This BLOG On Home Loan Included In Chapter 7 Bankruptcy Conforming Guidelines Was UPDATED On April 16th, 2019
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 a foreclosure, deed in lieu of foreclosure, short sale
- The waiting period start date is the date 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
- The title needs to be transferred into the name of lender
- It also needs to be recorded in the office of the recorder of deeds and reflected in public records
In this article, we will cover and discuss qualifying for conventional loans with a prior mortgage included in the bankruptcy.
Home Loan Included In Chapter 7 Bankruptcy Waiting Period After Foreclosure
I get many calls every week where previous homeowners 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
- This is 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 a Prior Mortgage Included In Chapter 7 Bankruptcy
- The new guidelines allow homeowners with a prior mortgage Included In Chapter 7 Bankruptcy to be able to purchase a home in 4 years
- As long as the prior mortgage Included In Chapter 7 Bankruptcy and the housing event has been finalized, home buyers can qualify for conforming loans after four years of 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 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.
Waiting Period To Qualify For Home Loan Included In Chapter 7 Bankruptcy
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 a 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 are 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.