wait 3 years from the January 2017 date. This means the earliest date you would qualify for a FHA Loan will be January 2010
  • Conventional Guidelines on Mortgage Part of Bankruptcy is way different

Qualifying For Conventional Loan With Mortgage Part Of Bankruptcy

Conventional Loan Borrowers can qualify for a Conventional Loan with a mortgage part of their Chapter 7 Bankruptcy discharge after four years from the discharged date of their Chapter 7 Bankruptcy even if the foreclosure got recorded at a later date after the Bankruptcy discharged date.

This is how it works:

  • Case scenario: Say you had a mortgage part of your Chapter 7 Bankruptcy and it was discharged on January 2010
  • Your mortgage balance is now zero because your mortgage was part of your bankruptcy but the deed is still on your name and it has not been transferred to the lender yet
  • Say the home was finally foreclosed January 2013 so the deed was transferred out of your name
  • Conventional Guidelines on Mortgage Part of Bankruptcy is way different than FHA Guidelines On Mortgage Part Of Bankruptcy
  • You can qualify for a Conventional Loan under Fannie Mae and Freddie Mac Guidelines on January 2014 because you have passed the four year waiting period after the Chapter 7 Bankruptcy discharged date even though your foreclosure recorded date has been recorded one year ago
  • Again, as long as you have a mortgage part of your Chapter 7 Bankruptcy and as long as the deed has been transferred out of your name at a later date, you can qualify for a Conventional Loan four years from the discharged date of your Chapter 7 Bankruptcy

If you have further questions on this topic, please call The Gustan Cho Team at CrossCountry Mortgage at 262-878-1965 or text Gustan Cho on his cell at 262-716-8151. You can also email us at gcho@gustancho.com. The Gustan Cho Team is available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry.

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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