Mortgage After Foreclosure California Requirements For Home Buyers
This BLOG On Mortgage After Foreclosure California Requirements For Home Buyers Was UPDATED On February 7th, 2019
Millions of homeowners went through a foreclosure due to the economic collapse of 2008.
- A foreclosure happens when a homeowner no longer can afford their monthly mortgage payments and defaults on their note
- The lender forecloses on the homeowner
- There are alternatives to foreclosures such as
- deed in lieu of foreclosure
- short sale
- California homeowners can qualify for a mortgage after foreclosure California
Homeowners going through a foreclosure or have recently gone through a foreclosure, there are things they need to know about the foreclosure process:
- the mandatory waiting period after a foreclosure is finalized before they are able to qualify for a government or conventional loan
- The foreclosure process can be long
- Rules and regulations concerning foreclosures can be tricky as well
In this article, we will cover and discuss qualifying for a mortgage after a housing event.
No Waiting Period To Qualify For Mortgage After Foreclosure California
Having a foreclosure is not the end of the world.
- Gustan Cho Associates are lenders with no overlays on government and conventional loans
- We are correspondent lenders on non-QM loans
- There is no waiting period requirements on non-qm loans after foreclosure, deed in lieu of foreclosure, short sale
- There is a one year waiting period after Chapter 7 Bankruptcy discharged date
- 10% down payment is required for borrowers with 680 credit scores
- 660 credit scores require 15% down payment
- 20% down payment on credit scores of 640
Minimum credit scores to qualify for NON-QM Loans is 500 FICO.
Waiting Period Requirements On Government And Conventional Loans
- Millions of homeowners in California were forced into foreclosure due to the Great Recession of 2008 and mortgage meltdown
- However, there are mandatory waiting periods after foreclosure to qualify for a government and conventional loans
- For conventional mortgage loan programs, there is a 7 year waiting period after the recorded date of the foreclosure
- There is a four-year waiting period after a short sale and/or deed in lieu of foreclosure
- The waiting period start date is from the date of the sheriff’s sale or the date the homeowner’s name has been transferred out of their name into the name of the lender
- For FHA Loans the waiting period is much shorter
Qualifying For FHA Mortgage After Foreclosure California
The mandatory waiting period after foreclosure for FHA insured mortgage loans is three years from the date of the sheriff’s sale of the foreclosed property or the date the deed of the home was transferred out of the homeowners name into the name of the lender.
- The three year recorded date is extremely important
- Most people realize that just because they signed the foreclosure paperwork and turned in the keys that the waiting period start date is the date they surrendered the keys and told the mortgage lender that they were out of the home
- This is not often the case
- The waiting time clock starts when homeowners name is completely out of the deed of the home and recorded into the mortgage lender’s name
- This date needs to be recorded in county’s recorder of deeds office
What If The Deed Is Not Out Of My Name?
- If the deed is still in homeowners name and not in the lender’s name, waiting period after a foreclosure did not even start yet
- There are thousands of folks who thought they got foreclosed many years ago and find out that the deed is still in their names
- The waiting period time clock did not even begin yet
- I get calls every week from home buyers who thought they had passed the three year waiting period many years ago and I find out that the waiting period after foreclosure time clock did not even begin yet to qualify for FHA Loans
- Lenders who foreclose on homes are in no major hurry to transfer the deed in their names
- Lenders realize that this hurts the potential home buyer but they really do not care
- Homeowners currently going through a foreclosure or have recently gone through a foreclosure, make sure that name has been transferred out of the deed and into the lender’s name
- Make sure the paperwork has been recorded in county’s recorder of deeds office
- It might be seem like a simple thing but many do not realize that the waiting period clock did not start
- However, it is so crucially important
- What If My Mortgage Was Part Of Bankruptcy?
Mortgage Part Of Chapter 7 Bankruptcy To Qualify For FHA Loans
Many folks had their foreclosure as part of their bankruptcy and the bankruptcy wiped out the mortgage loan.
- However, just because mortgage is part of Chapter 7 bankruptcy, the waiting period does not start until the deed has been transferred out of name into the mortgage lender with government loans (FHA, VA, USDA)
- Those with mortgage as part of bankruptcy and get a bankruptcy discharge on the mortgage, it means they no longer owe the mortgage balance
- It was discharged with the bankruptcy
- However, now they own the home without a mortgage
- The house is still in their name
- They need to get that home out of their and into the name of the mortgage lender
- This need to get done for the foreclosure waiting period time clock to start ticking so they can qualify for USDA FHA Loans three years from the recorded date of foreclosure
- There are so many phone calls I get from potential home buyers who had filed bankruptcy and had mortgage part of the bankruptcy but the deed is still in their names
- Even though the bankruptcy might be three or more years old and the mortgage was part of bankruptcy, if the deed is still in their name, the waiting period after foreclosure had not started with government loans
Conventional Loans With Mortgage Part Of Chapter 7 Bankruptcy
Conventional Loans have different lending guidelines with mortgage part of Chapter 7 Bankruptcy:
- Homeowners with a foreclosure and the deed is still in their name can have issues
- The waiting period starts once the deed has been transferred out of the name of the homeowner
- The only exception is when borrowers have mortgage part of Chapter 7 Bankruptcy. With conventional loans, there is a four year period after discharged date of Chapter 7 Bankruptcy if mortgage was part of Chapter 7
- The recorded date of foreclosure and/or short sale date does not matter
- The housing event needs to have been finalized and the borrower cannot re-affirm the mortgage
- Qualifying For A Mortgage After Bankruptcy California
Waiting Period Requirements After Bankruptcy & Housing Event
The bankruptcy waiting period after a bankruptcy to qualify for a mortgage loan is two years, which it already passed but the foreclosure waiting period did not even start yet.
- If this is the case, make sure to notify lender
- If mortgage lender does not cooperate, send them a certified letter telling them if they do not get the deed out of homeowners name and into their name and record it in five business days that you are going to sell the property and keep the proceeds
- Technically, homeowners can do that
- Homeowners actually own the home free and clear with no mortgage because the mortgage balance got wiped out on bankruptcy discharge.
Mortgage After Foreclosure California With No Lender Overlays
Home Buyers seeking a home loan with bad credit with a direct lender with no mortgage overlays on government and conventional loans, please contact us at The Gustan Cho Team at 262-716-8151 or text us for faster response. Or email us at email@example.com. We specialize in helping borrowers secure home buyers obtain mortgage after foreclosure California and dozens of other states with no lender overlays.
By Gustan Cho