Non-QM Loans One Day Out Of Bankruptcy And Foreclosure

by Gustan Cho

The housing market is booming. The Federal Housing Finance Agency (FHFA) and HUD has increased Conforming and FHA Loan Limits for 2021 again due to skyrocketing home prices nationwide. The conforming loan limit for 2021 is now capped at $548,250 on conventional loans on single-family homes. This was an increase from the 2020s $510,400 loan limit. HUD’s new 2021 FHA Loan Limit of $356,362 is up from the 2020s $331,760 FHA loan limit. Conventional and FHA loan limits on two to four-unit homes are higher. Both FHFAs and HUDs loan limit in high-cost counties throughout the United States is higher on single-family homes as well as on two to four-unit multi-family homes. HUD, the parent of FHA, has increased the 2021 FHA Loan Limit for 2021 to $356,362 on single-family homes. FHA and the FHFA have been increasing FHA and Conventional loan limits for the past five years due to increasing home prices.

Strong Housing Market Forecast For 2021

Strong Housing Market Forecast For 2021

Home prices are expected to increase and remain strong for the next 18 to 24 months.

Many home buyers are getting priced out of the housing market due to rising home prices. Mortgage rates are at historic lows. The Central Bank lowered the Fed interest rate to zero percent. With the Federal Reserve Board lowering the Fed rate to zero percent plummeted mortgage rates to all-time historic lows. Low mortgage rates are another driving force in home demand versus housing inventory. If there is more demand for housing than housing inventory, it is a major driving factor in increasing home prices. Many homebuyers no longer have to wait two to four years after bankruptcy and/or a housing event. Capital Lending Network, Inc. offers non-QM loans one day out of bankruptcy and foreclosure.

Waiting Period Requirements On Government And Conventional Loans Versus Non-QM Loans One Day Out Of Bankruptcy And Foreclosure

Traditional government and conventional mortgages have mandatory waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. However, many homebuyers who need to wait two to four years after bankruptcy and/or a housing event may miss their chance of being able to purchase a home due to skyrocketing home prices. Home prices have been steadily increasing for the past ten years with no sign of any housing correction. Depending on the state and area, homes are selling the minute they are listed. Many areas are going through bidding wars. Others with solid pre-approval letters are being left hanging since home prices have gone up so much that they can no longer afford it. The waiting period requirements after bankruptcy and/or foreclosure on government and conventional loans depend on the type of mortgage loan program. Non-QM loans one day out of bankruptcy and foreclosure is a non-conforming mortgage program that does not have any waiting period requirements after bankruptcy and/or a housing event.

In the next paragraph, we will go over the waiting period requirement after bankruptcy and foreclosure on FHA, VA, USDA, and Conventional loans.

Agency Waiting Period Mortgage Guidelines On Government And Conventional Loans

Mortgage Guidelines On Government And Conventional Loans

HUD waiting period after bankruptcy and a housing event on FHA loans. FHA loans are one of the most common loan programs in the United States. FHA loans benefit homebuyers with less than perfect credit and lower credit scores the opportunity to qualify for a 3.5% down payment home purchase FHA loan. This only holds true as long as the borrower has a 580 credit score. Homebuyers with under a 580 FICO and down to a 500 credit score are eligible to qualify for FHA loans. However, HUD requires borrowers with under a 580 credit score to put a 10% versus a 3% down payment on a home purchase. The VA does not have any credit score requirement on VA loans. There is a two-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for a VA loan. There is a three-year waiting period after foreclosure, deed in lieu of foreclosure, short-sale to qualify for VA loans.

Buying A Home During Chapter 13 Bankruptcy Repayment Period 

Borrowers can qualify for a VA or FHA loan during the Chapter 13 Bankruptcy repayment plan. Chapter 13 Bankruptcy does not have to be discharged. It needs to be manual underwriting. VA and FHA loans are the only two mortgage loan programs that allow manual underwriting. The borrower needs to have been in the Chapter 13 Bankruptcy repayment plan for at least 12 months. The manual underwriting needs to be signed off by the bankruptcy trustee. Many borrowers are concerned the trustee will not sign off on a mortgage during the Chapter 13 bankruptcy repayment plan. The team at Capital Lending Network, Inc. has helped thousands of borrowers qualify for an FHA and/or VA loan during the Chapter 13 Bankruptcy repayment period. We never had a bankruptcy trustee ever deny a home mortgage during the Chapter 13 Bankruptcy repayment plan. There is no waiting period after the Chapter 13 Bankruptcy discharge date. However, if the borrower’s Chapter 13 Bankruptcy has not been seasoned for at least two years, it needs to be manually underwritten. USDA requires a three-year waiting period after Chapter 7 Bankruptcy discharged date, foreclosure, deed in lieu of foreclosure, short-sale. Capital Lending Network, Inc. has no lender overlays on government and conventional loans. We are also experts on manual underwriting on FHA and VA loans.

Fannie Mae And Freddie Mac Agency Guidelines After Bankruptcy And A Housing Event On Conventional Loans

Bankruptcy And A Housing Event On Conventional Loans

Fannie Mae and Freddie Mac set the lending guidelines on conventional loans. Conventional loans are not backed by any government agency. Fannie Mae and Freddie Mac set agency guidelines on conventional loans.

Here are the Fannie Mae and Freddie Mac Agency Mortgage Guidelines after bankruptcy and/or a housing event on conventional loans:

  • There is a four-year waiting period after the Chapter 7 bankruptcy discharge date.
  • There is a two-year waiting period after the Chapter 13 bankruptcy discharge date to qualify for conventional loans.
  • There is a four-year waiting period after the Chapter 13 bankruptcy dismissal date.
  • There is a four-year waiting period after a deed in lieu of foreclosure and short-sale to become eligible to qualify for conventional loans.
  • There is a seven-year waiting period after a standard foreclosure to qualify for a conventional loan.
  • If a borrower had a prior mortgage included in bankruptcy and the mortgage was not reaffirmed, there is a four-year waiting period after the discharged date of bankruptcy to qualify for conventional loans.
  • The date of the housing event after the bankruptcy discharge date does not matter.

If the borrower had a prior mortgage included in bankruptcy and just got a recent housing event recorded due to the mortgage included in the bankruptcy, they can easily qualify for a conventional loan and NOT an FHA loan.

Non-QM Loans One Day Out Of Bankruptcy And Foreclosure At Capital Lending Network, Inc.

Non-QM loans one day out of bankruptcy and foreclosure is one of our most popular loan programs at Capital Lending Network, Inc. Most non-QM lenders have lengthened the waiting period after bankruptcy and/or a housing event to a four-year waiting period. However, CLN Mortgage Group, Inc. has relationships with non-QM wholesale lending partners that will approve non-QM loans one day out of bankruptcy and/or a housing event with a 30% down payment. The more risk a lender has, the higher the down payment is required. The longer the bankruptcy and/or foreclosure ages, the lower the down payment requirement. Although the down payment requirement is steep, homebuyers do not have to wait out the waiting period requirements after bankruptcy and/or foreclosure to take advantage of the booming housing market.

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1 comment

Barbara Novelli December 24, 2020 - 12:46 am

Do you require seasoning on a Ch 7 “Dismissal?” not a discharge.. for a Va Loan? I am a 100% perm and Total Vet. I had a Chapter 7 That was dismissed in Feb 2019 but I had to pay the Trustees fees which did not get done until June 2020. Now it seems they have put it in court docs as dismissed June 2020. Can you still help? I have a middle score of 665.
Thanks

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