This Article Is About Fannie Mae Guidelines On Multiple Bankruptcies On Conventional Loans

Mortgage loan borrowers can qualify for a mortgage after bankruptcy. All government and conforming loans have a mandatory waiting period after bankruptcy. To qualify for FHA Loan after bankruptcy, there is a two-year waiting period after the discharge date of a Chapter 7 Bankruptcy. A home buyer can qualify for an FHA Loan one year into a Chapter 13 Bankruptcy. This only holds true as long as they have been timely with all of their payments to their creditors and have the approval of the trustee of the Bankruptcy Court.

Out of hundreds of loans that I have closed during Chapter 13 Bankruptcy, I have never had an issue with a Bankruptcy Trustee not signing off on a mortgage loan. Buyers can qualify for a VA Loan two years after a Chapter 7 Bankruptcy. Buyers can qualify for a conventional loan four years after a Chapter 7 Bankruptcy with a 5% down payment. Buyers can qualify for a conventional loan two years after the Chapter 13 discharge date. The waiting period is four years after a Chapter 13 dismissal date.

In this blog article, we will cover qualifying for conventional loans after bankruptcies and Fannie Mae Guidelines On Multiple Bankruptcies.

Types Of Bankruptcies

A Chapter 7 Bankruptcy is often called total liquidation. With a Chapter 7 Bankruptcy, all of the consumer’s assets get liquidated. The proceeds go to pay the consumer’s creditors. Most folks who file Chapter 7 Bankruptcy have little or no assets and many debts and judgments. Most debts can get wiped out with a Chapter 7 Bankruptcy.

Consumers can get a fresh start in life. All collection activities from creditors need to stop the date the consumer files Chapter 7 and/or Chapter 13 Bankruptcy. All collection accounts, judgments, wage garnishments, bank levy, and all unsecured and/or secured debts are discharged with a Chapter 7 Bankruptcy. However, any government loans such as student loans, federal and income taxes, child support, alimony, and court fines cannot be discharged with a Chapter 7 Bankruptcy.

Any creditor that a consumer owes or thinks he owes needs to be listed on the Chapter 7 Bankruptcy Petition. Debts are normally discharged in 90 days. That date is called the discharged date of the Chapter 7 Bankruptcy. It is on that date that the consumer no longer owes any more money to any creditors and has a fresh financial start in life debt-free.

Chapter 13 Bankruptcy Mortgage Guidelines

A Chapter 13 Bankruptcy is called restructuring of debt. It is where the courts restructure the consumer’s debts and take a percentage of the consumer’s wages and use that portion to pay the creditors. The payment plan normally is for a period of three to five years After that period is over, the remaining balance gets wiped out Consumers are no longer responsible for any more debts and have a fresh start with their financial life

In order to qualify for a Chapter 13 Bankruptcy, the consumer needs a full-time job. In the event, if the consumer loses their jobs for an extended period of time during the Chapter 13 Bankruptcy repayment period, Chapter 13 Bankruptcy gets dismissed. Consumers can convert Chapter 13 Bankruptcy into a Chapter 7 Bankruptcy and get all of their debts discharged since they do not have income.

Qualifying For Conventional Loan After Bankruptcy

Homebuyers can qualify for a conventional loan after bankruptcy after four years from the discharged date of the Chapter 7 Bankruptcy. Minimum credit scores to qualify for conventional loans are 620. Lenders want no late payments after the discharged date of the bankruptcy. Want to see re-established credit after bankruptcy. A minimum 5% down payment is required to qualify for conventional loans. First-time homebuyers can qualify with a 3% down payment with Fannie Mae. Homebuyers who did not own a home for the past three years can qualify for a conventional loan with a 3% down payment with Freddie Mac.

Chapter 13 Bankruptcy Dismissal Mortgage Guidelines

There is a two-year waiting period to qualify for a conventional loan after a Chapter 13 Bankruptcy discharged date. No late payments after the Chapter 13 Bankruptcy and re-established credit. In the event, if consumers did not complete the Chapter 13 Bankruptcy and had their Bankruptcy dismissed, then there is a four-year waiting period after the Chapter 13 Bankruptcy dismissal date.

No late payments and re-established credit are a must after the Chapter 13 Bankruptcy dismissal date in order to qualify.

What Are Fannie Mae Guidelines On Multiple Bankruptcies

Fannie Mae Guidelines On Multiple Bankruptcies within the past seven years is a five-year waiting period from the latest bankruptcy discharged date. Fannie Mae Guidelines On Multiple Bankruptcies applies when consumers had a Chapter 13 bankruptcy and a Chapter 7 bankruptcy.

There is an exception to the Fannie Mae Guidelines On Multiple Bankruptcies. If the borrower can prove that the Chapter 13 Bankruptcy was clearly converted to a Chapter 7 Bankruptcy without any gaps in time. The exception of the 5-year waiting period is waived and the 4-year waiting period applies. Anything other than this will be fall under Fannie Mae Guidelines On Multiple Bankruptcies.

5 year waiting period after the latest discharged date of the bankruptcy will apply. If they can prove that the Chapter 7 Bankruptcy was converted to a Chapter 13 Bankruptcy without any gaps in time, then it WILL NOT fall under Fannie Mae Guidelines On Multiple Bankruptcies. A four-year waiting period after the latest bankruptcy discharge date will apply.

New Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

Borrowers a mortgage part of bankruptcy, new Fannie Mae Guidelines state they can qualify for a conventional loan four years after the discharged date of the Chapter 7 Bankruptcy. This holds true even though the recorded date of the foreclosure is after the Chapter 7 Bankruptcy discharged date. The waiting period for the foreclosure is exempt if the mortgage is part of the bankruptcy. The four-year waiting period starts from the bankruptcy discharge date.

To qualify for a conventional loan if the consumer has a mortgage part of bankruptcy, borrowers must meet all other Fannie Mae mortgage lending guidelines. This includes a 5% down payment on the home purchase and a 620 minimum credit score.