Waiting periods after bankruptcy or foreclosure REQUIRED before getting a NEW mortgage loan.

Derogatory Item

Waiting Period

Foreclosure

Home given back to the bank – No owner participation

7 years from date foreclosure completed and transferred back to bank – No extenuating circumstances *

Extenuating circumstances - 3 years from date foreclosure completed and transferred back to bank with 10% down.  Primary home purchase and rate and term refinance only. No second homes or investments. Qualifying extenuating circumstances are death or well documented extended illness.

Short Sale

Deed in Lieu of Foreclosure

New rule - started August 16. 2014

Short Sale = Home sold but sales price less than owned

Deed in Lieu = Home returned to lender in exchange for forgiving loan

4 years from date sale closed and transferred to a new owner or transferred back to bank

Bankruptcy – Chapter 7

Debts are discharged through BK, client does not pay any debts owing

4 years from discharge date

2 years from discharge date possible with extenuating circumstances *

Debts are paid back on a monthly scheduled payment plan

2 years from discharge date

4 years from dismissal date

Bankruptcy AND Foreclosure

House INCLUDED in bankruptcy

Bankruptcy AND foreclosure, with home foreclosed on included in bankruptcy. Waiting period is based on bankruptcy discharge date, not foreclosure date, regardless of how long after the bankruptcy the official foreclosure occurred. Fannie Mae only

Derogatory Item

Waiting Period

Foreclosure

Deed in Lieu of Foreclosure

Home given back to the bank – No owner participation

Deed in Lieu = Home returned to lender in exchange for forgiving loan

3 years from date foreclosure completed and transferred back to bank

Less than 2 years, but more than 12 months from date foreclosure completed and transferred back to bank may be acceptable if the result of acceptable extenuating circumstances *

Short Sale

Short Sale = Home sold but sales price less than owned

3 years from date sale closed and transferred to new owner

NO waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period proceeding short sale AND did NOT do a strategic short-sale. Job loss and relocation outside of area are examples of short-sale NOT being strategic.

Bankruptcy – Chapter 7

Debts are discharged through BK, client does not pay any debts owing

2 years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred

LESS than 2 years, but more than 12 months from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances * AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.

Bankruptcy – Chapter 13

Debts are paid back on a scheduled repayment plan

If still IN your Chapter 13, AND at least 1 years of on time payments under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (on time), and permission from the bankruptcy trustee to enter into a loan (very hard to get)

If Chapter 13 discharged. NO waiting period, but the loan is manually underwritten for the first two years after the discharge, which has tougher underwriting guidelines

Derogatory Item

Waiting Period

Foreclosure

Deed in Lieu of Foreclosure

Home given back to the bank – No owner participation

Deed in Lieu = Home returned to lender in exchange for forgiving loan

2 years from date foreclosure completed and transferred back to bank

1 – 2 years from date foreclosure completed and transferred back to bank IF credit re-established and paid as agreed AND was caused by extenuating circumstances *

If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that the borrower or spouse is a satisfactory credit risk unless both of the following requirements are met:

1) The borrower(s) had obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period.

2 The bankruptcy was caused by circumstances beyond the control of the borrower or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified. Divorce is not generally viewed as beyond the control of the borrower and/or spouse.

Short Sale

Short Sale = Home sold but sales price less than owned

2 years from date sale closed and transferred to new owner

NO waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period proceeding short sale AND did NOT do a strategic short-sale

Bankruptcy – Chapter 7

Debts are discharged through Bankruptcy. client does not pay any debts owing

2 years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred

1 – 2 years from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances * AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.

Bankruptcy – Chapter 13

Debts are paid back on a monthly scheduled payment plan

1 years of on time payments under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (on time)

Derogatory Item

Waiting Period

Foreclosure

Deed in Lieu of Foreclosure

Short Sale

Home given back to the bank – No owner participation

Deed in Lieu = Home returned to lender in exchange for forgiving loan

Short Sale = Home sold but sales price less than owned

3  years from date foreclosure completed and transferred back to bank

Less than 3 years from date foreclosure completed and transferred back to bank IF credit re-established and paid as agreed AND was caused by extenuating circumstances *

Bankruptcy – Chapter 7

Debts are discharged through Bankruptcy, client does not pay any debts owing

3 years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred

Less than 2 years from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances * AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.

Bankruptcy – Chapter 13

Debts are paid back on a monthly scheduled payment plan

1 years of on time payments under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (on time)

Less than 1 years from date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.