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Foreclosure As Part Of Your Bankruptcy Mortgage Guidelines

Foreclosure As Part Of Your Bankruptcy Mortgage Guidelines

This BLOG On Foreclosure As Part Of Your Bankruptcy Mortgage Guidelines Was UPDATED On January 20th, 2019

If you have a foreclosure as part of your bankruptcy, the waiting period of the foreclosure will apply since the waiting period of the foreclosure is longer than the waiting period of your bankruptcy.

  • However, there is a loophole in a foreclosure that you really need to pay attention to
  • Otherwise, your waiting period can be much longer than the three year mandatory waiting period required

Waiting Period After Bankruptcy

There is a 2 year waiting period from the date of your bankruptcy discharge in order for you to qualify for FHA and VA Loans.

  • However, just the 2 year waiting period after a bankruptcy does not guarantee you a mortgage loan approval
  • Lenders want to see that you have no late payments after your bankruptcy discharge, no overdrafts on your checking account, re-established credit, and some assets such as a steady balance on your bank account
  • The most important factor is re-establishing your credit after a bankruptcy
  • The easiest and fastest way of re-establishing your credit after a bankruptcy is by getting secured credit cards
  • The ideal amount of secured credit cards to get is 3 to 5
  • Consumers should get secured credit cards that report to all three major credit bureaus

Secured Credit Cards To Rebuild Your Credit

Each secured credit card should boost your credit scores by at least 20 points or more.

  • The first secured credit card will probably have the biggest impact
  • For example, the first secured credit card will probably boost your credit scores by 40 points
  • The second might boost it by 30 points
  • The third secured credit card might boost it by 15 points
  • The fourth secured credit card might boost it by 10 points
  • The fifth credit card might boost it by 5 points
  • Never be late on your secured credit card payments
  • Otherwise, it defeats the purpose
  • A late payment on a credit card will definitely drop your credit scores
  • Late payments on secured credit cards is treated the same as a late payment on an unsecured credit card or other revolving debt

Waiting Waiting Period After Foreclosure As Part Of Your Bankruptcy

If you have a foreclosure as part of your bankruptcy, the waiting of your foreclosure applies.

  • There is a 3 year mandatory waiting period from the date of the sheriff’s sale or the date the deed of your home was transferred out of your name and into the bank’s name to qualify for FHA Loans
  • Just because the foreclosure was part of the bankruptcy does not mean that the waiting period starts on that date
  • There are many folks who had a foreclosure as part of their bankruptcy but the lender did not transfer the deed into their name which ends up prolonging the waiting period
  • Make sure if you have a foreclosure as part of your bankruptcy, the lender transfers the deed into their name
  • There are cases where the lender did not transfer the deed into their name after 3 or more years

Update On This Mortgage Blog Article

Update:  Since this mortgage blog article was written and published, there has been changes on mortgage part of bankruptcy for conventional loans.  If you have had a mortgage part in your bankruptcy filing and has been discharged, the waiting period starts from the discharge date of your bankruptcy and not the recorded date of your foreclosure and/or deed in lieu of foreclosure on conventional loans only.  This new mortgage lending guidelines on mortgage part of your bankruptcy does not apply to FHA Loans, VA Loans, or USDA Loans.

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