Waiting Period In Qualifying For Home Loan With Mortgage Charge Off

Home Loan With Mortgage Charge Off

Home Buyers can now qualify for home loan with mortgage charge off. However, there are strict rules and regulations in qualifying for home loan with mortgage charge off with waiting period requirements. Under HUD’s FHA Guidelines, mortgage borrowers do not have to pay off collection accounts and charge off accounts with outstanding balances. HUD has categorizes collection accounts into two categories: Medical Collections and Non-Medical Collections. Charge off accounts and medical collection accounts are treated the same where both of these two types of derogatory accounts are exempt from debt to income calculations no matter how much the outstanding balance is. You can have credit disputes on medical collections an non-medical collection accounts with zero outstanding balances. However, you are allowed to have credit disputes on non-medical outstanding collection accounts up to a total aggregate outstanding collection amount up to $1,000. Any amounts over the aggregate $1,000 in total outstanding non-medical collection balance, you need to have the credit disputes retracted for the mortgage application process to proceed, otherwise, the mortgage loan file needs to be downgraded to a manual underwrite . One risk with retracting credit disputes is that once the credit dispute is retracted, the borrower’s credit scores will drop and may no longer qualify for a home loan if it drops below the minimum credit score requirements .  As mentioned earlier, you can qualify for FHA Loan with charge off accounts no matter to the amount of outstanding charge off balance, however, you cannot have credit disputes on charge off accounts.

Waiting Period In Qualifying For Home Loan After Mortgage Charge Off

There is mandatory waiting periods to qualify for home loan after mortgage charge off. Mortgage charge offs are treated differently than regular charge off accounts and the waiting periods for home loan after mortgage charge off is different with FHA Loans than Conventional Loans. HUD’s mortgage lending guidelines in qualifying for home loan after mortgage charge off is three years from the date of the charge off account reported on the borrower’s credit report. The rules are the same for a primary mortgage as well as second mortgage charge off accounts. Fannie Mae and Freddie Mac has a mandatory 7 year waiting period for conventional loan borrowers to qualify for conventional home loan after mortgage charge off. A mortgage charge off does not mean that the consumer is relieved of the outstanding debt. A mortgage charge off means that the lender, whether it is a first position lender and/or second mortgage lender, has written off the debt off their books and deemed it as uncollectible debt. The lender who charged off the debt can always try to collect the debt until the statute of limitations has expired. It is extremely rare that creditors who charge off consumer debt, including mortgage charge offs, that they will go after the charged off debt.

How Does Mortgage Charge Off Report On Credit Report

Most charge off accounts report with a balance with it on consumer’s credit report, including mortgage charge off accounts. Many mortgage loan officers do not realize that it is alright to have an outstanding balance on a mortgage charge off and they normally tell the borrower that they do not qualify unless they get a zero balance statement from the lender who charged off the mortgage, whether it was the first mortgage or second mortgage. No mortgage lender will issue a statement and/or letter to a consumer with a charge off mortgage that they are no longer liable for the mortgage charge off. Again, when a mortgage loan originator tells you that you do not qualify for home loan with mortgage charge off due to the outstanding balance on the credit report, they are wrong and get a second opinion. Or you can have the mortgage loan officer to contact me at 262-716-8151 and I can educate them on the FHA guidelines and give them case scenario examples. There are mortgage lenders who will not approve a home loan with mortgage charge off not because of FHA guidelines on mortgage charge off accounts, but because of their mortgage lender overlays . Mortgage lender overlays are additional mortgage lending guidelines the individual mortgage lender sets on top of the federal minimum lending guidelines. Mortgage lenders are not required to just go with the minimum FHA or Conventional Mortgage Lending Guidelines. They can set higher standards. If you are told that you do not qualify for home loan with mortgage charge off or other mortgage lending overlays by a lender, please contact me at 262-716-8151. We are national mortgage lenders with no mortgage lender overlays and can help you secure a home loan with mortgage charge off accounts. We are available 7 days a week, evenings, as well weekends and holidays. You can also email us at gcho@gustancho.com.

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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