Waiting Period To Qualify For FHA Loan And Conventional Loan After Bankruptcy And Foreclosure

Home Loan After Bankruptcy And Foreclosure

Gustan Cho Associates

Conventional lending guidelines are different than those of FHA mortgage lending guidelines.  With FHA lending guidelines, the waiting period is 2 years after  a bankruptcy.  The two year waiting period waiting clock starts from the discharge date of the bankruptcy.  With FHA guidelines on waiting period after foreclosure, deed in lieu of foreclosure, there is a three year waiting period from the recorded date of the foreclosure or deed in lieu of foreclosure.  It is not the day you sign foreclosure or pre-foreclosure paperwork and turn in your keys.  It is the actual date the foreclosure or deed in lieu of foreclosure was recorded and stamped at the county recorder’s office.  Sometimes you may turn in your keys of your home to the bank or mortgage lender and you may think that that is the date of the foreclosure or deed in lieu of foreclosure but that is not the case.  Sometimes a mortgage lender or bank will not record the foreclosure or deed in lieu of foreclosure until many years after the homeowner turns in the keys and the waiting period to qualify for a mortgage did not even start yet.  Banks and mortgage lenders are in no major hurry in transferring the deed of the foreclosed home into their names and they are fully aware that this tactic is hurting the potential home buyer but they really do not care. Sometimes it seems that banks and mortgage lenders are delaying transferring the deed on purpose in getting back to the homeowner for foreclosing.

Home Loan After Short Sale

With short sales, there is a 3 year waiting period to qualify for a mortgage loan after the short sale date which is reflected on the HUD’s Settlement Statement.

With conventional, waiting period is totally different.  If you have a prior bankruptcy, the minimum waiting period to qualify for a conventional loan after the bankruptcy discharge date is 4 years.  To qualify for a conventional loan after a standard foreclosure is 7 years from the recorded date of the foreclosure which is reflected on the county public records.  The recorded date is the date where the deed of the property is transferred out of the homeowners name into the name of the mortgage lender.  To qualify for a conventional loan after a deed in lieu of foreclosure or short sale is now four years.  You can now qualify for a conventional loan after 4 years from the date of a short sale and/or 4 years after the recorded date of the deed in lieu of foreclosure with 5% down payment.  This is a totally new Fannie Mae Guideline implemented several weeks ago.  Prior Fannie Mae guidelines allowed a home buyer with a prior deed in lieu of foreclosure and/or short sale to qualify for a conventional loan after a two year waiting period as long as the home buyer had 20% down payment.  The two year waiting period after a deed in lieu of foreclosure or short sale with the 20% down payment is no longer in effect.

Foreclosure Part Of Bankruptcy

Excellent news for home buyers who had foreclosure part of bankruptcy.  If you had a foreclosure part of bankruptcy, you can now qualify for a conventional loan in 4 years from the date of the discharge date of your bankruptcy even though the foreclosure has not transferred out of your name into the bank’s or mortgage lender’s name.  Many homeowners who had their foreclosure part of bankruptcy could not qualify for a conventional loan because mortgage lenders did not start counting the waiting period of the foreclosure until the recorded date of when the deed was transferred out of the homeowner’s name into the name of the mortgage lender’s name.  Now, as of last month, New Fannie Mae Guidelines for homeowners who had a foreclosure part of bankruptcy, the waiting period starts on the date of the bankruptcy discharge date and not the recorded date of the foreclosure.  If you had a foreclosure included as part of the bankruptcy and the mortgage lender did not get the deed to your foreclosed home transferred into their names, that is okay because the waiting period clock starts the date of the bankruptcy discharge date.  This is great news because hundreds of thousands of homeowners who filed bankruptcy over four years ago and had their foreclosure included part of their bankruptcy could not have qualified for a conventional loan because the waiting period clock did not even begin due to the fact that their mortgage companies did not transfer the deed into their names.

Not All Mortgage Lenders Will Approve New Fannie Mae Guidelines Of Foreclosure Part Of Bankruptcy

Even though the new Fannie Mae guidelines state that if you have a foreclosure part of bankruptcy, most mortgage lenders have investor overlays where they will not accept such mortgage loan applications.  Most mortgage lenders still require 7 years waiting period to qualify for conventional loan even if you had a foreclosure part of bankruptcy due to their own mortgage lender overlays.  The great news is that I am a no mortgage lender overlay lender and just go off the automated findings per Automated Underwriting System ( AUS ) and fund loans that only meet Fannie Mae guidelines.  As long as you get an approve/eligible per DU FINDINGS or LP FINDINGS, you will close your mortgage loans.  If the bank, credit union, or mortgage banker you went to and they tell you that you do not qualify due to their own investor overlays, contact me at 262-716-8151 or visit me at www.gustancho.com.  Neighborhood Loans is licensed in Illinois, California, Florida, Indiana, Washington, and Wisconsin.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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