2016 Buy Again After Bankruptcy, Short Sale, Foreclosure or DIL

by on 1.6.16 in Boomerang Buyers

NOTE:  This page was first created in February, 2011, and is updated as new guidelines are released.  This page is monitored by Boomerang Buyer experts that understand the guidelines, and have successfully guided countless families back into homeownership after significant financial hardship.

2016 FHA Guidelines

  • Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
  • Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
  • Credit must be re-established no late payments in past 12-24 months, depending on hardship

Application Date must be after the above waiting period to be eligible for FHA financing after hardship.

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2016 VA Guidelines

  • Bankruptcy Ch 7 – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
  • Bankruptcy Ch 13 – If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
    • If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
  • Foreclosure / Deed in Lieu – You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
  • Short Sale – VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing. – Updated 4/2016
  • Credit must be re-established with a minimum 620 credit score

Application Date must be after the above waiting period to be eligible for VA financing after hardship.

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2016 USDA Guidelines

Date of Credit Approval must be after the above waiting period to be eligible for USDA financing after hardship.

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2016 Conventional (Fannie Mae) Guidelines

  • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
  • Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure –
    • UPDATED – Effective 7/29/2014:  Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.
    • UPDATED – Effective 8/16/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
    • SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 620 credit score.

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Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Date of Credit Report must be after the above waiting period to be eligible for Conventional financing after hardship.

2016 Jumbo Mortgage Guidelines

  • Bankruptcy – You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcy occurs on credit profile.
  • Foreclosure – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure – You may apply for a Jumbo mortgage loan:
    • SEVEN (7) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
    • NOTE: There are investors out there that will allow you to buy again in FOUR (4) years after a short sale, but expect higher rates, higher fees, and possibly larger down payment requirement.  Jumbo lenders have not yet loosened up the qualifying guidelines for buying after a hardship.
    • It may make financial sense to consider a portfolio Jumbo lender that offer high rates, so that you can take advantage of today’s market.  Once your short sale is seasoned, refinance into a more favorable, longer term loan.

NOTE:  If hardship is the result of an extenuating circumstance, waiting periods may be reduced.  Contact lender for details.

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Portfolio Loans

We are beginning to see more and more portfolio loans in the market that have relaxed waiting periods for bankruptcy, foreclosure, short sale and deed in lieu of foreclosure.  These are not necessarily subprime loans, but they do often have higher interest rates, and higher closing costs.

Portfolio loans are offered by investors that are looking at other compensating factors, like high credit scores, low loan to value (larger down payments), and reserves.

Do not rule out a portfolio loan as a “bridge” to get you into your home until you reach your waiting period for refinancing into a loan with better terms.

Preparing to Buy Again

You should begin looking at your credit at least six (6) months before you are ready to buy again. Quite often there are things left over on your credit report that can delay your ability to qualify. With a little head start and good advice, you can get your credit in line, qualify for financing and buy again.

We specialize in these situations so feel free to drop me an email, call or leave a question below.

1460 comments
JonJones3
JonJones3

Hello Scott, I completed a short sale in CA on 8/12/2013.  However, I never had a late payment nor did I miss a payment.  I have heard many stories from many different sources.  Can you answer the question as to when I will be able to apply for a mortgage?  I have been told two years in the past, now, I've been told 3 years.  I have read on various websites, the timeframe has been relaxed to 2 years.  Help....


Thank you,

Jon 

ScottSchang
ScottSchang moderator

@JonJones3 Hi Jon, the waiting period will depend on the type of financing you are using to purchase the new home.  Lenders that do not have experience with these guidelines will quote whichever timeline they "heard" without differentiating.

I am a lender in CA, and I've done a bunch of these loans....as you can probably tell from this article :)

If the mortgage was discharged through a BK, these timeline will be different.

FHA will allow you to buy 3 years from the date your name came off title.  Conventional used to be 2 years with 10% down, but that changed to 4 years with 5% down in 2014.  If you are eligible for VA financing, you could buy now.

If you have as much as 10% to 15% down, I also like to use a portfolio loan to bridge the "waiting period" gap until you can qualify for traditional financing.

If you would like to give me a call, or shoot me an email - I would like to get more information so that you can make an educated decision about what these options look like.  My cell is 714-336-8286, my email is scott@findmywayhome.com

Arubagirl
Arubagirl

Hi. My home is currently for sale. Unfortunately we havent had any bites. Out mortgage has never been late but we are underwater. Our current mortgage guy is telling us that if we do a short sale we can get another mortgage right away. This scares me. Please advise!! Thank you. Ps. We are in NJ.

ScottSchang
ScottSchang moderator

@Arubagirl most underwriting guidelines do not allow you to buy right away after a short sale, but it's not impossible.  FHA will allow it if the short sale if you're not buying a similar property in a similar area, and the payment was current at the time of close.  I would give this a 1 in 100 chance of being possible.  If you are eligible for VA benefits, there is no wait after a short sale as long as you are current on the mortgage.

Was the mortgage included in a BK by any chance?  

Also, there are portfolio loans available that require a higher rate, fees and down payment.  These programs will allow you to buy right away, but they are a little expensive.  If you have the down payment, I think portfolio loans make sense as opposed to not owning a home.  It really comes down to the math.  It either saves you money (long run) or it doesn't.

KEKASQ
KEKASQ

I had a Short Sale completed in Delaware in May 2014 when I relocated to MD. I am being told that I can not qualify for another mortgage until 4 years after which would be next year. I own a condo free and clear but really need to buy a house quickly due to family circumstances. I am interested in a portfolio loan but have no idea who offers them in Maryland. I have tried my bank and credit union but neither offer such a product. My credit score is approximately between 690 and 720, is this sufficient? If so , do you know of any lenders in MD?

ScottSchang
ScottSchang moderator

@KEKASQ You would qualify for FHA financing 3 years from the short sale, conventional financing is 4 years.

I do have a contact of a good friend, and great lender that might be able to help with the portfolio loan.

Shoot me an email to scott@findmywayhome.com and I will make an introduction.

lushi
lushi

Hi Scott,


Chapter 7 BR, discharged in 12/2010, professional (attorney) earning nearly $300k per year, student loans, and about $20k in other debt including car loan.  , We would like to purchase a jumbo around $650k, but don't have a 20% down payment.  What options - if any - are out there?

ScottSchang
ScottSchang moderator

@lushi Was there a mortgage included in the BK?  If so, that will change my answer.  Most "traditional" Jumbo financing options are requiring 7 years from a derogatory event to be eligible for Jumbo financing.  

That said, there are some pretty aggressive portfolio programs that will allow as little as 10% down, and can offer an interest only ARM.  The rates and fees are higher than traditional mortgages, but when you do the math, the tax write-off and equity almost always outweighs the cost of this temporary loan option.  You would be eligible to refinance into a traditional Jumbo in 12/2017.

What State are you trying to buy in?  If I cannot help personally, I will try to introduce you to someone that I know and trust to run the numbers for you so that you can make an informed decision about whether or not this is a viable option.

K10scottie
K10scottie

We are 2 years out after our foreclosure. We currently pay the mortgage on/live in, a home our parents bought. What is the best way to have ownership transferred to us? Would a loan modification work? I've also read info about quit claim deeds, but I don't know that that's an option.

ScottSchang
ScottSchang moderator

@K10scottie Ownership is evidenced by being on title to the home, not the financing.  You can do a quit claim deed now and become the owners of the home.  Contact a local title company, or escrow company and they should be able to help you with the paperwork.

Once you own the home, you would still have a waiting period before you would be able to refinance the mortgage, and get it out of your parent's name, and into yours.

Hope this helps?

soidrockcargo1
soidrockcargo1

If I received a forclosure notice but paid the balance and kept my home, how soon could I apply for another mortgage and would it show as a forclosure on my credit?

ScottSchang
ScottSchang moderator

@soidrockcargo1 It should not show as a foreclosure on your credit, but it may say "foreclosure started".  I see lenders give wrong information about this all the time, and you'll have to paper trail all of the events leading up to the notice of default, and paying the balance.

Depending on the rest of your credit, income, and employment history, you could potentially qualify as early as 12 months from the date of the last late payment.  Most underwriting systems are looking at your last 12 months payment history.  After 12 months, it's probably not the NOD that's causing issues, it's most likely a combination of other challenges like reserves, credit score or debt to income ratio.

Hope this helps?

soidrockcargo1
soidrockcargo1

I cosigned for my son and it was his house that received the notice. As soon as I found out I paid the balance and sold the home. My score is a 785 and I have a 700000 limit. The mortage guy said I may still have to wait 3 years or pay a high intrest rate. Is there anything I can do to have this removed? It's been a year so what are my chances of getting a loan with a low intrest rate now?

ScottSchang
ScottSchang moderator

@soidrockcargo1 I think there's a strong possibility of your qualifying for a Conventional or FHA mortgage now.  What State are you trying to buy in?  I might be able to point in the right direction for a lender that can help.

If you are using Jumbo financing, the guidelines may be different.  There are definitely options here.

If you shoot me an email to scott@findmywayhome.com, I will try to help

RyanHague1
RyanHague1

Hi Scott,


This is great info, thanks for compiling and updating.


Three years ago I completed a short sale. This year I had planned to purchase the loft I have been renting since short selling my house. Last year I wanted to purchase, but I was told I had to wait one more year.


I was also told I'd have to do FHA again, or wait another year to do a non-FHA loan. So today I found out that my complex is not FHA approved. Right now it looks like I have no options. I can't wait another year as the landlord is adamant about selling this year. The complex's inability to qualify for FHA is out of my control.


Do I have any options at all? I have great credit again, and I have more than 20% of the loft's cost ready to put down, plus a solid well-paying job. I'm grasping at straws, frustrated by this system. 


Thank you again for this information.


Ryan

ScottSchang
ScottSchang moderator

@RyanHague1 Hi Ryan, is there any chance that the mortgage was discharged in a bankruptcy?  If not, then you're probably looking at a portfolio loan.  These are not hard money loans, but you will be looking at a little bit higher rates and fees.  Use this loan for 12 months, then refinance into a conventional loan 4 years from the short sale date.

What State are you trying to buy in?

RyanHague1
RyanHague1

@ScottSchang I'm not sure if it was discharged in that way, I'd need to find out. It was a short sale due to divorce, but we didn't file for bankruptcy. How would I find this info?


I've read online about Fannie Mae offering loans two years after short sales if you can bring 20% to the table, which I can. I also read about the two-year limit regarding divorce in certain situations. Is there any truth to these?


I'm purchasing in Georgia.


Thanks for your response.

ScottSchang
ScottSchang moderator

@RyanHague1 @ScottSchang What you're talking about is an extenuating circumstances exception, and yes, I think you have a shot at qualifying under that guideline.  

The guideline that allowed you to buy with 20% down in 2 years was discontinued in August 2014, when they changed it to 4 years.  Still, I think you could get the exception due to the forced sale through the divorce.

I have a really good lender friend in GA I can recommend.  If it can be done, I think he can handle it.  If you would like an introduction, shoot me an email to scott@findmywayhome.com

ChrisandGang
ChrisandGang

Hi Scott,

Similar but slightly different question. Ch7 discharged in 12/2013, mortgage included in bankrupcy. Did a loan mod last july, but the debt does not show on credit report.

House is upside down, do not want to keep it, and want to move ASAP. We are weighing rent vs. buy.

Credit score has improved to approx 650. Now we have stopped making mtg payment 2 months ago in an effort to save for down payment, but again this does not show on credit report. I know that we would qualify for FHA loan today, but I am trying to determine if I would have to show proof of current mortgage payments.

OR

If I continue on not pay mtg, and try for a conventional loan 4 yrs after bankrupcy (12/2017), what happens if the bank does NOT foreclose, but the deed is still in my name and I am not current on loan mod pmts?

Thanks,

Chris

ScottSchang
ScottSchang moderator

@ChrisandGang Hi Chris, this is where a lot of people get thrown off about the waiting periods after a BK.  The mortgage did not just "go away" when you file BK.  It doesn't show up on your credit report, but that does not mean that you are not still responsible for making the payments if you want to stay in the home.  If you don't want to stay in the home, you have to have your name removed from title.

If you default on the mortgage (which you're close to doing now), you would have to get your name off title before you could consider buying again. Using FHA financing, you would have a 3 year wait from the removal of your name through foreclosure, deed in lieu or short sale.

Conventional financing would allow you to buy 4 years from the discharge date, as long as the mortgage is current, or your name has been removed from title.

The fact that you are now 60 days delinquent on your mortgage will confine your options to either:

1. Catch up the mortgage payment

2. Attempt to get your name off title as soon as possible

If you are current on your mortgage, you may have the option of renting it out, or you may be required to carry qualify using both payments on the new loan, and the old.  If you are not current on your mortgage, you will not qualify for any new financing.

I know this can be confusing.  Hope this makes sense?



ChrisandGang
ChrisandGang

Yes that absolutely makes sense. Thank you.

In your opinion, what would be the best approach to get my name off of the mortgage title?

ScottSchang
ScottSchang moderator

@ChrisandGang A deed in lieu of foreclosure would be the quickest and easiest way to get your name removed from title.  Deed in lieu is also known as "cash for keys" because it is not unusual for the lender to actually pay you to leave the home in good condition.

The next option would be short sale.  This option still requires the lender's approval, but will give you some control over the timelines.

The last option is to simply stop making payments, and wait for the lender to "get around" to foreclosing.  This option is not as bad as it has been in the past, but you are at the complete mercy and timeline of the lender, which could take years before actually foreclosing on the property.

ChrisandGang
ChrisandGang

Wait! Another question. If the deed in lieu goes through, and my name is off the deed/title, will it be an issue (with a lender) that I wasn't up to date with my mtg at that time?

ScottSchang
ScottSchang moderator

@ChrisandGang No, that will not be an issue.  The mortgage has been discharged through your BK, so you're not technically obligated to make payments.  The only time it would be important to keep the payments current would be if you are trying to keep the home, and buy a new one.

ChrisandGang
ChrisandGang

@ScottSchang @ChrisandGang this is extremely helpful, I need to clarify one thing. Assuming we move forward with a deed in lieu during the next 6 months, will this negative mark on my credit affect my ability to qualify for a conventional loan in December 2017 (4 years from discharge)?  Currently my score is 650 and my wife is approximately 680

ScottSchang
ScottSchang moderator

@ChrisandGang @ScottSchang If the mortgage is included in the BK, it is illegal for the lender to report late payments, or a deed in lieu on the credit report.

Keep in mind, that does not mean that the DIL will not show up at all, it's still a matter of public record.  It simply will not prevent you from qualifying using Conventional financing 4 years from the discharge

ChrisandGang
ChrisandGang

Someone I know in the mortgage business told me that a potential lender will want to see my record of on-time payments. In fact by missing payments as I have, this is the "kiss of death" as he said it. He told me that my best chance for a mortgage down the road would be two years of consistent rental payments after the deed in lieu. I like what you are telling me Scott, but this is very frustrating I am getting different information from everyone I speak with.

ScottSchang
ScottSchang moderator

@ChrisandGang I don't mean any disrespect, but that person is not familiar with the underwriting guidelines.  The 2 years out of Deed in Lieu was a fannie mae specific guideline from 2014 that was discontinued. 

ChrisandGang
ChrisandGang

It's okay Scott I don't know him that well. Is it customary for a lender to ask the borrower to show evidence of Timely mortgage payments? I'm worried that because I have stopped paying the mortgage, it will hurt me 18 months from now when I apply for conventional financing

ScottSchang
ScottSchang moderator

@ChrisandGang Yes, it's absolutely customary to ask for your payment history UNLESS the mortgage is discharged through bankruptcy AND you are keeping the home.

For instance, if you could afford both payments (new and old home) AND your mortgage was discharged in the BK, AND your payments are on-time, you can qualify using only the BK waiting period.

If you are in default on the mortgage, and the mortgage is discharged through BK, you need to have your name off title.

The biggest challenge you're going to have is that you may not be asking the right questions, the right way.  You are not being told anything that is inaccurate, you are just being given answers that are based on incomplete information.

I know, this is really confusing and kind of crazy.  I assure you that I've been through this many, many times with many, many people in your exact situation.

b_allen5
b_allen5

Hi Scott,


I filed for chapter 13 in Sept. 2012 in order to surrender 3 homes due to a job relocation and inability to sell at the time.  The ch. 13 discharge was in June, 2015 and all 3 homes have gone through the foreclosure process.  I'm told I can get a portfolio loan called "Fresh Start" but that requires 15-20% down and 6 mo reserves on top of that.  Do I have any other options at this point?  My wife and I have scores in the mid-high 600's now and no other credit events.  Thanks.

b_allen5
b_allen5

I'm shopping around now and the best I can find is 15%, do you know where the 10% was being offered through by any chance?

ScottSchang
ScottSchang moderator

@b_allen5 Your options are pretty limited until you hit 2 years from ch13 discharge, at which point you can use Conventional financing.  FHA will require 3 years from the last foreclosure date before you are eligible for FHA financing.

If you have to do a portfolio loan, you're only going to use it for a short period of time - next June at the latest (for conventional).

What State are you trying to buy in?

b_allen5
b_allen5

We are looking to buy in Texas


ScottSchang
ScottSchang moderator

@b_allen5 I know it doesn't sound like a good idea to use a high rate and cost loan, but when you do the math, the benefit of homeownership usually far outweighs the cost.

After considering the tax benefits, and the potential equity growth over the next year, it becomes a math problem.  I also think you should be able to find a portfolio loan for less than 20% down.  I've seen as low as 10% down.

Hope this helps?

ScottSchang
ScottSchang moderator

@b_allen5 Let me reach out to my network and see if I can find anyone that I trust.  If you would like, shoot me an email to scott@findmywayhome.com and I can make an introduction if I find someone that can help.

My experience says that you are looking at a worse case scenario, when in fact I think you've got better options available.

MorganMontgomery
MorganMontgomery

Hi Scott. My husband and I filed Chapter 7 and it was discharged Oct 2013. The mortgage on the house we currently reside was not reaffirmed; yet we are still making the payments timely. The issue is that the house we reside needs extensive work, not just cosmetic; but also structural. Since it’s obvious we cannot get a HELOC or a home improvement loan, we are trying to determine what our options are. If we allow the house to foreclose or turn in the keys, we would have to wait an additional 3-4 years to be eligible to buy, correct? Are there other options we could pursue? Perhaps a refi with cash out?

Any assistance you can provide is appreciated. FICO is currently 680.

Thanks!

ScottSchang
ScottSchang moderator

@MorganMontgomery your timeline for buying after a foreclosure, deed in lieu, or short sale, would be determined by the type of financing you're using to buy the new home.  Using conventional financing, you would be eligible 4 years from the discharge of the BK, regardless of foreclosure or deed in lieu date.  Using FHA financing to buy the new home would require a 3 year waiting period from the date your name is removed from title.

You mention cash out refinance - do you have equity in the home now?  If you have equity in the home, you would not want to do a foreclosure or deed in lieu, you will want to try to sell, and get as much equity out as you can.

Another option might be if you are able to sell the home, and the payments continue to be current until the sale is complete, then you would be eligible using FHA financing in 2 years from the discharge date.  

And finally, you may be able to use a portfolio loan to get you into a new home sooner, and simply refinance into traditional financing as soon as you are able.

Hope this helps?

Jw1017
Jw1017

Hi Scott. We are in a tough situation. We bought our home back in 2009 and the market in our area has dropped dramatically on top of us having to deal with issues that were not disclosed. I am just tired of trying to deal with this property and my husband received a job offer out of state that I would really like the opportunity to persue but I don't know how we will ever sell our home. What is our best option with the least damage to our credit?

Mknk11
Mknk11

Hi Scott. I am filing chapter 7 next month. I was wondering when I might be elegible for a conventional mortgage again afterwards. I have too much equity in my current home and will be surrendering it back to the trustee. There is no mortgage. Medical bills totaling twice the home's value have placed me here. Upon my bankruptcy discharge I will have the homestead exemption amount in a check from the trustee in the amount of about 39000. Would any lender consider me with a solid cosigner? Or would my cosigner have to purchase the property and rent it to me? Cosigner being my mother.

ScottSchang
ScottSchang moderator

@Mknk11 Unfortunately, you would not be eligible for a conventional mortgage until 4 years from the discharge date of the BK.  You would be eligible for FHA, 3 years from the date your name is removed from title.

In your specific situation, your Cosigner would have to qualify for the mortgage on their own.

Hope this helps?

Mknk11
Mknk11

Scott thank you so much for taking the time to answer. Reading the other posts and your answers I have to say I respect your advice very well. Thanks again

Foxpointe
Foxpointe

Had a foreclosure on investment property 5 and a half yrs ago and a shortsale on primary residence 3 yrs ago. Do I have an option for conventional loan by any chance? I'm pre-qualified for an FHA loan, but the max loan amount is $271,050 where I am and I wonder if I can have conventional loan option at all. Credit is around 720 and have $65k as a down payment. I was behind the payments on mortgage when I had foreclosure and shortsale. Never behind on anything else. No debts now.

ScottSchang
ScottSchang moderator

@Foxpointe was there a bankruptcy at all?  If no BK, then you're looking at 7 years out from the foreclosure, and 4 years from the short sale - so basically, you need something to carry you for the next 18 months.  

A couple of options might be to look at a portfolio loan, with a little higher rates and fees - but you would be able to do a higher loan amount, and you would only be keeping the loan for 18 months.  Or, look at a portfolio 2nd, which would be a higher rate and fees, but a smaller loan amount, and you would only have to keep it for 18 months.

What State are you trying to buy in?  I might be able to point you in the right direction to explore these options.

Foxpointe
Foxpointe

I live in PA now. All events happened in CA. Would mortgage companies have portfolio loans? I heard about it, but the rate was substantially high. Portfolio 2nd can be a good option for me. Can I get FHA and portfolio 2nd to fill the gap?

ScottSchang
ScottSchang moderator

@Foxpointe I do not know of any portfolio lenders in PA, I do have those relationships in California.  Shoot me an email to scott@findmywayhome.com, and I will introduce you to an agent I know in that part of the Country that might be able to help.

Tmark
Tmark

I am looking to get a home loan and had some questions I called FindMyWayHome and spoke to Scott. He was very nice, professional and informative even after realizing that he wouldn't be able to help me. Thank you so much Scott!

vicsicily
vicsicily

If you sold a home by way of short sale due to Military move, credit showing only 1 mortgage late because home did not close as scheduled.  Do you have options ? 

ScottSchang
ScottSchang moderator

@vicsicily Yes, you would have options.  A lot of it depends on how long ago this happened, and how the rest of the credit activity looks.  VA does not recognize short sale as a hardship, especially if you were re-located during active duty.

What State are you trying to buy in?

vicsicily
vicsicily

@ScottSchang @vicsicily The only negative on our credit is this one mortgage late.. Nothing else. :(  This was last June and we were moved from NJ to MD. 

vicsicily
vicsicily

@ScottSchang We are dealing with a lender but they are telling us we have to be past one year mark to do anything.  But everything I read says that is not true, any suggestions? 


ScottSchang
ScottSchang moderator

@vicsicily @ScottSchang That lender is looking at FHA guidelines, not conventional.  And the waiting period of 1 year is from the discharge of the BK.  Using FHA financing, it's a 3 year wait from the foreclosure.

Conventional will allow you to buy 2 years from the discharge.

You say the mortgage late is showing up on your credit?  It shouldn't be if the mortgage was discharged through the bankruptcy.  I would consult your BK attorney, and contact the credit bureaus with your BK discharge paperwork and let them know that this account was discharged.  It should not be reporting.

If for some reason the mortgage is not included in the BK, then you would have a waiting period following the foreclosure, and would not be able to use the BK waiting period.

ScottSchang
ScottSchang moderator

@vicsicily @ScottSchang You should be ok - The challenge might be finding a lender that understands the guidelines.  What State are you in?  I might be able to point you in the right direction.

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