Waiting Period Requirements After Bankruptcy And Foreclosure To Qualify For Mortgage

There are mandatory waiting period requirements after bankruptcy and foreclosure to qualify for a mortgage loan. If someone had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, federal mortgage lending guidelines require mandatory waiting period before a mortgage loan borrower can qualify for a residential mortgage loan.  Qualifying for a mortgage loan and getting an approval on a mortgage loan are totally different.  Someone can qualify for a mortgage loan after passing the mandatory waiting period but just waiting out the waiting period will not guarantee a mortgage loan approval.  Mortgage lenders want to see re-established credit during the waiting period and no late payments after a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  Mortgage lenders do not want to see any overdrafts in the prior 12 months and at least three credit tradelines that has been seasoned for at least one year.  Rental verification is a must and the only way to use rental verification is by providing the mortgage lender 12 months cancelled checks or if you are renting from a property management company, a letter from the property management company is sufficient. Cash rent payments with receipts from the landlord does not count towards rental verification.

Waiting Period Requirements After Bankruptcy And Foreclosure For FHA Loans

Bankruptcy:  There is a two year mandatory waiting period from the discharge date of the bankruptcy.

Foreclosure:  There is a three year mandatory waiting period from the recorded date of the foreclosure or the date of the sheriff’s sale.

Deed in lieu of foreclosure:  There is a three year mandatory waiting period from the recorded date of the deed in lieu of foreclosure.

Short sale:  There is a three year mandatory waiting period from the date of the short sale;  Date of the HUD’s settlement statement date is the date the waiting period starts.

FHA Back To Work Extenuating Circumstances Due To An Economic Event: One Year Waiting Period Requirements After Bankruptcy And Foreclosure

HUD has implemented the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program.  The Back to Work mortgage program shortens the waiting period after someone has had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale to a one year waiting period instead of the mandatory waiting period in the above paragraph.  In order to qualify for the FHA Back to Work Extenuating Circumstances due to an economic event mortgage program, the borrower needs to have been out of work or underemployed for at least six or more months prior to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.

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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