Waiting Period After Bankruptcy And Foreclosure

Waiting Period To Qualifty For Mortgage After Bankruptcy And Foreclosure

Home Loan With Bad Credit

Federal mortgage  lending guidelines have waiting period after bankruptcy and foreclosure requirements to qualify for a residential mortgage loan.  Both FHA and Conventional loan programs have their own waiting period after bankruptcy and foreclosure requirements.  We will discuss FHA and Conventional loan waiting period after bankruptcy and foreclosure requirements to qualify for a mortgage loan in this article.

FHA Mortgage After Bankruptcy And Foreclosure Waiting Period

There is a mandatory two year waiting period after bankruptcy to qualify for a mortgage loan.  The two year waiting period after bankruptcy clock starts from the discharge date of the bankruptcy.

There is a mandatory three year waiting period after foreclosure to qualify for a residential mortgage loan.  The three year waiting period clock starts from the date the foreclosure was recorded on public records and not the date that the keys were surrendered or the date of the sheriff’s sale.  The name on the deed has to have been out of the homeowners name and into the name of the mortgage lender or new home buyer and recorded in the recorder of deeds office.  The same rule applies for a deed in lieu of foreclosure,  There is a mandatory three year waiting period after deed in lieu of foreclosure’s recorded date and not the date the paperwork was signed.

With short sales, the three year waiting period after short sale clock starts ticking from the date of the short sale date reflected on the HUD settlement statement.

FHA Back To Work Extenuating Circumstance Due To An Economic Event: 1 Year Waiting Period Mortgage After Bankruptcy And Foreclosure

The United States Department of Housing and Urban Development, also known as HUD and the parent of the Federal Housing Admininstration ( FHA )  has launched the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program last August 15. 2013 for those home buyers who had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.  Not everyone can qualify for the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program.  The candidate for the FHA Back to Work mortgage loan program needs to have been involuntarily out of work either from a lay off or a company shutdown.  You cannot have quit your job voluntarily.  The involuntary termination of the employment needed to have been the cause of the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  The candidate needed to have had a reduction of household income of at least 20% for a period of at least six months.  The candidate needed to have had great credit and timely payment history until the date of the economic event.  For those who had bad credit and payment history prior to the economic event and had disregard for credit will not be eligible for the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program.

Self Employed Borrowers

Self employed folks or those who had a business that went out of business do not qualify.  Business owners are classified as those who had taken a calculated risk and do not qualify for the FHA Back to Work mortgage program.

The Back to Work mortgage loan applicant needs to have obtained a full time job after the economic event and has re-established credit with no late payment history after the economic event.  The Back to Work mortgage applicant needs to have completed a HUD approved housing counseling course 30 days prior to applying for a formal mortgage application.  FHA Back to Work Extenuating Circumstances due to an economic mortgage loans are all manual underwrites and the debt to income ratios required are 31% front end and 43% back end debt to income ratios.  These front end and back end debt to income ratios can be higher if there are compensating factors.  If you are a home buyer in Illinois, Florida, California, Washington, Indiana, or Wisconsin and feel you qualify for the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program, please contact me at www.gustancho.com.

Conventional Mortgage After Bankruptcy And Foreclosure

Conventional mortgage after bankruptcy and foreclosure is more stricter than FHA mortgage after bankruptcy and foreclosure lending requirements.  There is a mandatory 4 year waiting period after bankruptcy to qualify for a conventional loan.  There is a 7 year waiting period after foreclosure to qualify for a conventional loan.  However, with deed in lieu of foreclosure and short sale, a home buyer can qualify for a conventional loan after a 4 year waiting period with 5% down payment.

Foreclosure As Part Of Bankruptcy

Fannie Mae recently changed its rules for home buyers who had a foreclosure part of their bankruptcy.  If you had a foreclosure part of your bankruptcy, the waiting period to qualify for a conventional loan is 4 years from the date of the bankruptcy discharge date.

Just Passing The Waiting Period After Bankruptcy And Foreclosure Does Not Automatically Guarantee Mortgage Approval

Just waiting out the waiting period after bankruptcy and foreclosure does not automatically qualify you for a residential mortgage loan.  Mortgage lenders do not want to see any late payments after a person has filed bankruptcy or had gone through a foreclosure, deed in lieu of foreclosure, or short sale.  Re-establishing your credit after bankruptcy and foreclosure is extremely important if you intend in qualifying for a home mortgage loan in the near future.  Many folks who just went through the traumatic experience of a bankruptcy or foreclosure do not want to do anything with new credit and want to purchase items via cash.  Unfortunately, this practice will end up hurting the consumer.  For those who recently went through a bankruptcy or foreclosure should immediately start re-establishing their credit by getting a few secured credit cards with at least $500 credit limits.

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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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