FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

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FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

This BLOG On FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy Was UPDATED On November 13th, 2018

There are major differences with FHA Versus Fannie Mae Guidelines On Mortgage Part Of Bankruptcy.

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

Waiting Period Guidelines After Housing Event And Bankruptcy

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 Requirements On 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
  • 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

Conventional Lending Guidelines After Housing Event And Bankruptcy

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
  • The waiting period after a short sale or deed in lieu of foreclosure is four years
  • 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
  • This 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 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

Borrowers with a prior mortgage part included in their Chapter 7 Bankruptcy can qualify for a FHA Loan three years after the recorded date of foreclosure and/or housing event:

Here is how it works:

  • Case scenario:
    • Say borrower had a mortgage part of your Chapter 7 Bankruptcy and it was discharged on January 2010
    • Mortgage balance is now zero
    • This because mortgage was part of bankruptcy
    • But the deed is still in homeowners 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, borrowers 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 they would qualify for a FHA Loan will be January 2020
  • 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. This holds true 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 Chapter 7 Bankruptcy
    • It was discharged on January 2010
    • Mortgage balance is now zero
    • This is because mortgage was included in bankruptcy
    • But the deed is still on your name
    • 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
  • Borrowers can qualify for a Conventional Loan under Fannie Mae and Freddie Mac Guidelines on January 2014
  • This is because you have passed the four year waiting period after the Chapter 7 Bankruptcy discharged date
  • This holds true even though foreclosure recorded date has been recorded one year ago
  • Again, as long as you have a mortgage included in Chapter 7 Bankruptcy and as long as the deed has been transferred out of your name at a later date, borrowers can qualify for a Conventional Loan four years from the discharged date of your Chapter 7 Bankruptcy

Mortgage Applicants with further questions on this topic, please call The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry.

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