Gustan Cho The Mortgage Expert,
Publish On: May 2, 2024
This guide covers Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy. The waiting period agency guidelines on HUD are different versus Fannie Mae and Freddie Mac when you have a mortgage included in bankruptcy. The waiting period agency guidelines on HUD is a three-year waiting period after the finalization of the housing event if the borrower had a mortgage included in bankruptcy. What this means is if the borrower has a mortgage included in a prior bankruptcy, the discharged date of the bankruptcy does not matter.
The three-year waiting period starts when the foreclosure, deed in lieu of foreclosure, or short sale has been finalized after the bankruptcy discharged date. The finalization of the housing event can be years.
However, with Fannie Mae and Freddie Mac, there is a four-year waiting period after the bankruptcy discharged date if the mortgage was included in the bankruptcy. The finalization of the housing event date does not matter. It is a flat four-year waiting period from the date of the bankruptcy discharged date. This is why in most cases where a borrower had a mortgage included in the bankruptcy, qualifying for a conventional loan is the best bet.
Freddie Mac and Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy
There are major differences in waiting periods on Fannie Mae vs HUD guidelines mortgage in bankruptcy. Under Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy, the foreclosure or deed-in-lieu of foreclosure or short sale waiting period does not matter. There is a four year waiting period from the discharged date of the Chapter 7 Bankruptcy discharged date. The housing event can happen at a later date after the discharged date. This is the major difference between Conventional versus FHA guidelines on mortgage part of bankruptcy. With FHA, VA, USDA Loans, the waiting period with mortgage part of Chapter 7 Bankruptcy does not start until the housing event has been finalized. Speak With Our Loan Officer for Mortgage Loans in Bankruptcy
Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy Waiting Period Start Date
With government loans ( FHA, VA, USDA Mortgage Guidelines), the waiting period is 2 years after the discharged date of the Chapter 7 bankruptcy. The two-year waiting period waiting clock starts from the discharge date of the Chapter 7 bankruptcy discharge date. With FHA and USDA guidelines on waiting period after foreclosure, deed-in-lieu of foreclosure, or short sale, there is a three-year waiting period from the recorded date of the foreclosure or deed-in-lieu of foreclosure.
Waiting Period After a Housing Event on VA Loans
The Department of Veteran Affairs has a two-year waiting period to qualify for VA loans after foreclosure, deed-in-lieu, short sale. It is not the day the homeowner signs foreclosure or pre-foreclosure paperwork and turns in the keys. It is the actual date the foreclosure or deed-in-lieu of foreclosure was recorded and stamped at the county recorder’s office.
Sometimes homeowners may turn in keys of home to the bank or lender and may think that that is the date of the foreclosure or deed-in-lieu of foreclosure but that is not the case.
Sometimes a lender or bank will not record the foreclosure or deed-in-lieu of foreclosure until many years after the homeowner turns in the keys. The waiting period to qualify for a mortgage did not even start yet. Banks and mortgage lenders are in no major hurry in transferring the deed of the foreclosed home into their names. They are fully aware that this tactic is hurting the potential home buyer but they really do not care. Sometimes it seems that banks and lenders are delaying transferring the deed on purpose in getting back to the homeowner for foreclosing.
Home Loan After Short Sale on Conventional Loans
There are waiting period requirements to qualify for government and conventional loans after a short sale. Government Loan Programs all have the same waiting period requirements after foreclosure, deed-in-lieu of foreclosure, short sale. However, Fannie Mae and Freddie Mac have separate waiting period requirements after the recorded date of foreclosure and after a short sale/deed in lieu of foreclosure. There is a seven-year waiting period after the recorded date of foreclosure to qualify for Conventional Loans. There is a four-year waiting period to qualify for conventional loans after a short sale or deed-in-lieu of foreclosure. Click here to apply for home loan after short sale on conventional loans
Mortgage Waiting Period Guidelines After Short Sale
With short sales, there is a 3-year waiting period to qualify for FHA and USDA loans after the short sale date which is reflected in the HUD’s Settlement Statement. With conventional, the waiting period is totally different. For those who have a prior bankruptcy, the minimum waiting period to qualify for a conventional loan after the bankruptcy discharge date is 4 years. To qualify for a conventional loan after a standard foreclosure is 7 years from the recorded date of the foreclosure which is reflected on the county public records. The recorded date is the date where the deed of the property is transferred out of the homeowner’s name into the name of the mortgage lender.
Fannie Mae Guidelines Mortgage in Bankruptcy: Foreclosure, Deed-in-Lieu, or Short Sale
To qualify for a conventional loan after a deed-in-lieu of foreclosure or short sale is now four years. Borrowers can now qualify for a conventional loan after 4 years from the date of a short sale or 4 years after the recorded date of the deed-in-lieu of foreclosure with a 5% down payment. This is a totally new Fannie Mae Guideline implemented a couple of years ago. Prior Fannie Mae guidelines allowed a home buyer with a prior deed-in-lieu of foreclosure or short sale to qualify for a conventional loan after a two-year waiting period as long as the homebuyer had a 20% down payment. The two years waiting period after a deed-in-lieu of foreclosure or short sale with the 20% down payment is no longer in effect.
UPDATE on Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy
Excellent news for homebuyers who had mortgage part of Chapter 7 Bankruptcy. Borrowers who had mortgage part of bankruptcy can now qualify for a conventional loan is 4 years from the date of the discharge date of Chapter 7 bankruptcy. This holds true even though the foreclosure has not transferred out of the homeowner’s name. Many homeowners who had their foreclosure part of bankruptcy could not qualify for a conventional loan.
Many homebuyers do not meet the waiting period start date after surrendering their home and thinking it the waiting period started because deed was not transferred out of their names from the note.
Mortgage lenders did not start counting the waiting period of the foreclosure until the recorded date of when the deed was transferred out of the homeowner’s name into the name of the lender’s name.
Waiting Period Start Date of Fannie Mae vs HUD Guidelines on Mortgage in Bankruptcy
Now, as of last month, New Fannie Mae Guidelines for homeowners who had a foreclosure included in bankruptcy, the waiting period starts on the date of the bankruptcy discharge date and not the recorded date of the foreclosure. If you had a foreclosure included as part of the bankruptcy and the lender did not get the deed to your foreclosed home transferred into their names, that is okay because the waiting period clock starts the date of the bankruptcy discharge date. This is great news.
How Does Fannie Mae Guidelines Mortgage in Bankruptcy Work
Hundreds of thousands of homeowners who filed bankruptcy over four years ago and had their foreclosure included part of their bankruptcy could not have qualified for a conventional loan because lenders did not count the waiting period start date until the housing event was finalized. This was because the waiting period clock did not even begin due to the fact that their mortgage companies did not transfer the deed into their names. Speak With Our expert for Mortgage Loans in Bankruptcy
Not All Lenders Will Approve New Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy
Even though the new Fannie Mae guidelines state that if you have a foreclosure part of bankruptcy, most mortgage lenders have investor overlays where they will not accept such mortgage loan applications. Most mortgage lenders still require 7 years waiting period to qualify for a conventional loan even if you had a foreclosure part of bankruptcy due to their own overlays. The great news is we are a no overlay lender. We just go off the automated findings per Automated Underwriting System (AUS) and fund loans that only meet Fannie Mae guidelines.
Waiting Period Start Date AUS Findings With Fannie Mae vs HUD Guidelines Mortgage in Bankruptcy
As long as you get an approve/eligible per DU FINDINGS or LP FINDINGS, you will close your mortgage loans. If the bank, credit union, or mortgage banker you went to and tell you that you do not qualify due to their own investor overlays, contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
