Bankruptcy, Foreclosure, Short Sale, Deed In Lieu:  Mortgage Application Date

There is a two year waiting period for a mortgage loan borrower to qualify for a FHA insured mortgage loan after he or she has filed bankruptcy from the discharge date of their bankruptcy.  There is a three year waiting period for a mortgage loan borrower to qualify for a FHA insured mortgage loan after he or she has had a foreclosure, deed in lieu of foreclosure, or short sale.  For short sales, the three year waiting period is over from the date of the HUD settlement statement/closing of  the short sale.  For a foreclosure, or deed in lieu of foreclosure, the three year waiting period is over from the RECORDED DATE OF THE FORECLOSURE OR DEED IN LIEU OF FORECLOSURE and not the date that the foreclosure paperwork was signed.  The recorded date of the foreclosure or deed in lieu of foreclosure is the date that the actual property transfer happened and recorded in your county’s recorder of deeds office.   You cannot apply for a mortgage application prior to these dates but many mortgage loan borrowers do because their mortgage loan originators tell them its alright.  Please have your loan officer double check with their underwriting department to make sure they check their FHA mortgage lending guidelines so you do not have to sign your mortgage documents twice and have you change your mortgage application date.

Mortgage Application Date: Mortgage Application Date Needs To Be After Your Waiting Period Is Over

For example, say you had a deed in lieu of foreclosure in April 15, 2010 but the deed in lieu of foreclosure was recorded in February 13, 2011.   Your three year waiting period is over on February 13, 2014.  Many home buyers are eager to purchase a home prior to the three year waiting period so they enter into a purchase contract and schedule a closing say 30 days from today, February 21, 2013.  Your mortgage loan originator will probably not be able to get a Fannie Mae Automated Underwriting System Approval until February 1, 2013.  You can get a DU FINDINGS approve eligible in the beginning of the month since DU does not recognize the actual day.  However, your mortgage application date needs to be on or after February 13, 2014 since that is the actual date of the end of your mandatory waiting period.  If your mortgage application date is prior to your three year waiting period anniversary date, you mortgage application will get kicked back and you need to complete and new mortgage application packet along with the proper disclosures with the correct mortgage application date.

FHA Back to Work Extenuating Circumstances Due To An Economic Event: Mortgage Application Date

HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan programs shortens the waiting period to one year waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale if the mortgage loan borrower was unemployed or underemployed which resulted in a 20% reduction of their overall housing income for at least six months prior to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  The mortgage loan borrower needs to take a one hour HUD APPROVED housing counseling course.  The mortgage application date and the real estate purchase contract date cannot be until 30 days after the date of the HUD approved counseling certificate.  Any mortgage application date prior to the 30 day waiting period of the HOUSING COUNSELING CERTIFICATE DATE will be denied and your mortgage application date needs to be modified which means a complete new mortgage application and disclosures needs to be completed.

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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