Qualifying For Mortgage Loan After Foreclosure And Short Sale

This BLOG On Qualifying For Mortgage Loan After Foreclosure And Short Sale Was UPDATED On July 17, 2017

Previous homeowners who had a prior foreclosure can now qualify for home loan after foreclosure and short sale. There is a minimum of a 3 year waiting period to qualify for FHA and USDA Loans after foreclosure, deed in lieu of foreclosure, and short sale from the date of the sheriff’s sale or the date the deed was transferred out of the homeowner’s name into the name of the mortgage lender and recorded. There is a two year waiting period to qualify for VA Loans after Foreclosure, Short Sale, Deed In Lieu, and Chapter 7 Bankruptcy.

  • Just because the waiting period has passed from the date the homeowner turned in keys to the bank does not mean that date if the effective start date of the waiting period. 
  • It has to be the actual date that the deed of the house was transferred out of the homeowner’s name and into the mortgage lenders name and recorded on public records. 
  • That recording date is the effective date and the clock starts effective that date of the waiting period.

Earliest Qualifying Date For Conventional Mortgage Loan After Foreclosure

Previous homeowners who had a prior deed in lieu of foreclosure or a short sale can qualify for a conventional mortgage loan after 4 years from the date of the sheriff’s sale or the date the deed was transferred out of their name into the name of the mortgage lender and officially recorded at the county recorder of deeds. There is a seven year waiting period after the recorded date of a standard foreclosure to qualify for conventional loans. Conventional Loans have different waiting period requirements after foreclosure versus short sale and deed in lieu of foreclosure.

  • Conventional Loans require 5% down payment required on the new home purchase. 
  • Conventional Loan Borrowers must remember and realize that the waiting clock does not start until the deed is fully transferred out of their name and into the name of the mortgage lender and officially recorded at the county recorder of deeds office, signed, stamped, and dated.

The above program is for only conventional mortgage loans.  FHA and USDA treats foreclosures, deed in lieu of foreclosures or short sales all the same and it is the regular three year waiting period. VA Loans all require 2 year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.

Recorded Date Versus Surrendered Date In Qualifying For Mortgage Loan After Foreclosure

The effective date that the foreclosure waiting period is over to qualify for a mortgage loan is three years from the recorded date of when the name of the deed was transferred out of homeowner’s name and not the mortgage release date.

  • Many folks think that just because they have a mortgage release at a certain date that means that is the effective date. 
  • That is not the case. 
  • It is the recorded date when the mortgage release was recorded with the clerk of the county recorders office.

2017 Update On Conventional Loan After Deed In Lieu Of Foreclosure And/Or Short Sale

The 2 year waiting period after a deed in lieu of foreclosure and/or short sale with a 20% down payment to qualify for a conventional loan is no longer in effect.

  • Fannie Mae has changed the waiting period to a four year waiting period after a deed in lieu of foreclosure and/or short sale.
  • Down payment requirements is 5% down payment to qualify for a conventional loan. 
  • 3% down payment required for first time home buyers.
  • First Time Home Buyers is defined as someone who has not owned a home in past three years.
  • Another positive change with Fannie Mae mortgage lending guidelines is that if mortgage borrower had a mortgage as part of Chapter 7 bankruptcy, the waiting clock starts from the date of the discharge date of the bankruptcy and not the recorded date of the foreclosure.
  • The foreclosure can be recorded at a later date.

Related> Qualifying Mortgage After Foreclosure

Related> Mortgage After Deed In Lieu Versus Foreclosure

Related> Home Loan After Foreclosure And Bankruptcy

This Article On Mortgage Loan After Foreclosure Was UPDATED On July 17, 2017

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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