Late Payments After Bankruptcy And Foreclosure Mortgage Guidelines

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Late Payments After Bankruptcy And Foreclosure Mortgage Guidelines

This BLOG On Late Payments After Bankruptcy And Foreclosure Mortgage Guidelines Was UPDATED And PUBLISHED On August 22nd, 2019

What is Late Payments After Bankruptcy And Foreclosure Mortgage Guidelines

Everyone can go through hardship at one or more time in their lives.

  • The Great Recession of 2008 has impacted many American families
  • First and foremost, the Great Recession of 2008 has plummeted home values in every part of the United States
  • Homeowners who counted on the equity in their homes for retirement had most or all of their equity
  • A large percentage of homeowners with equity had negative equity
  • Mortgage loan balances were higher than the value of their homes
  • When a homeowner has loan balance higher than the value of their homes, it is often referred to as upside-down mortgages
  • Never in history has foreclosures rates been so high
  • Bankruptcy rates have skyrocketed to the highest record ever in United States history
  • The term short sale, which many Americans did not hear of the term, was extremely common
  • Short Sale was a term used not just realtors and mortgage professionals but among many in financial distress
  • Complete industries were eliminated
  • Subprime mortgages were completely eliminated
  • Nearly all large subprime lenders went out of business and closed their doors completely
  • Half of mortgage loan officers either left the business or had to make a switch to a different field altogether
  • A large percentage of full-time real estate agents either left the field or had to get other jobs to maintain their income to support their families
  • A record number of workers in the real estate industry foreclosed on their homes

In this article, we will cover and discuss How Lenders View Late Payments After Bankruptcy And Foreclosure.

How The 2008 Recession Affected The Mortgage And Real Estate Industry

How The 2008 Recession Affected The Mortgage And Real Estate Industry

Professionals in the following fields were hurt the most:

  • such as contractors
  • construction workers
  • realtors, bankers
  • mortgage loan officers
  • attorneys
  • appraisers
  • title agents

Many in the above trades were forced into bankruptcy and had no choice but to foreclose on their homes:

  • Millions of small businesses had to close their doors
  • These business owners had to file bankruptcy and go through foreclosures
  • Millions of workers who were hourly or salaried wage earners lost their jobs
  • This was because the companies they were working for either closed their doors or downsized

Never in history has unemployment rates been as high after the 2008 Real Estate and Credit Collapse.

Economic Recovery

What is the Economic Recovery

The economic recovery has been the longest in history.

  • It was the longest recovery in history
  • It was not until President Donald Trump elected that the economy started to recover
  • Although unemployment numbers have greatly improved, the unemployment data was not accurate
  • This was due because many who lost their jobs or businesses have totally given up looking for jobs and their unemployment benefits have run out
  • These folks are not counted in the unemployment data
  • Look around and look at people and see how many people who are still looking for work
  • They are just getting by either by working a temporary job or jobs they are overqualified for

Life After Bankruptcy And Foreclosure

what is the Life After Bankruptcy And Foreclosure

The federal government realizes the damage the Great Recession of 2008 has done to hard-working American families. The government has totally revamped the mortgage industry.

  • The United States Department of Housing and Urban Development, also known by many as HUD, is the parent of the Federal Housing Administration, FHA
  • FHA has implemented home loan programs to help home buyers with prior bad credit
  • Consumers with prior bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales become homeowners

Many hard-working Americans who became victims of the Great Recession of 2008 and had to file bankruptcy or had to foreclose on their homes and thought they could never own home ever again can now qualify for a home after bankruptcy and foreclosure.

Qualifying For Home Loan After bankruptcy

What is the Qualifying For Home Loan After bankruptcy

Consumers with a prior bankruptcy can qualify for FHA Loans after 2 years from the discharge date of Chapter 7 bankruptcy and re-established credit:.

  • Those with a prior bankruptcy can qualify for a conventional loan after 4 years from the discharge date of their bankruptcy with re-established credit
  • Both VA and FHA Borrowers can qualify for home loans after 12 months in a Chapter 13 Bankruptcy repayment plan
  • VA requires a two year waiting period after Chapter 7 Bankruptcy discharged date
  • The two-year waiting period after Chapter 13 Bankruptcy discharged date to qualify for Conforming Loans per Fannie Mae and Freddie Mac Guidelines
  • Four year period after Chapter 13 dismissal date to qualify for conventional loans

Qualifying For Home Loan After Foreclosure

what is the Qualifying For Home Loan After Foreclosure

Home Buyers with prior foreclosure, deed in lieu of foreclosure, a short sale can qualify for an FHA Loans after three years of the recorded date of foreclosure or deed in lieu of foreclosure and 3 years from the short sale date of short sale which is reflected on the HUD-1 Settlement Statement now called the Closing Disclosure.

  • To qualify for a conventional loan after a foreclosure, the waiting period is 7 years from the recorded date of the foreclosure
  • To qualify for a conventional loan after a deed in lieu of foreclosure or short sale, the mandatory waiting period is four years from the recorded date of deed in lieu of foreclosure or the date of a short sale

The United States Department of Veteran Affairs (VA) requires two year waiting period after housing event (foreclosure, deed in lieu, short sale).

How Do Lenders View Late Payments After Bankruptcy And Foreclosure?

How Do Lenders View Late Payments After Bankruptcy And Foreclosure?

There are mortgage lenders that will not accept borrowers with late payments after bankruptcy and foreclosure.

  • Most lenders want to see a borrower with a prior bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure never to be late after their economic event
  • Borrowers with late payments after bankruptcy and/or housing event are considered second offenders and most lenders will want to shy away from them
  • Unfortunately, unexpected circumstances happen
  • People mean well but may encounter financial hardship after bankruptcy and foreclosure
  • Consumers may go in arrears on their payments
  • Consequences are they get derogatory credit items reported on their credit report
  • There are lenders that will approve borrowers with late payments after bankruptcy and foreclosure as long as they can get an approve/eligible per Automated Underwriting System Approval
  • A detailed letter of explanation will be required why you had late payments after bankruptcy and foreclosure and documented facts need to be provided
  • For example, consumers with late payments after bankruptcy and foreclosure due to loss of a job, medical issues, divorce, or other extenuating circumstances, provide copies of documents along with the letter of explanation
  • Those who got injured and were out of work and due to this fact had a loss of income and could not pay bills, attach the hospital bills, doctors letter, or other hard facts along with a letter of explanation

Mortgage lenders will understand extenuating circumstances and just want to make sure borrowers are not a financially irresponsible person.

Getting Approved With Late Payments After Bankruptcy And Foreclosure

How Getting Approved With Late Payments After Bankruptcy And Foreclosure

Late Payments after bankruptcy and foreclosure is not an agency guideline. Gustan Cho Associates Mortgage Group approve borrowers with late payments after bankruptcy and foreclosure all the time as long as they can get approve/eligible per Automated Underwriting System findings. Unfortunately, most lenders will not accept any late payments after bankruptcy and/or housing event. Home Buyers who need to get pre-approved with a direct lender with no mortgage overlays on government and/or conventional loans, please contact us at GCA Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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