What Is The Waiting Period After Mortgage Part Of Bankruptcy

When Is The Waiting Period After Mortgage Part Of Bankruptcy

A large percentage of my mortgage loan borrowers are borrowers who had prior bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure. Mortgage borrowers can qualify for a home loan after a bankruptcy and foreclosure as long as they meet the minimum waiting period after bankruptcy and/or foreclosure requirements. On this blog, we will discuss the mandatory waiting period after a bankruptcy and foreclosure on FHA Loans and Conventional Loans since these two mortgage loan programs are the most popular mortgage loan programs today. There are many instances where people will include their mortgage as part of their Chapter 7 Bankruptcy and many folks often get confused on the waiting period after mortgage part of bankruptcy.  Waiting periods normally start from the recorded date of the foreclosure and/or deed in lieu of foreclosure and not the day the homeowner surrendered their keys to their mortgage lender or vacated the property that the mortgage was part of their Chapter 7 Bankruptcy. The waiting period to qualify for a mortgage loan after bankruptcy starts from the discharged date of the Chapter 7 Bankruptcy and not the filing date of the Chapter 7 Bankruptcy. The waiting period after short sale starts from the date of the short sale date that is reflected on the HUD Settlement Statement. There are new changes on the Waiting Period After Mortgage Part Of Bankruptcy that was implemented and launched by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are the two mortgage giants in the United States that sets mortgage lending guidelines for Conventional Loans. These new changes on the Waiting Period After Mortgage Part Of Bankruptcy on Conventional Loans will help thousands of home buyers who had a mortgage as part of their Chapter 7 Bankruptcy where the foreclosure was not recorded at a much later date to qualify for a Conventional Loan. Under the new Fannie Mae Guidelines on the Waiting Period After Mortgage Part Of Bankruptcy to qualify for a Conventional Loan, there is a four year waiting period to qualify for a Conventional Loan from the discharged date of the Chapter 7 Bankruptcy discharged date and not the recorded date of the foreclosure even though the foreclosure and/or sheriff’s sale happened at a much later date.

Waiting Period After Mortgage Part Of Bankruptcy: FHA Loans

There is a two year mandatory waiting period after Chapter 7 Bankruptcy discharged date to qualify for a FHA Loan. There is no waiting period to qualify for a FHA Loan after Chapter 13 Bankruptcy  , however, if the Chapter 13 Bankruptcy discharge has been seasoned for less than 2 years, it needs to be a manual underwriting  .There is a three year mandatory waiting period to qualify for a FHA Loan after the recorded date of a foreclosure and/or deed in lieu of foreclosure. There is a three year mandatory waiting period to qualify for a FHA Loan after the date of a short sale. There is no mandatory waiting period to qualify for a FHA Loan after a short sale if and only if the homeowner was not late on his or her mortgage payments up to the date of the short sale. If you had a mortgage as part of your Chapter 7 Bankruptcy discharge, there is a three year waiting period from the recorded date of your foreclosure and/or sheriff’s sale after your Chapter 13 Bankruptcy discharged date. Many mortgage lenders are not in a major hurry to transfer the deed of the property out of the homeowners name into their name on cases where a homeowner has a mortgage or mortgages as part of their Chapter 7 Bankruptcy and many times, it may take some time to get the homeowners name out of the deed. Until the deed to the property has been transferred out of the homeowners name into the name of the mortgage lender or the property was sold, the 3 year waiting period clock did not start yet. There are cases where people cannot qualify to buy a home with a FHA Loan because the waiting period clock did not even start ticking because the deed is still in their names. If you have a mortgage as part of your Chapter 7 Bankruptcy, make sure you do everything in your power to get the deed out of your name into the mortgage lenders name so the three year waiting period clock has started.

Waiting Period After Mortgage Part Of Bankruptcy: Conventional Loans

Great news for Conventional Loan borrowers. There is a four year mandatory waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharged date. There is a two year mandatory waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date. There is a four year mandatory waiting period to qualify for a Conventional Loan after a deed in lieu of foreclosure but the waiting period clock does not begin until the deed has been transferred out of the homeowners name into the name of the mortgage lender, or the date of the sheriff’s sale, or the date the property was sold. The waiting period does not start the day that the homeowner has surrendered the property to the mortgage lender or turned in the keys to the foreclosure to the mortgage lender. There is a four year mandatory waiting period to qualify for a Conventional Loan after a short sale. The four year waiting period clock does not start until the date of the short sale date which is reflected on the HUD Settlement Statement. There is a seven year mandatory waiting period to qualify for a Conventional Loan after a foreclosure. The seven year waiting period does not start until the actual recorded date of the foreclosure that is reflected on the county’s recorder of deeds office, or the date of the sheriff’s sale, or the date the property was sold. The date where the homeowner turned in his keys and surrendered the property is not the start of the waiting period.

If you had a mortgage as part of your Chapter 7 Bankruptcy, you can qualify for a Conventional Loan four years from the discharged date of your Chapter 7 Bankruptcy even though your foreclosure was not recorded and transferred out of your name until a later date after your Chapter 7 Bankruptcy discharged date. This is great news and opens up doors to many home buyers who had a mortgage or mortgages as part of their Chapter 7 Bankruptcy. The foreclosure needs to have been completed and out of the homeowners name but the waiting period after the foreclosure does not matter and Fannie Mae will just go off the four year waiting period from the date of the Chapter 7 Bankruptcy discharged date. This is totally different than HUD’s FHA Guidelines on the waiting period to qualify for a FHA Loan if you had a mortgage part of your Chapter 7 Bankruptcy. If you had a mortgage as part of your Chapter 7 Bankruptcy, all you need to do is wait four years from the discharged date of your Chapter 7 Bankruptcy to qualify for a Conventional Loan.

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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