This BLOG On Is 120 Day Mortgage Late Considered Foreclosure Was Written By Gustan Cho and UPDATED And PUBLISHED On February 19th, 2020
One of the biggest fears for home buyers late on their mortgage payments in the past is the question Is 120 Day Mortgage Late Considered Foreclosure.
- I get countless of calls throughout the year by mortgage borrowers who were told they cannot qualify for any government and/or conventional loans because they were told that any 120-day mortgage late considered foreclosure by other lenders
- I was curious about a borrower who went to a local mortgage broker and was told by the broker that the borrower needed to meet a 3-year waiting period from the date of last activity (DLA) from the date the borrower became current from the 120-day mortgage late
- This was in February 2017
- The home was since sold and the borrower was ready to purchase a new home
- I called the mortgage broker and was told that under HUD Guidelines, a 120-day mortgage late considered foreclosure
- I told him absolutely not
HUD Guidelines On120 Day Mortgage Late Payments
Nowhere in the HUD 4000.1 FHA Handbook does it state that a 120-day late payment on a mortgage is the same as a foreclosure and/or housing event:
- Long story short, I had one of my loan officers take the application of the borrowers and ended up closing on the loan
- The answer to the question Is 120 Day Mortgage Late Considered Foreclosure is NO
Unless foreclosure proceedings started, HUD does not consider a 120 mortgage late the same as a foreclosure.
Being Late After 120 Day Mortgage Late Payments Is Not Considered A Housing Event
There is no waiting period after 120 Day Mortgage Late Payments to qualifying for FHA, VA, USDA, and/or Conventional Loans. If you are told yes when asked Is 120 Day Mortgage Late Considered Foreclosure, then contact us. If any borrowers are told that a 120-day mortgage late considered foreclosure, contact us at Gustan Cho Associates and we can get mortgage approval.
Qualifying For Mortgage With Bad Credit
Like to clarify bad credit mortgage loans.
- Borrowers can qualify for mortgage loans with prior bad credit
- FHA is the most popular mortgage loan program in the United States for homebuyers with less than perfect credit and higher debt to income ratios so we will mainly concentrate on FHA Home Loans on this blog
- The United States Department Of Housing And Urban Development (HUD) is the parent of the Federal Housing Administration (FHA)
- FHA is not a lender nor does it have anything to do with originating, funding, servicing FHA Loans
- FHA is a government organization under HUD whose role is to insure and guarantee FHA Loans originated and funded by private financial institutions in the event FHA Borrowers default on the FHA Loans and the property goes into foreclosure
- FHA insures and guarantees lenders of losses due to losses by foreclosures
- In order for the loan to be insurable, lenders need to following FHA Guidelines
- Outstanding late payments and charged-off accounts do not have to be paid to qualify for FHA Loans
- However, lenders do want to see timely payments in the past 12 months
- One or two late payments in the past 12 months is not a deal killer
However, prior bad credit with outstanding collections and charged-off accounts and late payments in the past 12 months will most not likely render an approve/eligible per Automated Underwriting System (AUS).
How Do Mortgage Underwriters View Late Payments
Late Payments can happen among the best of us.
- Mortgage Underwriters will need a letter of explanation of why mortgage borrowers were late.
- Was it for job loss?
- Was it due to a divorce?
- Was it due to other extenuating circumstances?
- Periods of late payments are understandable
- Lenders want to see borrowers have re-established credit after periods of bad credit
- Special attention is given for borrower’s payment patterns and behavior in the past 12 months
- Past payment history is a good indicator of future payment on borrowers new mortgage payments
Borrowers can qualify for FHA Loans with one or two late payments in the past 12 months.
Is 120 Day Mortgage Late Considered Foreclosure: Late Payments After Bankruptcy & Foreclosure
Most lenders will not accept any mortgage borrowers with any late payments after bankruptcy and/or foreclosure or other housing events.
- Most lenders consider any late payments after bankruptcy and/or housing event a second-time offender and will not accept anyone with any late payments period
- However, late payments after bankruptcy and/or foreclosure is not a deal killer
- I have helped countless of borrowers who got automated approval findings after late payments after bankruptcy and foreclosure
- People do not lose jobs after bankruptcy and/or foreclosure?
- People do not get sick and hospitalized after bankruptcy and/or foreclosure? People do not get divorced after bankruptcy and/or foreclosure?
Please contact us at Gustan Cho Associates if told by lenders that they cannot accept you due to late payments after bankruptcy and foreclosure or other housing events.
Waiting Period After Loan Modification To Qualify For FHA Home Loans
We will cover a perfect case scenario in explaining the answer to Is 120 Day Mortgage Late Considered Foreclosure.
- There is a one-year waiting period to qualify for FHA Loans after a loan modification
- The main reason for the one-year waiting period is because, under HUD Guidelines, borrowers need 12 months on-time payments on any mortgage payments to qualify for FHA Loans and other mortgages
- However, most mortgage borrowers who went through a mortgage loan modification were at one time or another 120 days late on their mortgage payments prior to modification
- Are all of the 120 day late payers on their mortgage all classified as having gone through a foreclosure? Is 120 Day Mortgage Late Considered Foreclosure?
- The answer is NO IT IS NOT
Is 120 Day Mortgage Late Considered Foreclosure: Qualifying For Mortgage With Lender With No Overlays
Home Buyers who need to qualify for a mortgage with no lender overlays on government and/or conventional loans can contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at email@example.com. Gustan Cho Associates has ZERO OVERLAYS on FHA, VA, USDA, and Conventional Loans. Gustan Cho Associates are also correspondent lenders on non-QM loans and bank statement loans for self-employed borrowers. There is no waiting period after foreclosure with non-QM loans. No tax returns are required on bank statement mortgage loans for self-employed borrowers. The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.