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Conforming Loans With Home Loan Included In Chapter 7 Bankruptcy

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Conforming Loans With Home Loan Included In Chapter 7 Bankruptcy

This BLOG On Conforming Loans With Home Loan Included In Chapter 7 Bankruptcy Was UPDATED On April 13th, 2018

By Gustan Cho

Fannie Mae has announced that there will be new rules on homeowners in qualifying for Conforming Loans With Home Loan Included In Chapter 7 Bankruptcy:

  • Currently, if someone had home loan included in Chapter 7 Bankruptcy, the waiting period does not start until the finalized housing event has been finalized
  • A housing event is foreclosure, deed in lieu of foreclosure, short sale
  • The waiting period start date is the date the where the deed has been transferred into the name of the mortgage lender or the date of the sheriff’s sale
  • Even though homeowners had home loan included in Chapter 7 Bankruptcy and the mortgage has been discharged and are no longer are liable for mortgage, the waiting period does not start until name have been transferred off the title and transferred into the name of lender and recorded in the office of the recorded of deeds and reflected in public records

Home Loan Included In Chapter 7 Bankruptcy Waiting Period After Foreclosure

I get many calls every week where previous homeowners have have Home Loan Included In Chapter 7 Bankruptcy. Many find out that their waiting period did not even start due to the fact that the mortgage lender has not transferred the foreclosed property into lender names and out of homeowners name:

  • Some lenders seem to do this on purpose because this devastates the chances of a home buyer the ability to qualify for a new home loan
  • Now, we are in luck
  • Fannie Mae now will waive the standard rules on having Home Loan Included In Chapter 7 Bankruptcy
  • The new guidelines allows homeowners with Home Loan Included In Chapter 7 Bankruptcy to be able to purchase a home in 4 years
  • As long as  Home Loan Included In Chapter 7 Bankruptcy and the housing event has been finalized, home buyers can qualify for conforming loans after four years of the Chapter 7 discharged date
  • The four year waiting clock starts from the date of the Chapter 7 bankruptcy discharge date.

Excellent News For Those With Prior Foreclosure

Home Buyer could not qualify for a conventional loan after a foreclosure until a 7 year waiting period after a foreclosure.

  • Now home buyers can qualify for a conventional mortgage loan with a 5% down payment in just 4 years after Home Loan Included In Chapter 7 Bankruptcy
  • Borrowers need to have the housing event finalized 
  • Borrowers cannot have re-affirmed the mortgage

New Fannie Mae Guidelines On Conventional Loan After Short Sale And Deed In Lieu

Many of my clients who had a deed in lieu of foreclosure or short sale used to qualify for a conventional loan after a short sale or deed in lieu with 20% down payment after 2 years of the deed in lieu or short sale.

  • Fannie Mae terminated the two year waiting period after a short sale or deed in lieu on August 16, 2014
  • The new Fannie Mae mortgage lending guidelines on qualifying for a conventional loan after a short sale or deed in lieu will be 4 years
  • Buyers cannot qualify for a conventional loan after a short sale or deed in lieu of foreclosure after 2 years with 20% down payment 
  • The 20% down payment requirement is gone altogether
  • Home buyers can qualify for a conventional loan after short sale or deed in lieu of foreclosure in 4 years with only 5% down payment
  • Prior to this new Fannie Mae guideline, home buyers could qualify 4 years after short sale or deed in lieu of foreclosure with a mandatory 10% down payment
  • Now, that is not the case
  • The home buyer only needs a 5% down payment

No Waiting Period After Housing Event With Non-QM Loans

There is no waiting period after a housing event with our non-qm loans. NON-QM Loans require 10% to 20% down payment on home purchase. The percentage of down payment requirements depends on borrowers credit scores. There is no loan limits with non-qm loans. The Gustan Cho Team also offers non-qm mortgages for self employed borrowers where no tax returns are required. 24 months bank statements deposits is averaged to calculate qualified income. 50% debt to income ratio caps with compensating factors. Minimum credit scores required is 620. There is no private mortgage insurance requirements on non-qm loans.

Related> Fannie Mae: New waiting period guidelines after short sale and deed in lieu

Related> Fannie Mae

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