Waiting period after a bankruptcy for a mortgage loan
If you are intending on getting a home purchase mortgage loan and have filed bankruptcy, there is a two year waiting period from the discharge date of the bankruptcy under Fannie Mae guidelines. However, just because you have passed the two year waiting period does not automatically guarantee you a mortgage loan approval. You need to get an approval by Fannie Mae’s Automated Underwriting System ( AUS ).
Waiting period after a foreclosure
The waiting period to qualify for a mortgage loan after a foreclosure is three years from the date of the sheriff’s sale or the date the deed to your home was transferred out of your name and into the name of the mortgage lender. Again, just because you have passed the three year waiting period does not guarantee you a mortgage loan approval. Your mortgage application needs to get an Automated Underwriting System ( AUS ) approval before the mortgage lender can proceed with processing and underwriting your mortgage application. The three year waiting period only applies to FHA mortgage loans. Conventional loan waiting periods are a minimum of 4 years to 7 years.
Short sales and deed in lieu of foreclosure waiting period
The Federal Housing Administration ( FHA ) treats short sales and deed in lieu of foreclosure the same as a regular foreclosure. Whether you had a deed in lieu of foreclosure or a short sale, under FHA’s eyes, it is no different than a regular foreclosure and the three year mandatory waiting period applies. However, if you had a deed in lieu of foreclosure or a short sale, you can qualify for a conventional mortgage loan in two years if, and only if, you can put a 20% down payment. Again, the mortgage borrower’s application will need an automated approval by Fannie Mae’s Automated Underwriting System ( AUS ).
Automated Underwriting System ( AUS )
Fannie Mae’s Automated Underwriting System ( AUS ) is like its own brain. In order to get a mortgage loan, all mortgage lenders require that you get an approved eligible reading from the Automated Underwriting System otherwise they will not process and underwrite your mortgage application. The Automated Underwriting System will take into account your income, asset, debt, liabilities, and credit report into account and analyze them and will issue you an approval or a denial. The Automated Underwriting System will detect bankruptcies, foreclosures, shorts sales, and deed in lieu of foreclosure. The AUS will also detect late payments, tax liens, judgments, collections, charge offs, and multiple properties. The Automated Underwriting System will also detect late payments after you have had a bankruptcy or foreclosure and evaluate your risk level.
It is wise that you start re-establishing your credit as soon as possible after a bankruptcy, foreclosure, deed in lieu, and/or short sale.