Qualifying For Home Loan After Bankruptcy And Housing Event
This BLOG On Qualifying For Home Loan After Bankruptcy And Housing Event Was Written By Gustan Cho NMLS 873293
Qualifying for home loan after bankruptcy is no problem as long borrowers have met mandatory waiting period requirements.
- Government and Conventional Loans have a mandatory waiting period after bankruptcy and/or housing event
- Borrowers can qualify for FHA and VA Loans after they have waited two years after the bankruptcy discharge date
- USDA requires a three-year waiting period
- Borrowers can qualify for conventional loans after a 4-year waiting period after Chapter 7 Bankruptcy discharged date
- There is no waiting period after bankruptcy and housing event with non-QM loans
In this article, we will discuss and cover Qualifying For Home Loan After Bankruptcy And Housing Event.
The Recovery Of The Housing Market After The 2008 Financial Crisis
- The 2008 Real Estate Meltdown was the worst economic disaster that not just affected the United States but the whole world
- Never since the Great Depression has the real estate meltdown of 2008 affected so many people
- Millions of Americans have lost their jobs, lost their businesses, and lost the hard-earned equity in their homes
- Millions of hard-working American workers who have retired have been forced to go back to work
- Homeowners who put 20% down payments on their home purchases just not long before the real estate meltdown of 2008 has seen the equity of their homes disappear literally overnight
- Many were left with homes that the balance of their mortgage loans was much higher than the actual value of the market value of their homes
- Millions of Americans were forced into bankruptcy
- Millions more had to foreclose on their homes because they could no longer afford their monthly mortgage payments
- The good news is home buyers can now qualify for a home loan after bankruptcy
But there are mandatory waiting periods to qualify for a home loan after bankruptcy depending on the mortgage loan program.
Qualifying For Home Loan After Bankruptcy And Waiting Period Requirements
Qualifying for home loan after bankruptcy requires the mortgage loan borrower to have passed a mandatory waiting period on government and conventional loans.
- HUD, the parent of FHA, and Department of Veterans Affairs require 2 years from the discharged date of the Chapter 7 Bankruptcy to qualify for FHA and VA Home Loans
- To qualify for home loan after Chapter 7 bankruptcy with conventional loans there is a mandatory waiting period of four years after the discharge date of the bankruptcy
- There is a one-year waiting period to qualify for VA and FHA Loans after a Chapter 13 Bankruptcy filing date with the approval of the Chapter 13 trustee
- Trustee approval of the United States Bankruptcy Court to qualify for VA and FHA Home Loans is required
- There is no waiting period after Chapter 13 discharged date to qualify for VA and FHA Loans
- There is a four-year waiting period to qualify for a conventional loan after a Chapter 13 dismissal date
- There is a two year waiting period after Chapter 13 discharged date to qualify for conventional loans.0.
All bankruptcies, whether they are Chapter 7 Bankruptcies or Chapter 13 Bankruptcies are reported to all three credit reporting agencies.
Waiting Period After Housing Event On Government And Conventional Loans
A Housing Event is a foreclosure, deed in lieu of foreclosure, short sale.
Here are the waiting period requirements to qualify for a mortgage:
- FHA and USDA requires a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale
- Department of Veterans Affairs requires a two-year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for VA Home Loans
- Fannie Mae and Freddie Mac require a four year waiting period after a deed in lieu of foreclosure and/or short sale
There is a seven-year waiting period to qualify for conventional loans after foreclosure.
Qualifying For Home Loan After Bankruptcy: Can I Get My Bankruptcy Removed From Credit Report With Credit Repair?
All negative items such as bankruptcies, foreclosures, short sales, deed in lieu of foreclosures, unpaid collection accounts, tax liens, delinquent accounts, charge offs, and judgments can be removed from a person’s credit report by savvy credit repair consultants who knows the loopholes in the credit laws.
- I have seen many consumer’s get their derogatory tradelines such as bankruptcies and foreclosures and other negative items completely wiped off their credit report
- Credit Report works and yes consumers can get bankruptcies, foreclosures, judgments, charge offs, unpaid collection accounts, and late payments deleted off the credit report
- However, credit repair is not needed to qualify for a mortgage
- All public records that are removed from the credit report will be discovered by lenders
- All lenders will do a third party public records search on all borrowers
Credit repair can do more damage than good during the mortgage process.
Home Loan After Bankruptcy If Deleted Off My Credit Report?
As mentioned in the previous paragraph derogatory tradelines can often be removed.
- Derogatory items such as bankruptcies, foreclosures, deed in lieu of foreclosures, short sales, judgments, unpaid collection accounts, charge offs, and other derogatory items can be deleted off the credit report
- After consumers get their bankruptcy deleted off a credit report, the chances are they will get an automated approval by the automated underwriting system
- This is because the automated underwriting system will not recognize they have a bankruptcy
- This is since you got it deleted off the credit report
However, all lenders will order a third party public records report by a third party servicer where they search public records on mortgage loan applicants.
Third-Party National Public Records Search By Lenders
Even though bankruptcy, foreclosure, short sale, deed in lieu of foreclosure may be deleted off a credit report, that does not wipe out the public records:
- Third-party public record investigative servicers such as Lexis Nexis will catch that
- Borrowers who have not passed the mandatory waiting period after bankruptcy and/or foreclosure will get caught
- Same with judgments
- Judgments are public records and credit repair companies can delete judgments off the credit report
- However, third-party service providers will catch those who have judgments
- On another note, when applicants complete the 4-page 1003 mortgage loan application, they need to complete a questionnaire
- On that questionnaire, mortgage applicants will be asked whether or not they have filed bankruptcy, foreclosure, or have a judgment
- If the applicant checked no and if they indeed have a bankruptcy, foreclosure, or judgment, they are committing Mortgage Fraud which the feds do not take it lightly and is a felony
Deletions such as collection accounts, charge offs, derogatory credit do not matter because they are not public records.
No Waiting Period After Bankruptcy And Housing Event
Gustan Cho Associates Mortgage Group now offers non-QM loans. There is no waiting period after bankruptcy and housing event with non-QM loans. 10% to 20% down payment is required. The amount of down payment required depends on borrowers’ credit scores. Mortgage rates depend on borrowers’ credit scores and the amount of down payment. There is no private mortgage insurance required with non-QM loans. There are no loan limit caps with non-QM loans. Homebuyers who need to qualify for a mortgage with a lender with no mortgage overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at firstname.lastname@example.org.
This blog on Qualifying For Home Loan After Bankruptcy and Housing Event was updated on July 6th, 2020