Freddie Mac Bankruptcy Guidelines On Conventional Loans

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Freddie Mac Bankruptcy Guidelines On Conventional Loans

This ARTICLE On Freddie Mac Bankruptcy Guidelines On Conventional Loans Was PUBLISHED On August 13th, 2019

What are the Freddie Mac Bankruptcy Guidelines On Conventional Loans

Fannie Mae And Freddie Mac Bankruptcy Guidelines On Conventional Loans require mandatory waiting period requirements after bankruptcy.

  • Conventional Loans are called Conforming Loans
  • The reason conventional loans are called conforming loans is that they need to conform to Fannie Mae and/or Freddie Mac Agency Mortgage Guidelines
  • Fannie Mae and Freddie Mac are the two mortgage giants
  • They are often referred to as Government Sponsored Enterprises (GSE)
  • Fannie Mae and Freddie Mac are private companies but are sponsored by the federal government
  • The Federal Housing Finance Agency is the federal agency in charge of Fannie Mae and Freddie Mac
  • The main role of Fannie/Freddie is to purchase conventional loans on the secondary market
  • Once the lender funds a conventional loan, either Fannie and/or Freddie will purchase the loan on the secondary market
  • If the conventional loan does not conform, Fannie and/or Freddie will not purchase the loans
  • If Fannie or Freddie does not purchase the loan, the lender is stuck holding the loan in their portfolio and/or selling it as a scratch-and-dent mortgage on the secondary market

In this article, we will cover Fannie and Freddie Mac Bankruptcy Guidelines On Conventional Loans.

Fannie And Freddie Mac Bankruptcy Guidelines Versus Other Loan Programs

what are the Fannie And Freddie Mac Bankruptcy Guidelines Versus Other Loan Programs

All government and conventional loans have a mandatory waiting period after bankruptcy to qualify for home loans. The waiting period is different depending on the particular loan program. We will compare the government versus conforming bankruptcy waiting period requirements in this paragraph.

Here are Bankruptcy Guidelines on government loans:

  • HUD, the parent of FHA, require a two-year waiting period after Chapter 7 Bankruptcy
  • The Department of Veterans Affairs (The VA) require a two-year waiting period after Chapter 7 Bankruptcy on VA Loans
  • The USDA requires a three-year waiting period after Chapter 7 Bankruptcy to qualify for USDA Loans
  • There is no waiting period requirements on VA and/or FHA Loans after Chapter 13 Bankruptcy discharged date
  • Borrowers can qualify for VA and/or FHA Loans during Chapter 13 Bankruptcy Repayment Plan without the bankruptcy being discharged with Trustee Approval

Fannie And Freddie Mac Bankruptcy Guidelines On Waiting Periods To Qualify On Conventional Loans:

  • There is a four-year waiting period to qualify for Conventional Loans after Chapter 7 Bankruptcy discharged date
  • There is a two-year waiting period to qualify for Conventional Loans after Chapter 13 discharged date
  • There is a four-year waiting period to qualify for Conventional Loans after Chapter 13 dismissal date

Unlike VA and FHA Loans, borrowers cannot qualify for Conventional Loans during Chapter 13 Bankruptcy Repayment Period.

Non-QM Loans Require No Waiting Period To Qualify For A Mortgage After Bankruptcy

No Waiting Period To Qualify For A Mortgage After Bankruptcy

Homebuyers can now qualify for a mortgage one day out of bankruptcy and/or foreclosure with Non-QM Loans. There is no waiting period requirements after bankruptcy and/or a housing event. A housing event is one of the following:

  1. Foreclosure
  2. Deed In Lieu Of Foreclosure
  3. Short-Sale

The following are the eligibility requirements on Non-QM Loans:

  • Minimum credit scores down to 500 FICO
  • 10% to 20% down payment
  • The down payment requirements depend on the borrower’s credit scores
  • Bank statement mortgage loan program for self-employed borrowers
  • Late payments in the past 12 months allowed
  • No maximum loan limits
  • No private mortgage insurance required on all Non-QM Loans
  • For primary, second homes, and investment properties
  • No pre-payment penalty on owner-occupant properties
  • Up to 50% debt to income ratios allowed

For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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