We are buying in rhode island. We stopped paying the HELOC during settlement negotiations. I guess we are looking at waiting a year?
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2014 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 with a 640 minimum credit score
2014 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 - You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
- Short Sale / Deed in Lieu - You may apply for a VA guaranteed loan TWO (2) years after a short sale, unless it was a VA loan then restrictions apply
- Credit must be re-established with a minimum 620 credit score
2014 USDA Guidelines
- Bankruptcy - You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy
- Foreclosure - You may apply for a USDA rural loan THREE (3) years after a Foreclosure
- Short Sale / Deed in Lieu of Foreclosure - If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640. Over 640 your UW will make the call but typically not less than one year.
Although I have not personally processed a USDA with a short sale under 3 years, I have heard of instances when it is possible to buy again with re-established credit in as little as 18 months.In some cases there is not a waiting period.
If the credit was perfect and they had to move because of a relocation or something and had no choice but to ask for a deed in lieu of foreclosure you would be ok.
2014 Conventional (Fannie Mae)
- 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 12/16/11
Currently treated the same as a foreclosure with a waiting time of SEVEN (7) years before you can buy again using a Fannie Mae conventional home loan.
- TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment
- FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
- 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 680 credit score.
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.
2014 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:
- FOUR (4) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
NOTE: If hardship is the result of an extenuating circumstance, waiting periods may be reduced. Contact lender for details.
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 in the lowest priced real estate market that California has seen in years and years!
We specialize in these situations so feel free to drop me an email, call or leave a question below.
Branch Manager at Broadview Mortgage Long Beach, California, I am passionate about educating and empowering consumers. Feel free to call, text or email me at (562) 999-1355 or ScottS@broadviewmortgage.com
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We had a ch 7 bankruptcy discharged in december 2011. The first mortgage and HELOC were included and never reaffirmed. Stayed current on first mortgage and settled HELOC for a lump sum to remove the lien on the house. The HELOC was charged off september 2013 settlement finalized february 2013. Can we get a mortgage on a new house and rent our current home? We are $20,000 underwater on the mortgage but qualify based on debt to income ratios to carry mortgage on our current home and a new home. Credit score is high 600's .
Just wondering about auto loan that is showing on my credit report that I reaffirmed but the bank claims they never got the paperwork. I tried to get it corrected but it was like dealing on a deaf ear. My attorney gave me copies of the reaffirmation but the bank said it wasn't filed. Anyway I have 2 payments left on the loan and it still shows on my credit report with a high balance, due to non-reporting by the bank. Is this going to cause me problems when I go for a mortgage after my 24 months?
We completed a DIL in September 2013. I am closely following my credit reports, because with our planning, we will have our 20% down on a house at the 24 month point after the DIL. Question is on the credit reports. My reports are showing:
Experian: CRD--creditor received deed
Equifax; 120+ days late (comment field states creditor received deed in lieu of foreclosure
Transunion: 120+ days late
I cannot see my MOP codes to know how this is coded. I was not in default per the bank and not in any foreclosure process at that point.
Is my report showing correctly? How can I find out if my MOP codes are correct? My credit score has not fallen < 700 at this time, and I have 2 car loans that I keep up to date and 2 credit cards that I use sparingly and pay off at the end of each month, so I feel confident that as long as the credit agencies are reporting as DIL and not as a foreclosure, I should be ready to re-enter the market in the last quarter of 2015.
Any direction regarding ensuring the credit report is correct? Anything else you suggest?
This thread has been a great resource. My question is about timing. The deed on my foreclosure transferred on 2010-06-27.
If I want to buy again with FHA, should I:
A) Get PreApproved and find a house BEFORE that date, and get the loan officer to delay sending it to underwriting until after 2011-06-27
B) Not bother even looking until after that date.
C) something else?
I'd be putting at least 20% down, long work history, 700 FICO. Chapter 7 discharged in June, 2010, Foreclosure deed transfer June, 2011. (House was included in bankruptcy, and we'd moved out, but they took two years to foreclose..)
OK I have a question! am trying to purchase a home thru USDA . i found our home but the bankrupty wont be 3 yrs till june 2014 will they go ahead and approve it now r will it have to be exactly the date of june?
Scott, what about the Back to Work Program:
AUGUST 2013 FHA UPDATE: If a borrower meet the new FHA “Back to Work” program criteria, they will be eligible for an FHA loan 1 year after short sale.
Something else just came out in January 2014 about your debt to income ratio and what it needs to be to qualify for a mortgage.
My husband and I are hoping to qualify for this, we live in Worcester MA. Bankruptcy, chapter 7 in 2009, short sale in 2011. I have 4 collection medical bills on my credit report that state they were included in bankruptcy. I also have 1 late payment in 6/12 for a credit. I have disputed this, setup automatically payments thought they would be indefinite, but because of capital one buying orchard bank auto pymts were setup for 3 mnths. I had email alerts setup but did not receive them. I called they said they would take care of it and were sorry for the problem.
Will one late payment really stop us from getting another home if I can't resolve this?
My husband and I had a home foreclosed on in 2008 due to a predatory loan and then we filed Chapter 7 with a discharge date of 1/24/2012. We received a 1099-C on the foreclosed home in 2009. My credit is a 696 and my husbands is a 676, we have re-established credit with 2 car loans and no late payments. Will we be able to buy a home on a USDA guaranteed loan?
I have a chapter 7 bankruptcy discharged 9/12, Lost job due to injury on the job and I am now on Disability with steady income. I have established new credit card accounts with 12,500 line of credit which I am only utilizing about $400.00. No late payments or any derogatory issues after the bankruptcy. I keep reading all over the internet that you can get financed after on year if you have extenuating circumstances. Would I qualify? And if so who does these type of loans, I haven't been able to find anyone. Looking to move to Florida. Any help or suggestions? Thanks!
my bankruptcy has been discharged for two years but my house hasnt sold yet at sherrifs auction i meet all income guidlines(120000 combined with spouse) and employment wife 25 years and me 6 years does this house not being sold yet hinder me for applying for loan
my wife and I recently divorced in june of 2013. we started our house loan in 2003,after switching several lenders for better rates my now ex wife lost her job in 2009. to that point we were not behind or late on any payments. she struggled to find a new job until 2010. by that time we were behind on the mortgage and were advised out best option would be to give up the house in bankruptcy. it was discharged in aug 2010. now we are divorced and I am trying to get a home loan (don't care for renting anylonger). who are the best options as far as getting a loan with past bad credit. my score is 651 but that mostly reflects the bankruptcy. I am having trouble finding a reputable lender willing to help me start over. I am not looking for an extravagant house out of my means, just a $75000 loan on a home appraised for $110,000 from a friend. any help would be greatly apprieciated..
I have a question, If my brother goes through with a "deed in lieu" instead of a short sale would I be eligible to purchase his home? This my be a silly question because I know in a short sale situation family members can not purchase the home but how about a "deed-in-lieu"? Thank you for any and all help you may have =)
Can the 12 months of on time payments consist of car note and credit card payments? Also what fico score is needed?
@gsn this is a great question, thank you for asking. This is a potentially complicated scenario because there may be a few moving parts. You could possibly be eligible to buy using FHA financing 2 years from the discharge date if the HELOC payments were made on-time up until the date that you settled.
If the HELOC was in default when you settled, you would have to wait a minimum of 12 months (with no mortgage lates) before you could apply.
What State are you buying in?
@crna1ab I would recommend making the last two payments, then dispute the reporting of the balance with the credit bureaus. It will not negatively affect your credit with it showing included in BK, it's just not helping contribute to the on-time payment history you are trying to establish after a BK to rebuild your credit.
Your lender should ask about the auto - If the loan officer you're working with does not have much experience of working with borrowers after BK, it might not come up until later in the loan process, after it gets to an underwriter.
Simply keep all of your paperwork showing the auto was paid in full.
@sunshinestate The MOP codes used to be a really big challenge, however, that has more or less been removed as a hurdle when buying after a hardship. Fannie Mae made changes to their underwriting engine to specifically address those MOP reporting errors.
If you were in fact120 days late, the loan was in default, and the deed in lieu of foreclosure is something that is easily documented. As long as you meet all other qualifying criteria, you should have no challenges applying in 24 months.
Hope this helps?
@stevebook The foreclosure was 2011 or 2010? You mentioned 2010 in the 3rd sentence. My advice for people in your situation is to get with your lender and at least get your credit qualification done. You can certainly try to narrow down your County, City and/or neighborhood, but I would not recommend making offers.
As far as the lender in concerned, you would not be able to submit the loan for underwriting (DU) until after the "waiting period" date.
So yes to getting pre-approved, no to making offers :)
Hope that helps?
@SMR2014 it is unlikely that you will get an approval until after the 3 years are up. Your lender should be able to "credit qualify" you based on your income, assets and credit - however, you would not be able to start the loan process until after the 36th month.
Hope that helps?
@kgarson22 Hi KG, The waiting period after a short sale is 2 years if you have 20% down and a minimum 680 credit score using Conventional financing. FHA only requires 3 years from short sale. It doesn't sound like you would need to worry about qualifying for an exception since you're already close to meeting the waiting period.
The late payments should not be an issue as long as there is not a pattern of delinquent payments after the BK. Lenders are typically looking at the last 12 months of payments when determining loan eligibility.
Hope this helps?
@hswallis USDA requires a 3 year "waiting period" before you would be eligible after a foreclosure or bankruptcy. You are well past your waiting period for the foreclosure, but the BK puts you at 1/25/15.
FHA only requires a 2 year wait after a bankruptcy which would make you eligible now. Since your foreclosure was in 2008, you are also considered a "first time homebuyer" for many buyer assistance programs.
What State are you buying in? We are a direct lender in California. If you are also in California I would be happy to give you more information about assistance programs that can get you close to the 100% financing that USDA offers.
Hope this helps?
@crna1ab what you are seeing online about buying a year after bankruptcy is the FHA Back to Work extenuating circumstance exception. You have to specifically ask the lender if they are able to offer that program, not all lenders can. If you do not already have a lender in mind, I can recommend someone I know that might be able to help.
In regards to the disability, if you are permanently disabled, and receive permanent disability social security income, then you can actually buy 1 day out of bankruptcy. You will have to show that your disability is permanent and that it resulted in a 20% or greater loss of income, the result of which caused you to file the bankruptcy.
If you would like that recommendation, shoot me an email to firstname.lastname@example.org and I will make an introduction.
Hope this helps?
@pyramid66 unfortunately, you are still the owner of the home, and the loan is in default. Even though the mortgage is not being reported on your credit, it is still viewed by a lender as a mortgage in default if you are more than 90 days late on the mortgage payment.
You would be unable to use Conventional, FHA, VA or any Government overseen entity. There are private lenders that may be willing to accept the risk. This loan would require a large down payment and would have high rates and fees.
If a short sale or deed in lieu of foreclosure is an option, I would pursue that path to expedite the removal of your name from title.
Depending on how your name is removed from title will determine how long of a waiting period will be required before you are eligible for a mortgage.
Allowing the bank to foreclose carries the longest waiting period of all other options.
Hope this helps?
@ckrocknroll this really all comes down to what happened to the home after including it in the bankruptcy. BK will protect you from any tax liability resulting from the default on the mortgage, but it does not extinguish the liens against the property, you still own the home until your names are removed from title.
There are a lot of moving parts here, it's not really possible to unravel all of the possible challenges or options based on the information you've given me here.
It sounds like there may be a case for qualifying under the Back to Work extenuating circumstance due to a drop in household income (when your wife lost her job). That would put you in a position to possibly buy again sooner if you lost the home as a result.
What happened to the home after the BK?
@StephanieHansen this is a good question! A short sale occurs when the bank allows the owner of the home (your brother) to sell the home for less than what is owed on the mortgage. Under this circumstance, as you know, the bank will not allow the home to simply be sold back to the owner (through relatives) at a discount.
There is not "sale" per se, with a deed in lieu. A DIL is the bank agreeing to relieve your brother of the debt in exchange for the signing over the title (ownership) directly to the bank. At that point, the bank will repossess the property and most likely process and resell it on the open market as a REO (real estate owned).
You can monitor the activity on the home and as soon as a for-sale sign goes up, you can make an offer to purchase the home at fair market value.
Hope this helps?
@Beastie2us FHA typically requires a minimum 640 fico score, however, individual lenders may require higher. 12 months on time payments will consist of all liabilities that show up on your credit report including your home.
@ScottSchang @gsnGreat question. I am in virtually same scenario. Ch 7 discharged 1/2013, always current on first. Settled 2nd 11/13, but it was not paid since 8/2011 (same date as ch 7 filing, so current prior to filing). So 12 month waiting period after settlement of 2nd, and 2 year wait after discharge, so eligible for FHA in 1/2015? Question regarding the timing of the 12 month waiting period after settlement? Settlement was offered by bank, and accepted by us, and payment made in 11/13 (and confirmed received), but we still have not got the lien release. Does the 12 month waiting period run from the settlement date or from the Lien release date? My lawyer says the lien release date is irrelevant and of no consequence, but I believe the waiting period would only start at lien release date. Could you clarify? Love this blog BTW - thanks for doing it. Any advice on getting a Lien release after settlement was agreed to and payment was made 5 months ago. Bank says it is "in process". I believe they are just stalling as long as they can to keep punishing us.
Okay. I was worried because I heard that 120+ days late was seen as a foreclosure, and that for
Fannie Mae, foreclosure was a 7 year wait. So, even though it says 120+ days late, I should be okay. How do the underwriters/DU tell the difference, or will I have to submit my executed DIL documents as proof?
Also, TU shows my DIL as 9/13, but for 10/13, 11/13 and 12/13 they are reporting at 120 days late. Reporting stops after that. I assume that I will have to dispute and send them my executed documents as evidence of finalization of the DIL prior to 10/13 to get 10-12/13 removed from the credit report--is that correct? All others end reporting 9/13. I also checked with the county and the deed exchange was reported for 8/13.
Are there any other snags that I need to be following up on? How does a consumer actually get their MOP codes for these items? Is there a specific code I need to worry about? Or prefer to have?
@SMR2014 We have a 700 credit score , my husband is disable, we was told we was pre qualified . so we found the house and they r fixing to run all this thru , i do have a lender . Last year we spoke to a lender same company but it was 2 yrs at that time , so now this is the third year , the lender last year talked like the could lock it in before he realize house was including in bankrupty, of course this is a new guy because the guy i spoke to last year apparently no longer there.. when i called this guy n explained i spoke to someone last yr, he pulled up file but was thinking did he realize r doesnt matter! it wont be till june? This is so driving me crazy because of course we love this home.....
@ScottSchang we are in Oklahoma. I've look at the FHA back to work program and it appears that may be something we would qualify for. I've also seen different grants that are available for down payment assistance. We do have a mortgage broker and she seems to only want to go the USDA route and thinks that she can get us approved even though we aren't past the 3 year mark. We aren't dead set on the USDA loan but we are ready to get out of a 2 bedroom rent house with 2 kids!!!
@ScottSchang @ckrocknroll the house went to the mortgage company and was sold at auction. for half of its appraised value. its currently owned by a new couple. we had a deed in lieu on the home which clears the 3 year wait period in april of 2014. we definetly loss the home due to my ex wife's loss of her job. up to that point the mortgage was in good standing and both of our credit ratings were around 700. now that its just myself I'm trying to get a home for myself and my son but finding it challenging to find a lender willing to "take a chance" on me.
@gsn @ScottSchang technically, it's a delinquent mortgage until the lien was removed. The underwriter will ask for a 12 month Verification of Mortgage during the process, which for the 1st, will come back with no issues. I would definitely try to get a second opinion from a lender in Rhode Island, but the way we would have to look at it (as a California direct lender) is that there is a history of delinquent payments on the 2nd mortgage, and we would need a minimum of 12 months time to pass from the date the lien was removed.
@ScottSchang Thank you Scott. As always, a clear and understandable answer.
Just to be clear, there is not really a "waiting period" per se when we are discussing this scenario, there is however the underwriting guideline that states that there can be no more than 1 x 30 in the past 12 months - but in your case, the delinquency went beyond 30 days, so we have to wait for 12 months to show that there were no mortgage delinquencies in that time.
As for the lien, until that lien is removed, the lender has the ability to begin foreclosure proceedings in the event of default (which you are in default on the 2nd mortgage). The 12 months of no late payments could not start until the lien is extinguished, which is evidence of the debt being settled.
@sunshinestate There was a time when a 120 day reporting on your credit would indeed read as a foreclosure, but Fannie Mae has made significant changes that no longer trigger that result.
The date you need to be concerned about is the date that your name was removed from title (public records), not the date of the DIL paperwork.
Fannie actually created the ability to manually adjust foreclosures, short sales or DIL that are reporting inaccurately.
I wouldn't worry about the reporting dates on the credit report as long as it is accurately reporting the DIL and not continuing to report late payments.
Hope this helps?
@ScottSchang I guess ill just have to wait and see just works your nerves not knowing. we r renting and just ready to move:)
@ScottSchang I know this may sound confusing to you! But it is to me am just wondering if this guy did the foot work after me telling him i spoke to this guy last year... And when i called this company and ask for the guy from last year, he said he can assist me. ( found file) told him information n apparently to pulled it up on his computer , check credit n even mention credit was better then last yr.like no problem pre approve!
@ScottSchang which i guess he looked it up and gave me the date of June 15, 2014
@ScottSchang It dont sound silly , i feel like these questions am asking are silly.... the guy i spoke to last year like i said he wasn't aware there was a home in the bankrupty and at that time we was looking and found a home and when i called him , he was gonna find a lender to lock, i guess a loan in , till he realized we needed to wait 3 yrs... which it will be june 15 . 2014
The BK and the removal of the lien against the home included in BK are two separate events that can affect your timeline for buying after a hardship.
I just don't want you to have any more surprises!
@SMR2014 I know that USDA does offer a Direct Housing Loan that may have more flexibility when it comes to buying after the BK. You might want to ask the loan officer about that program. This might be a silly question, but was there a mortgage included in that Bankruptcy?
@ScottSchang oh my gosh Thanks a Million @ScottSchang. We've been waiting patiently for buying a home and with a 16 year old (well tomorrow) and a 14 year old we are ready to get more room. I'll definitely ask our broker and let her know if USDA won't do it we aren't opposed to doing FHA by no means. You've made my day.
It is certainly possible that your broker can get an exception for USDA. As long as you can credit and income qualify, I don't see anything that should prevent you from qualifying.
Sounds like you need to unleash those kids and get them their own rooms :) Good luck!
If you do not have any revolving credit lines, you'll need to get some. The biggest challenge I've seen with folks coming out of bankruptcy is that they don't purposely build good credit after letting everything go.
I learned that one the hard way myself. You have to credit cards, and pay them down to $0 every billing period.
@ckrocknroll @ScottSchang ok, good! It sounds like worse case scenario is that you are eligible for FHA financing in april of 2014, and, with a minimum 680 credit score (shouldn't be too hard to get 30 points) and 20% down payment, you would be eligible for Conventional financing now.
It sounds like you definitely have options. The real question is can you buy before April of 2014. You can if you meet the conventional guidelines, or if your'e eligible for VA financing.