Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans

Gustan Cho Associates

This ARTICLE On How To Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans Was Updated On May 16th, 2019

Back in the late 1990s and early 2000s, real estate was the hot item ticket.

  • Prior to the 2008 Great Recession, real estate values were going up year after year with no sign of a setback
  • This surge in real estate value was nationwide and getting approved for a mortgage was so easy
  • Borrowers had many different types of loan programs available at their fingertips such as no doc and stated income loan programs
  • Borrowers did not have to provide proof of income and almost everyone qualified for a mortgage
  • Regular working middle-class people had second, third, and fourth homes and millions of folks in this country became real estate investors

Everyone who was either directly or indirectly involved in real estate investments.

Real Estate investors included the following:

  • Contractors
  • Attorneys
  • Real Estate Agents
  • Appraisers
  • Loan Officers
  • Bankers
  • Teachers
  • Property Managers
  • Police Officers and Fire Fighters
  • Students
  • Retired folks with no real estate investment experience

Everyone who touched real estate made money and then D-Day hit when the whole real estate and credit markets collapsed.

Foreclosure And Bankruptcy Historical High After 2008 Real Estate Collapse

Then came the real estate crash of 2008 where the credit and real estate market crashed.

  • This crash lead the nation into a long depression which affected tens of millions of Americans
  • People lost their jobs, lost their businesses, lost their real estate investments, and lost their homes
  • Folks who were fortunate enough to maintain their businesses saw a major drop in revenues
  • Those who hung onto their personal homes saw values plummet
  • Retirees were forced back to the workforce and millions of jobs got eliminated
  • Even millions of attorneys were forced into bankruptcies and foreclosures
  • The country lost half of its mortgage loan originators
  • The government reports unemployment at a record 8% but I know those figures are wrong
  • These figures do not include folks who had businesses or were self employed and millions of people do not even claim unemployment
  • The true figures are upwards of 20% or more and this figure is not even counting folks who are underemployed
  • I have clients who were once making $800,000 per year prior to the real estate
  • Credit market collapse who is now only making $100,000
  • These folks had to give up their vacation homes
  • They had to take their children out of college or transfer them from a private college to a public university or junior college
Qualify For Mortgage After Foreclosure And Bankruptcy
Nationwide Mortgage

Recovery Of Housing And Credit Markets

The government states that the recession is over but many folks strongly disagree. The Obama Administration pulled the trigger to non-stop regulations not just in the mortgage industry, but to every other sections of government. Housing market did recover and has been steadily appreciating year after year since 2011.

Below is a snap shot of my take of our economy and housing market:

  • First and foremost, our country did not go through a recession but many believe our country went into a world depression
  • It is not just this country that suffered the real estate and financial collapse but this economic downturn was worldwide
  • The credit and real estate collapse was worldwide and literally bankrupted many nations like Greece, Italy, and others
  • Everywhere in America, everyone knows of someone who has lost their homes, businesses, and jobs.
  • There is a foreclosure on every block in America’s neighborhoods
  • Small community banks have closed their doors or got acquired by giants like J.P. Morgan Chase, Citibank, Bank of America, and Wells Fargo
  • Courts were overwhelmed with foreclosures and evictions
  • Having bad credit is now America’s norm
  • We all need to recover and time is the best remedy when it comes to rebuilding one’s life and credit
  • Many folks who have filed bankruptcy and/or foreclosure can see the light at the end of the tunnel
  • People can now qualify to purchase homes
  • I specialize in helping those who have filed bankruptcy and/or lost their homes via foreclosure secure mortgages to purchase a home or refinance their current homes
  • I am a victim of the financial and real estate crash of 2008 as well
  • So I fully understand what a borrower is going through
  • I lost everything I have worked so hard for, my homes and businesses and could not afford tuition for my 3 children
  • At 47 years old, I had to start my life over again
  • help clients with repairing and reestablishing their credit and securing them for the best home loan program available in the market

What Are NON-QM Loans

Home buyers who have not completed the waiting period requirement to qualify for a FHA or Conventional Loan can qualify for NON-QM Loans:  

  • NON-QM Loans do not require any waiting period after bankruptcy or foreclosure
  • Non-QM Loans are portfolio loans that lenders keep on their books
  • Mortgage rates on non-qm loans are generally higher than traditional mortgages
  • NON-QM Loans is a great tool to being able to purchase a home no rather than later
  • This holds true specially in a hot real estate market

Here are some bullet points on NON-QM Mortgage Loans

No Waiting Period to Qualify For Mortgage After Foreclosure And Bankruptcy:

  • 10% to 20% down payment
  • No Loan Limits
  • Jumbo Mortgages down to 600 Credit Scores
  • Bank Statement Only mortgage programs
  • No pre-payment penalty

Waiting Periods After Foreclosure And Bankruptcy

Home buyers can now Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans with Gustan Cho Associates with no waiting period.

Unfortunately, there are waiting period requirements after foreclosure and bankruptcy for the following loan programs:

  • FHA Loans
  • VA Loans
  • USDA Loans
  • Conventional Loans
  • Jumbo Mortgages

For home buyers who had a previous foreclosure and bankruptcy, there are mandatory waiting periods to qualify for a mortgage.

  • However, home buyers Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans
  • There is no waiting period
  • These programs do require higher down payments
  • Their mortgage interest rates are higher than traditional mortgages
  • There is no private mortgage insurance required on all NON-QM Loans
  • NON-QM Loans are great loan programs for home buyers to use it as a bridge until they meet their waiting period and are able to Qualify For Mortgage After Foreclosure And Bankruptcy
  • They can then refinance their NON-QM Loans with a FHA or Conventional Mortgage

Waiting Period Requirements On Qualify For Mortgage After Foreclosure And Bankruptcy

There are waiting period requirements for Fannie Mae and Freddie Mac to Qualify For Mortgage After Foreclosure And Bankruptcy.

Here is the Conventional waiting period requirements to Qualify For Mortgage After Foreclosure And Bankruptcy:

  • The four-year waiting period to Qualify For Mortgage After Short Sale, Deed In Lieu, or Chapter Bankruptcy.
  • Seven year waiting period to Qualify For Mortgage After Foreclosure
  • The two-year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date
  • If borrowers had mortgage part of Chapter 7 Bankruptcy, there is a four-year waiting period to qualify for a Conventional Loan from the discharged date of the Chapter 7
  • The recorded date of foreclosure does not matter
  • However, the foreclosure needs to have been finalized and cannot just be in limbo

Here is HUD Guidelines on waiting period Qualify For Mortgage After Foreclosure And Bankruptcy 

  • There is a three-year waiting period to qualify for an FHA Loan after a foreclosure, deed in lieu of foreclosure, or short sale
  • There is a two-year waiting period to qualify for an FHA Loan after a Chapter 7 Bankruptcy discharge
  • Borrowers can qualify for an FHA Loan one year in a Chapter 13 Bankruptcy repayment plan with the approval of the Trustee
  • Per HUD Guidelines in qualifying for FHA Loan After Chapter 13 Bankruptcy, there is no waiting period after the discharge date of Chapter 13
  • However, it does need to be a manual underwrite for any waiting period with less than 2 years seasoning after a Chapter 13 Bankruptcy
  • If borrowers had mortgage part of Chapter 7 Bankruptcy, there is a three year waiting period from the recorded date of the foreclosure with the mortgage that was part of the bankruptcy

Borrowers need to feel comfortable with their loan officer like they are comfortable with their accountant or attorney.  The loan officer should be available at all times and help borrowers in the home loan qualifying process, no matter how loan it takes.

How Does Bankruptcy And Foreclosure Impact Credit Scores?

Bankruptcy and/or foreclosure will drop consumer credit scores. A bankruptcy, foreclosure, short sale or deed-in-lieu will remain on credit report for seven years. However, consumers can easily have their good credit scores back as long as they start re-establishing new credit after bankruptcy and foreclosure.   Here are some bullet points borrowers should take note:

  • As for the effect on bankruptcy, foreclosure or a short sale often will plummet a person’s credit scores by 200-300 points, with the biggest drop for those whose credit was previously unblemished
  • Those with a bankruptcy and foreclosure should immediately start re-establishing credit by getting three to five secured credit cards as soon as possible
  • I have seen many folks have credit scores north of 700 FICO after a bankruptcy and/or foreclosure

Mortgages Made Easy

Mortgage borrowers with any questions, please contact us at Gustan Cho Associates at www.gustancho.com or call us at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.  We are available 7 days a week.   This BLOG On Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans was updated on May 16th, 2019

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