Mortgage After Bankruptcy And Foreclosure Waiting Period Guidelines

by Gustan Cho

This Article Is About Mortgage After Bankruptcy And Foreclosure Waiting Period Guidelines

Bankruptcy is not the end of the world. Actually, it is the opposite.

  • Bankruptcy is a federal law giving consumers a second chance in their financial life
  • Bankruptcy will enable consumers who are deeply in debt to get those debts discharged and/or restructure them where they can rebuild and reestablish their credit and finances
  • There are two types of consumer bankruptcies that are the most common
  • Chapter 7 bankruptcy enables consumers with little to no assets and little to no income to file and have all of their non-exempt debts discharged in 90 days
  • Chapter 7 Bankruptcy is called total liquidation
  • Any assets that are non-exempt are liquidated by the order of the U.S. Bankruptcy Court through a court-appointed Bankruptcy Trustee

Most filers of Chapter 7 Bankruptcy have little to no assets.

Benefits Of Filing Bankruptcy

What are the Benefits Of Filing Bankruptcy

There are maximum income caps on those who can be eligible to file Chapter 7 Bankruptcy

  • The maximum threshold is determined through the Chapter 7 Bankruptcy Means Test
  • Chapter 13 Bankruptcy is for consumers who have assets and a steady source of income
  • It is also called restructuring and/or reorganization
  • Consumers who file Chapter 7 Bankruptcy will be appointed a Bankruptcy Trustee
  • The Bankruptcy Trustee will structure a repayment plan for creditors
  • A percentage of the filer’s monthly wages will be set aside to pay creditors at a discounted rate over a payment term
  • Most payment terms in Chapter 13 Bankruptcy is 36 to 60 months
  • After the consumer pays the repayment to creditors over the 36 to 60 month repayment period, the remaining debts will be discharged by the U.S. Bankruptcy Court
  • What this means is any balance left from creditors is discharged and the consumer is debt-free

In this article, we will discuss and cover qualifying Mortgage After Bankruptcy And Foreclosure for homebuyers. Yes, you can qualify for a mortgage after bankruptcy. VA and FHA loans allow borrowers to qualify for a mortgage during the Chapter 13 Bankruptcy repayment plan. We will also discuss Capital Lending Network’s non-QM mortgages one day out of bankruptcy and/or foreclosure program with a 30% down payment.

Mortgage After Foreclosure Lending Guidelines

There are still people who had their homes foreclosed during the 2008 real estate and credit meltdown but the waiting period after foreclosure time clock did not start.

  • Lenders look at the start date of the waiting period after foreclosure from the date the housing event has been finalized
  • A housing event is either a foreclosure, a deed in lieu of foreclosure, or a short sale
  • The waiting period after the short sale is the date the short sale happened and can be proven by the closing disclosure
  • However, the waiting period after foreclosure and/or deed in lieu of foreclosure is when the deed was changed over either to the new owner and/or the lender and/or the date of the sheriff’s sale
  • Just because you and the lender agree to surrender the home and surrender the keys is not the date of the foreclosure
  • Once the homeowner surrender’s the home to the lender, the lender is not in any hurry to change over the deed from the foreclosed homeowner to the lender’s name
  • Until the deed has been changed over to the lender’s name and out of the borrower’s name, the waiting period has not started on the housing event
  • There are instances where the foreclosure waiting period time clock did not start for years
  • This holds true even though the homeowner surrendered the home over 10 years ago
  • The waiting period after bankruptcy is straight forward

The borrower needs to just wait out the waiting period after the bankruptcy discharged date. However, this is not the case with a foreclosure and/or other housing events.

Mortgage After Bankruptcy And Foreclosure Waiting Period Guidelines On Government And Conventional Loans

What are the guidelines for the waiting period for a mortgage after bankruptcy and government takeover and conventional loans

Government and Conventional mortgage programs have mandatory waiting period requirements after bankruptcy and/or a housing event.

  • Every mortgage program is different with regards to the waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • As mentioned earlier, Capital Lending Network, Inc. has non-QM mortgages with one day after bankruptcy and/or a housing event with a 30% percent down payment
  • The housing market is hot
  • Home prices have been skyrocketing for the past seven years with no sign of any housing correction
  • Non-QM loans allow homebuyers to purchase a home sooner than later during a booming housing market
  • Mortgage rates are at historic lows
  • Rate is expected to remain low for the next 18 to 24 months

In the next paragraph, we will discuss the waiting period requirements on government and conventional loans.

Waiting Period Requirements On Government And Conventional Loans

Government and conventional loans require mandatory waiting period requirements after bankruptcy and/or a housing event.

Here are the waiting period requirements on the following mortgage loan program:

HUD Agency Guidelines On FHA Loans After Bankruptcy And Foreclosure:

  • There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for an FHA loan
  • There is a three year waiting period after foreclosure, deed in lieu of foreclosure, and/or short-sale to qualify for an FHA loan

VA Agency Guidelines On VA Loans After Bankruptcy And Foreclosure:

  • There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for a VA loan
  • There is a two year waiting period after foreclosure, a deed in lieu of foreclosure, short sale to qualify for a VA loan

USDA Agency Guidelines On USDA Loans After Bankruptcy And Foreclosure:

  • There is a three-year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for a USDA loan
  • There is a three-year waiting period after a foreclosure, a deed in lieu of foreclosure, short-sale to qualify for a USDA Loan

FHA And VA Loans During And After Chapter 13 Bankruptcy Discharged Date

What FHA and VA loans look like during and after Chapter 13 Bankruptcy Waiver

Mortgage During Chapter 13 Bankruptcy And After Chapter 13 Bankruptcy Discharged Date:

  • FHA and VA are the only two mortgage programs that allow borrowers to qualify for a mortgage during the Chapter 13 Bankruptcy repayment plan without the Chapter 13 being discharged
  • It needs to be a manual underwrite and Trustee approval is needed
  • There is no waiting period after the Chapter 13 Bankruptcy discharged date
  • However, if the discharge has less been seasoned for less than two years, it needs to be a manual underwrite

You need two years of timely payments during the repayment plan prior to the discharged date of Chapter 13 Bankruptcy.

Fannie Mae And Freddie Mac Guidelines After Bankruptcy And Foreclosure On Conventional Loans

Here are the Fannie Mae and Freddie Mac Agency Guidelines on the waiting period requirements after bankruptcy and/or a housing event:

  • There is a four year waiting period after Chapter 7 Bankruptcy to qualify for conventional loans
  • There is a four year waiting period after a deed in lieu of foreclosure and/or short sale to qualify for conventional loans
  • There is a seven-year waiting period after a standard foreclosure to qualify for a conventional loan
  • There is a two-year waiting period after the Chapter 13 bankruptcy discharged date
  • There is a four-year waiting period after the Chapter 13 bankruptcy dismissal date

Capital Lending Network, Inc. offers non-QM mortgages one day out of bankruptcy and/or foreclosure with a 30% down payment.

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