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2015 Buy Again After Bankruptcy, Short Sale, Foreclosure or Deed in Lieu

Boomerang Buyers Buy Again After Hardship

Click Here to view Buy Again series in Video Library

2015 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

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

2015 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

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

2015 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.
  • UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and subsequent foreclosure, short sale, or deed in lieu of foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages.
  • Link to 12/1/2014 USDA Guideline – HB-1-3555  Attachment 10-B  See Page 4 of 6

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

2015 Conventional (Fannie Mae) – UPDATED 12/2014

  • 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.

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.

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.

562-999-1355

Scott Schang

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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904 comments
kcccmom
kcccmom

Hi Scott,


We had a chapter 7 bk that was discharged in 2010. We never reaffirmed the mortgage, but continued to pay timely for the last 5 years. We'd like to purchase another home and get out of this one (underwater 100,000). It shows included in BK on our credit. Is there any way to do this and then just let this home go back to the bank?

ScottSchang
ScottSchang moderator

@kcccmom Unfortunately, this home will be considered when you purchase a new home.  If you rent this home out, and buy a new home, you would be required to qualify for both the current, and new mortgage payments in order to purchase a new home.

My recommendation would be to try to do a short sale, or deed in lieu of foreclosure.  Based on Fannie Mae guidelines as of August 2014, you would be eligible to buy 4 years from the discharge of a bankruptcy, with no additional waiting period for foreclosure, short sale, or deed in lieu of foreclosure.

It would mean that you would have to do something with the current home before buying again, and the waiting period may only be a month, instead of years.

Hope this helps?

Inspired1c
Inspired1c

Hi Scott,

I will be 2 yrs out from my chapter 7 in October of this year. In 2014, my family moved to CA from MD. We still own our home in MD and currently rent it out. It was not included in my BK, since my husband is the only one on the mortgage, however, my name is on the deed. He did not file for BK. We would like to buy a house in CA when my 2 yrs are up. I have a few questions:

- Can we qualify for an FHA loan?

- If so, do we need to sell our MD house?

- If we don't sell, would our purchase in CA be considered a second mortgage? If so, what would we need to qualify?

- Is there anyway to purchase the home on my own without my husband so that it wouldn't be a second mortgage? For example, I own a business, could I purchase through my business?

Sorry for the laundry list of questions, but any guidance would be greatly appreciated.

ScottSchang
ScottSchang moderator

I@Inspired1c I would actually like to THANK YOU for the laundry list, makes it easier to respond!

- You would be eligible for FHA, 2 years from the bankruptcy as long as you are buying a primary residence.

 - You will have to qualify with both payments if you have less than 30% equity in the MD house.  Also, if you have a 2 year history as a landlord on your tax returns, you may be able to off-set the MD mortgage payments with rents received.

 - You cannot necessarily purchase the home through a business, but you can buy on your own as long as your income qualifies.  If you are not on title, that might help with income qualifying.

I am a direct lender in California, and would be happy to review everything for you so that you have a more clear picture of what options might be available.  If you shoot me an email to scotts@broadviewmortgage.com , we can discuss further?

Hope this helps!

Inspired1c
Inspired1c

Super helpful. I'll send you an email. Thank you!

Nicolemaria1981
Nicolemaria1981

Hi Scott!!! Your replies are very helpful!! We recently spoke with a lender regarding getting financing... My husband will be 4 years from his bk discharge date in November. The lender said he could get us financed now showing extenuating circumstances... We are a little hesitant because we don't want to Have to go through the stress of jumping through lots of hoops. We have already started building our home and will be putting over 20% down... The builder agreed to allow us to rent back the home until financing is complete. However, it would save us money to finance it sooner.

What documents do people typically have to provide for extenuating circumstances and is it very difficult? (Bk was due to a foreclosure due to job loss and having a child in 2008... Unfortunately the mortgage lender at the time refused to allow us to refinance or short sale).

ScottSchang
ScottSchang moderator

@Nicolemaria1981 you have a much better chance of qualifying for an extenuating circumstance if you are trying to qualify for a conventional mortgage.  The lender is going to have to document the events that led up to the foreclosure, and bankruptcy - and the timing is important.  An extenuating circumstance is defined as a one time event that you had no control over.  Unfortunately, having a child would not be considered.  The job loss can be document with layoff papers, or a termination letter.  You will also have to produce unemployment benefits for a significant period of time, and possibly bank, or other asset statements showing the depletion of your assets to the extent that you were unable to continue making your mortgage payment.  All of these events have to conclude with you having no other possible alternative but to let the home go into foreclosure.  It's a rather difficult process.

The most common extenuating circumstances exceptions are granted if there is the death of a primary wage earner, or a permanent disability suffered by a primary wage earner.  Anything else if very challenging to show that you "had no other choice" but to let the home go.

Hope this helps!

alporter2015
alporter2015

Dear Scott, I live in Illinois and took Chapter 7 bankruptcy due to my home being foreclosed on because of an incredibly expensive divorce/custody battle in February of 2012.  I thought the bankruptcy encompassed the foreclosure, and I recently have been working with a new lender. 

The new lender ran my credit report and it shows that I still have an open account with the bank I took foreclosure through, and shows I have a past due amount of $15,553.  My new lender told me to contact the bank to explain things to them, and have them send a letter to the credit bureaus that would have the derogatory things removed. The house was sold at Sherriff's auction in June of 2012.

When I contacted the old bank, they explained that everything AFTER the date I filed for bankruptcy was included, but nothing prior to it....which I do not understand.  I thought the entire point of bankruptcy was to include all debt and that it would just show up on my credit report as a bankruptcy.  The derogatory marks from the old bank, and the fact it still shows the account as open is affecting my ability to get this new loan.  I have tried contacting my bankruptcy attorney, but he has not gotten back to me yet.  I am hoping you can help explain to me why they bank will not remove things that I thought should have been included in the bankruptcy.

Thank you!

ScottSchang
ScottSchang moderator

@alporter2015 it does not make sense that your mortgage was not included in the bankruptcy.  Unfortunately, this is a question that only your bankruptcy attorney would be able to answer.  Sorry I cannot be of more help

alporter2015
alporter2015

@ScottSchang @alporter2015 Hi Scott, my bankruptcy attorney did contact me, and told me the mortgage should have been included in the bankruptcy, but if it wasn't that is something I would have to take up with the Credit Card Companies directly and dispute what it there.  I actually think it is a bunch of bogus crap, but not really anything I can do about it at this point except file a dispute with four credit reporting bureaus. PNC Bank sucks.

ScottSchang
ScottSchang moderator

@alporter2015 @ScottSchang You really shouldn't have to go through all of that and placing a dispute on your credit report can cause a whole other set of nightmares.  What State are you trying to buy in?  You should be able to document your way out of this.  If you have the final HUD1 closing statement form the foreclosure, and you can use title records to show that the lien was removed, or paid.  Your lender should be able to work with that.

Fannie Mae DU allows the lender to "remove" mortgage items from consideration, then you have to go in and document your way through the credit item with the documentation I've mentioned.  Strange that they would continue to report it as open though.

Strawberrygurl
Strawberrygurl

Hi Scott I have a deed in lieu on rental property. In a quick summary the water wasn't turned off in the priopery resulting in a 10k lien that I didnt become aware of until a couple years later when they increased mortgage amount. My primary mortgage is in good status and I have a credit score of 680. The deed in lieu took place in June 2013. Is there anyway I can get a loan for a new home now? I am in NJ.

Strawberrygurl
Strawberrygurl

This was helpful I am actually speaking with someone who says that there options out there so hopefully it will work out. He gave me a contact so i am crossing my fingers. Thank you for the glimmer of hope.

ScottSchang
ScottSchang moderator

@Strawberrygurl Unless the mortgage debt was included in a bankruptcy, you have a waiting period form the date of the final deed in lieu if you are trying to buy using Conventional, FHA, VA, or USDA financing.

I am beginning to see portfolio lenders in the market that are not "hard money", that claim to be able to lend with lesser waiting times.  I do not have any personal experience working with these investors, but I am hearing that it's possible.

It's a little more of a hunt, but I would keep asking around and researching - it seems like there are options available.

Hope this helps?

Popsy2
Popsy2

Is a short sale on a HELOC treated the same as for a primary loan in regards to future financing?  Our primary loan was paid in full, but second was a short sale.

ScottSchang
ScottSchang moderator

@Popsy2 If the HELOC was not included in a bankruptcy, then yes.  If it was not included in a BK, then it is a mortgage loan, secured by a lien against the property, and would have a waiting period.

ScottSchang
ScottSchang moderator

@Popsy2 @ScottSchang if the mortgage was discharged through BK, Conventional financing will allow you to buy 4 years form the discharge date.  If it was not included in a BK, then it's 4 years from the short sale date.

FHA will allow you to buy 3 years from the short sale

VA will allow you to buy 2 years form the short sale

dkai001
dkai001

My ch 13 was discharged 3/13 so I am now 2 years post bk. We are trying to find a loan to build our hose as we lost our home to a fire last year. We own the land free and clear and also have $150 to put towards the build. My score is 730 now. And I am having trouble finding lending. Do you have any suggestions? We live in Nebraska.

ScottSchang
ScottSchang moderator

@dkai001 I would maybe check with a local bank or credit union for this.  A construction loan may have different qualifying guidelines than FHA or Conventional, because it's a different type of loan with different levels of risk.  Looking for a traditional loan will not get you the answers you are looking for.  I suggest doing a google search for construction loans?

Hope this helps?

Cjohnson0122
Cjohnson0122

My husband and I have been discharged from bankruptcy 7 w/o foreclosure in August 2014 due to job loss, we now have saved 25,000 for a down payment 680 credit score and 6 acres we own outright, and equity in our current home, can we get a construction loan? What about private lenders?

ScottSchang
ScottSchang moderator

@Cjohnson0122 private lenders can do almost anything, it's all about risk and reward for them.  They like low risk (lots of equity) and high fees,  because they know you're not going to keep the loan for long.

Construction loans are extremely hard to come by, and are actually considered more risky than purchasing an existing home.

I'm not sure what your options might be with a BK less than 1 year ago.  What State are you buying in?  If you want to shoot me an email with your details to scotts@broadviewmortgage.com, I can check around and see if I know anyone that may be able to help?

patriotsandpaws
patriotsandpaws

Hi Scott,

A correction to my 1st email.  My FICO score is 730 - no 73.


Thanks

Jennifer

patriotsandpaws
patriotsandpaws

Hi Scott,

I live in California and in early 2013 I had to short sale my rental property.  I have a FICO score of 730 and own a home.  I want to get a HELOC.  I have the LTV in my primary home.  However, because of the short sale I have been told by several banks that I have to wait 4 years.  Any ideas where I might go to get a loan?  


Thanks

Jennifer


ScottSchang
ScottSchang moderator

@patriotsandpaws Hi Jennifer, by any chance was there a bankruptcy involved as well?  That might affect the timelines.  Finding a HELOC might be challenging because second mortgages have much more strict guidelines than first mortgages.  

It sounds like the short sale was on an investment property?  Is that accurate?  I do have some ideas, I can ask around.  Send me an email to scotts@broadviewmortgage.com and I will let you know if I have any leads on a solution

Philphilphil25
Philphilphil25

Scott, I noticed you told grikampey down a couple posts down that they would need 10% down minimum down on a conventional loan! why is that? Why couldn't they put down the normal 5% for a conventional loan. I'm in the same boat as they are

ScottSchang
ScottSchang moderator

@Philphilphil25 great catch :)  Yes, Conventional guidelines state that if the home is lost to foreclosure, the maximum Loan to Value is 90%, if financing 4 years after a BK.  If you wait out the 7 years, you can go up to the maximum allowed Loan to Value, which is 97%.

Now, this was because they mentioned that it was foreclosed.  If you lost the home to short sale or deed in lieu of foreclosure, the guidelines do not specifically address this.  While I believe you may be able to buy with the minimum down payment, I would expect that the lender will require 10%, just to be safe. 

The loans we have closed under this new guideline have had 10% or more down, so I have not yet tested this limit.

Philphilphil25
Philphilphil25

Another question I have for you Scott is about fha time frames.

Does fha still make you wait 3 years from when the home comes out of your name, or is it 3 years from time of discharge if your home was included in your bankruptcy?

ScottSchang
ScottSchang moderator

@Philphilphil25 Unfortunately, FHA does have separate waiting periods for BK, and then another one for when your name comes off title.  Only Conventional, and USDA financing is allowing you to ignore the subsequent foreclosure, short sale, or deed in lieu date.

Philphilphil25
Philphilphil25

Hey Scott I'm in the same situation as the people below had a bankruptcy with a home included in it. It's been over 4 years since the discharge date.... I noticed you told them they would need 10% down minimum... Is there a reason why you can't get a conventional loan with 5% down or is 10% is what the going rate is due to circumstances

Thanks in advance phil

grikampey
grikampey

Hi There,


We had a Chapter 7 BK (due to job loss) discharged in 11/2010.  Our home that was included in the BK sold at a Trustee Auction in 12/2010.  We are hoping to buy again and have worked hard to learn from the past,  We will have more than 20% down and both my wife and I have credit scores over 700 currently.  When will we be able to get a conventional loan again?  Not looking to do a FHA due to PMI requirement.

ScottSchang
ScottSchang moderator

@grikampey If your home was included in the bankruptcy, you would be eligible for Conventional financing 4 years from the discharge date of the BK, as long as you are no longer on title to the home, which sounds like you're good!

There will be a minimum 10% down payment, but sounds like you're ready to buy now.  I have heard that many lenders are not familiar with the guideline that allows you to do this.  If you have challenges finding a lender that can help, shoot me an email to scotts@broadviewmortgage.com.  

I can help if you are in California, if you are in another State, I have lenders that I can refer you to.

Hope this helps?

cc13
cc13

I'm reposting as I never saw a response and really value the feedback being shared here!  Hope you can help - thanks!


Curious . . . Ch. 7 discharge included primary and second 11/2010 w no reaffirmation.  Notice of substitution of trustee (removing me in favor bank's trustee) and Trustee's sale were recorded 1/24/2011; property sold at trustee's sale 4/26/11.  I understand the BK date (and attendant waiting periods) should prevail for conventional, but what about Jumbo?  I would think the same logic should apply: loan was discharged and right to property forfeited in 11/10 in either case, but I've heard they may be treated differently.  Thanks for any help!

ScottSchang
ScottSchang moderator

@cc13 I'm so sorry, I'm not sure how I missed your original question!

Jumbo financing does not follow Fannie Mae guidelines.  Every Jumbo investor we work with have their own guidelines and waiting periods.  In all cases that I am aware of, the BK and foreclosure are considered separate events with separate waiting periods.  

You're looking at a minimum of 7 years from the foreclosure for all Jumbo financing that I am aware of.  You may need to find a private money, or portfolio lender that is willing to offer different waiting periods.  Anytime you venture into private or portfolio money, you are looking at a minimum 30-40% down payment and very high rates and fees when compared to traditional, conventional financing.

len0909
len0909

Short Sale in Pennsylvania in June, 2013 due to sale of company resulting in my job being eliminated. I now love in Florida, have a FICO score of 700+ and I will put 25% down on a $90,000 home. I have zero debt and the combined Principle, Interest, Taxes, Insurance and HOA fees would be LESS than the rent I have been paying since May, 2013. Any recommendations of an understanding lender would be greatly appreciated.

ScottSchang
ScottSchang moderator

@len0909 There is a strong possibility that you could qualify for an Extenuating Circumstances Exception, which would allow you to buy using Conventional financing 2 years from the the short sale, or 1 year after the short sale using FHA.  If you are a Veteran, and eligible for VA benefits, you could buy 2 years from the short sale, or possibly even now, due to your circumstance. 

The biggest challenge when using the extenuating circumstance exception is documenting the hardship, and the events that led up to the eventual short sale.  You will need to document the reason for your loss of income, and show how it financially impacted you using bank statements and tax returns.  It is much easier to get this exception using Conventional financing, than it is if trying to use FHA.

If you cannot find a lender that is willing to try to get you this exception, I would research portfolio lenders.  A good example would be a credit union, or small regional bank.  If the lender holds the mortgage and services it, they can assess the risk in the branch and make a "common sense" decision to lend you the money.  

Under the scenario you've described above, I would think that a portfolio lender would be a strong possibility.

Hope this helps?

Mrs Ashley
Mrs Ashley

Hello everyone, My name is Mrs Emily Dany and i am talking as the happiest person in the whole wide world today and i told my self that any lender that rescue my family from our poor situation, i will tell the name to the whole world and i am so happy to say that my family is back for good because i was in need a loan of $ 70,000 USD to start my life all over as i am a single mum with 2 kids and the world seemed like it was hanging on me until i met the GOD sent loan lender that changed my life and that of my family, a GOD fearing loan lender, Mrs Marry Pery, she was the Savior GOD sent to rescue my family and at first i thought it was not going to be possible until i received my loan of $ 70,000 USD i will advise any one who is in genuine need of a loan to contact Mrs.Marry Pery via email at (marryperyloanhome@gmail.com) because she is the most understanding and kind hearten lender. God bless and keep you all

Dero82
Dero82

Hi Scott,

We filed for 13 BK in 10/2010 and surrendered the home for the 1st mortgage and the 2nd was converted to unsecured debt and included In the BK. The BK was discharged 09/2014 however the home has not been forclosed yet and the bank is asking if we want to short sale instead. My question is if we short sale will that void the surrender and does that mean we will have to wait 3 years from the short sale date or will it follow the BK discharge date which would be 1yr after discharge for a FHA loan?

Thanks, Dero

ScottSchang
ScottSchang moderator

@Dero82 Hi Dero, I would recommend you take the short sale, or deed in lieu of foreclosure.  Because the mortgage debt is included in the BK, it will not affect your credit at all.  The short sale will show up the same as a foreclosure in public records, and the timelines will not be affected.  The biggest difference is that you have more control over the timeline of a short sale, as opposed to waiting around for the foreclosure to occur.

If you are trying to buy using a FHA mortgage, the waiting period is 3 years from the date your name is removed from title, regardless of whether or not there was a foreclosure, short sale or deed in lieu of foreclosure.  If you are buying using Conventional financing, you could buy 2 years from the discharge date of the Chapter 13.

FHA treats BK and any subsequent transfer of the property as 2 separate events with separate timelines.  Only Conventional financing allows you to ignore any subsequent foreclosure, short sale or deed in lieu.

Hope that helps?

cc13
cc13

Curious . . . Ch. 7 discharge included primary and second 11/2010 w no reaffirmation.  Notice of substitution of trustee (removing me in favor bank's trustee) and Trustee's sale were recorded 1/24/2011; property sold at trustee's sale 4/26/11.  I understand the BK date (and attendant waiting periods) should prevail for conventional, but what about Jumbo?  I would think the same logic should apply: loan was discharged and right to property forfeited in 11/10 in either case, but I've heard they may be treated differently.  Thanks for any help!

Popsy2
Popsy2

We had to short sale our home due to a job loss, then cancer diagnosis and finally relocation for a new job.  It has been 6 months since we closed on the short sale.  Due to these circumstances, can we qualify for a new loan before the 4 year mark?  Our finances have recovered and our median credit score is about 700..

ScottSchang
ScottSchang moderator

@Popsy2 It certainly sounds like you would meet the guidelines for an extenuating circumstances exception, which would make you eligible to apply in 2 years from the short sale date, instead of the 4 years normally required with Conventional financing.

If you are eligible for VA financing, that would be 2 years without extenuating circumstances.  FHA requires 3 years.

Was there a bankruptcy at any time during this time?

Popsy2
Popsy2

@ScottSchang @Popsy2


No, no bankruptcy.  Our primary loan was paid in full and a home improvement loan was the short sale  

ScottSchang
ScottSchang moderator

@s1984 Yes, that's right.  Using conventional financing, there is a 7 year wait after a foreclosure unless there was an extenuating circumstance that led to the foreclosure such as death of a primary wage earner, loss of job, permanent disability resulting in a loss of income, and in some cases, divorce resulting in a significant loss of income.  Extenuating circumstances are extremely difficult to document in many cases, but it's an option - so I want to make you aware.

Stephanie5917
Stephanie5917

I Live in illinois and have been discharged from a chapter 7 bankruptcy, 10/2010, the sherifs sale for the home that we forclosed on was done 5/29/12 to be approved or apply for a home loan via FHA or RD to we have to wait 3 years from the sale?

Any help is appreciated!

Stephanie5917
Stephanie5917

reading your response again looks like we may qualify for RD not FHA?

ScottSchang
ScottSchang moderator

@Stephanie5917 To be qualified for FHA, yes, there is a 3 year wait from the date that your name was removed from title.  That sounds like May 29th, 2015?  

USDA RD actually made a change to their guidelines in December to mirror Conventional financing, which allows you to use the 3 year waiting period from the discharge of the BK, without having an additional waiting period for the foreclosure.

Hope this helps?

Stephanie5917
Stephanie5917

Yes, May 29th 2015 is 3 years from sale date but wonder if because or being 5 years from discharge date makes a difference because of....

"UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and subsequent foreclosure, short sale, or deed in lieu of foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages"

Maybe i am just wishful thinking? we have found a home we want

ScottSchang
ScottSchang moderator

@Stephanie5917 - correct, as long as you meet all other qualifying guidelines, the foreclosure will not preven you from being eligible for RD now, FHA in May

southcarolina23
southcarolina23

Hello Scott - 


I'm having a hard time getting a conventional loan due to a foreclosure that was included in Bankruptcy filed in July 2007.  I have found this information from Fannie Mae but no one seems to know what I am talking about...


If a mortgage debt was discharged through a bankruptcy, the bankruptcy waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting periods must be applied.   (I have the link the fanniemae's page but it won't let me paste it here)


Any thoughts that could help me?  Thank you.

niko82
niko82

@southcarolina23 

Bingo!

Bankruptcy AND Foreclosure

House INCLUDED in bankruptcy

New rule - started August 16, 2014

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

southcarolina23
southcarolina23

That's what I thought. Why can't I find anyone who knows this that will actually do the mortgage?

southcarolina23
southcarolina23

@jayns Thank you for the info.  Both brokers I have had before also went thru Quicken Loans, but for whatever reason this issue came up.


I will check into Churchill now.

southcarolina23
southcarolina23

@jayns @southcarolina23 I'm having issues now.  Last week - to separate brokers, one in Indiana and another in South Carolina - couldn't get my deal completed because of this.


I found a guy that blogged about this thing in California and sent him all the info, he said he could do it.  But it's been radio silence since last Thursday when I sent it to him....


ScottSchang
ScottSchang moderator

@southcarolina23 @jayns Thank you @jayns   for helping out on this!  @southcarolina23 , are you in South Carolina?  It sounds to me like there may be a different layer of complication or confusion about your specific situation.  If you're getting radio silence, there's a strong possibility that you just have a lousy loan officer that's afraid to deliver what they believe to be bad news.

There's always a solution, sometimes the timing just isn't what you want to hear.

Unfortunately I can only lend in California, but I have friends across the Country that I can refer you to.

ScottSchang
ScottSchang moderator

@southcarolina23 @ScottSchang @jayns I just can't imagine this being the case - If you would like, you can give me a call and give me more details about the situation.  The only thing I can possibly imagine is that would are still on title to the home - is that possible?  I definitely know lenders that can lend in South Carolina that understand this guideline.  My cell is 714-336-8286

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