Waiting Period After Bankrutpcy And Foreclosure

Waiting Period After Bankruptcy And Foreclosure

Gustan Cho Associates

There are mandatory waiting period after bankruptcy and foreclosure to qualify for a residential mortgage loan.  FHA requires a two year waiting period after the discharge date from a bankruptcy and three years from the recorded date after a foreclosure or deed in lieu of foreclosure.  FHA requires a 3 year waiting period after a short sale.  The date three year waiting period after a short sale starts from the date of the short sale reflected on the HUD settlement statement.

Fannie Mae has a mandatory waiting period of 4 years after a bankruptcy for a mortgage loan applicant to qualify for a conventional loan.  There is a mandatory waiting period of 7 years from the recorded date of a foreclosure to qualify for a conventional loan.  For those with a foreclosure as part of their bankruptcy, the waiting period is 4 years from the bankruptcy discharge date.  This new rule was just implements a few weeks ago.  For those home buyers with a prior deed in lieu of foreclosure or short sale, the mandatory waiting period is 4 years from the recorded date of the deed in lieu of foreclosure or the short sale date reflected on the HUD’s settlement statement.

What If I Got My Bankruptcy And Foreclosure Removed Off My Credit Report Via Credit Repair

Does credit repair work?  Can you get bankruptcies and foreclosures removed off your credit report?

Credit repair does work and I have seen some credit repair consultants that can remove not just collection accounts, charge offs, late payments, but also remove bankruptcies, foreclosures,  deed in lieu of foreclosures, short sales, judgments, and other public records off credit reports.  Having derogatories removed off credit reports will definitely look great and boost your credit scores, however, when you apply for a mortgage loan, you need to disclose your bankruptcy and foreclosure even if they are no longer reported on your credit report.

I have personally witnessed bankruptcies and foreclosures completely deleted from a consumer’s credit report just months after they were recorded.  When you apply for a mortgage, the mortgage application will specifically ask you whether you have filed bankruptcy and/or had a foreclosure.  This questionnaire that is on page 4 of the 1003, the mortgage application, needs to be answered truthfully.  If you have gotten your bankruptcy and/or foreclosure removed from your credit report and you answer that you have not filed bankruptcy and/or foreclosure on the questionnaire but you have, you have committed mortgage fraud.  Having your bankruptcy and/or foreclosure removed from your credit report does not mean that your bankruptcy and/or foreclosure is expunged.  It might be deleted off your credit report but the fact still remains that you did file bankruptcy and/or had a foreclosure and those records are still part of public records.  You do not have to worry about other derogatory items being removed from your credit report such as collection accounts, charge offs, late payments, or other derogatory items because the mortgage application does not ask you nor does the application ask your whether you had any derogatory items removed.

Credit Repair

Hiring a credit repair company and getting derogatory items deleted off your credit report is totally legal.  Nothing against the law in getting your bankruptcy and/or foreclosure removed off your credit report due to inaccurate information but it is illegal lying about it on your mortgage application.

Related> What is mortgage loan fraud?

Related> Penalty for lying on a mortgage

Related> FBI-Mortgage application fraud

Related> When mortgage application fibs becomes a felony

Related> Mortgage mistake

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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