This Article Is About Foreclosure FAQ And Mortgage Guidelines After Foreclosure
If a homeowner cannot make their mortgage payments as scheduled and falls behind, the mortgage lender can take back the subject property and sell it via legal channels as stipulated in the note of the mortgage loan contract.
- So, it’s very important for every homeowner to understand how foreclosures work
- Foreclosure proceedings can be initiated by the mortgage lender if the homeowner lags behind his or her mortgage payments
- Foreclosure is the legal route mortgage lenders take to repossess your home
- There are voluntary foreclosures and involuntary foreclosures
- Read on to get the answers to all of your foreclosure questions
- There are no waiting period requirements to qualify for Non-QM Loans after foreclosure
Voluntary Foreclosure FAQ
A voluntary foreclosure is a foreclosure where you just turn in your keys to the mortgage lender.
- If you can negotiate terms with the mortgage lender that if you turn in your keys, they will not go after you for the deficiency, that is known as a deed in lieu of foreclosure
- If the lender grants you a deed in lieu of foreclosure, the lender will not come after you for a deficiency judgment
A person can qualify for a 5% down payment conventional loan if they have a deed in foreclosure in just four years.
Involuntary Foreclosure FAQ
An involuntary foreclosure is when you fight the foreclosure to the end and the sheriff comes over and throws your belongings out.
- Most folks leave before they have a sheriff’s eviction
- The lender can come after you for the deficiency and a judge can impose a deficiency judgment on you
Most lenders do not come after foreclosure deficiency judgments.
Foreclosure FAQ On Foreclosure Proceedings
There are ways of avoiding foreclosure proceedings.
- The lender will want all of your current financial situation such as your gross monthly income and your monthly expenses
- Lenders will not want the property
- They will do everything possible to help homeowners either keep or sell the property
However, they need to see if they give homeowners a loan modification, the borrower is able to afford the payments.
Your mortgage lender might give you a 3 month or 6-month forbearance where they can add your delinquent payments to the back of your mortgage loan.
- Or they might want you to just pay property taxes and insurance and give you a break on the mortgage payments
- I strongly recommend that you contact your lender prior to you being late with your mortgage loan
- You will be surprised how much your lender will want to work with you if you contact them while you are current with your mortgage payments
Your mortgage lender might even offer you a mortgage loan modification where they will decrease your monthly payments.
Short Sale And Pre-Foreclosure Sale
You may qualify for a pre-foreclosure sale or short sale to avoid full foreclosure by selling your home for an amount that is less than your mortgage amount.
- Many lenders will work with you on short sales
- This is because they do not want to hold your home on their books
Deed In Lieu Of Foreclosure FAQ
Deed in lieu of foreclosure is when you turn in your home keys to the lender:
- The lender agrees not to sue you for the deficiency
- This method is better than a foreclosure because you will avoid a deficiency judgment
On a deed in lieu of foreclosure, you will not be liable for back taxes.
FHA Mortgage Loan Programs
If you have an FHA insured mortgage loan, the lender can probably assist you to receive a one-time assistant program from the FHA mortgage insurance fund.
- The requirements to receive this one-time payment from FHA insurance fund is that you must be late at least 4 months on your FHA mortgage loan but no later than 12 months on your monthly payments
- You need to show proof that once you receive this one-time payment from FHA that you will no longer be past due on your mortgage payments
- You must sign a promissory note with FHA that allows HUD to put a lien on your home for the amount you have received from the FHA insurance fund
- The amount given to you is an interest-free loan but not for free
The money needs to be repaid when you refinance or sell your home.
Qualifying For A Mortgage After Foreclosure
Home buyers can qualify for a home loan after a foreclosure, deed in lieu of foreclosure, short sale. There are waiting period requirements on government and conventional loans. However, Non-QM Mortgages, there is no waiting period after foreclosure, deed in lieu of foreclosure, short sale.
Here are the basic waiting period guidelines to qualify for mortgages after a housing event:
- FHA and USDA requires a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale
- The VA requires a two year waiting period after foreclosure, deed in lieu of foreclosure, short sale
- Fannie Mae and Freddie Mac require a four year waiting period after a deed in lieu of foreclosure and/or short sale to qualify for conventional loans
- The waiting period is 7 years after a regular foreclosure on Conventional Loans
Non-QM Loans do not have any waiting period requirements after a foreclosure, deed in lieu of foreclosure, short sale.
For more information on this blog or other mortgage topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at email@example.com.
October 11, 2020 - 4 min read