I went through chapter 7 Bankruptcy in 2009 that included the mortgage loan. The foreclosure did not happen until 2013. Will I be able to take advantage of the new changes?
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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.
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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@tbradford28 Yes, it sounds like you meet the Fannie Mae guidelines which would allow you to use a 4 year waiting period from the discharge of the BK, with no additional timeline for the foreclosure that took place after the discharge. I have encountered many lenders that are not familiar with this guideline. If you're in CA, I can help, if not, I might be able to recommend someone if you encounter challenges finding a lender that can help.
I had to short-sale my home in Dec 2013 so my son could go to a special education school in another town. I am now wanting to build a home on a lot I recently purchased. How long do I have to wait to get a mortgage? I am getting different answers... very frustrating
@Tisha Markette Hi Tisha, If there was no Bankruptcy involved, the guidelines for buying after a short sale will depend on the type of loan you are applying for.
There is a 4 year waiting period to use Fannie Mae, conventional financing, 3 year wait to use FHA or USDA, and a 2 year wait if using a VA mortgage.
If you are looking for a loan to do ground up construction, that is a specialized type of financing that is not securitized the way that Fannie,FHA,USDA or VA is - and those specialized lenders will have their own guidelines. They may also be more lenient in considering the reason for your short sale than standard financing would allow.
Hope this helps?
I UNDERSTAND A NEW LAW HAS BEEN PASSED AND YOU CAN BUY A HOUSE AFTER 2 YR. FORECLOSURE. IT WAS JUST PASSED 4/10/2015
@calilady I am not familiar with any new guidelines, do you have any more information?
I had chapter 7 discharged Feb 2011. The house was included ; I vacated the house before I filed chapter 7.However foreclosure is still pending. I am interested in buying at this current time, but I am unable due to the property has not foreclosed yet. Once the property forecloses do my seasoning time starts or does it go by the bankruptcy discharged date of Feb 11? If I hire a lawyer is there a possibility to speed up the foreclosure process?
@mapis the waiting period depends on what kind of financing you are using to buy the new home. If you are using conventional financing, once the home is foreclosed, you can buy again 4 years from the discharge date of the BK - which would be right away (Feb 2015). If using FHA, your waiting period begins from the date of the foreclosure.
I am not sure that an attorney would speed things up, but if you vacated, and I assume stopped paying on the home over 4 years ago, it does not seem that the lender is eager to foreclose.
A deed in lieu of foreclosure would be quickest, and maybe a short sale would even be quicker than the foreclosure.
Hope this helps?
@ScottSchang @mapis Thanks for your answer. This will definitely help. I used my VA COE for this loan. I am planning to go VA this time again using my wife's COE. She will not qualify for the loan alone because of DTI.
As far as the bank, I believe unless I intervene in some way, the bank is never going to foreclose. I called them and they do not have an estimate of when this will be completed. Hopefully an attorney can help speed up this process and get the property off my name.
Once the foreclosure is done, what is the VA waiting time?
@mapis @ScottSchang VA will use the foreclosure, short sale, or DIL date to begin the "buy again" clock. If the defaulted loan is VA, and you're buying again using VA, it may go from the date that the guarantee was paid. Either way, it's 2 years from the date your name comes off of title.
Your best bet may be to purchase using conventional financing as soon as you can get the lien removed, and look at VA in the future possibly to remove the mortgage insurance.
The builder dissolved his S corp and formed a new one and is in business despite five lawsuits against him.
Thank you for your prompt reply. I guess we need a lot of prayers now.
We live in PA. We have paid interest on te loan for the past 7 years and never missed a payment. The total loan is for $409,000 and there is a balance of $99,000 left to finish the last details of construction. We purchased the heating unit, all major appliances, garage doors, windows, all the bathroom fixtures and put in the septic system with our own money. The major issue is the trusses that were installed incorrectly by the original builder. We could get no-one to work on them. I have met with the Truss company and the Engineer and he explained what needs to be done for them to pass inspection. I can do it but I have a business with emploees who count on me to get them work everyday to feed their families. There is only so much time in a day. We have all the other contractors lined up and ready to come in and do the finish work. Drywall and installation of kitchen and bath fixtures. No one wants to touch those trusses. We only need to get the occupancy certificate and get in there. We are so close. The home is a 3,000 square foot home built on a five acre lot which we owned prior to construction. What the market value after completion would be ??? I know the bank will be owed $409,000.
@Mac truck This is a tough one, I'm sorry, I don't know what you could do other than try to find a loan to replace that one. The loan to value would have to be pretty low for anyone to lend on this deal, especially since it's not livable at this point (at least as far as inspectors are concerned). And of course, going after the builder is not an option, because he went out of business, right?
MY WIFE AND I SECURED A CONSTRUCTION LOAN SEVEN YEARS AGO OUR LOAN AMOUNT IS 402,00. THE HOME BUILDER WALKED AWAY FROM THE SITE AFTER 9 MONTHS LEAVING MAJOR PROBLEMS WITH THE PROPERTY. WE HAVE TRIED YEAR AFTER YEAR T GET SOMEONE TO TAKE OVER CONSTRUCTION TO NO AVAIL. I HAVE TRIED MYSELFTO DO THE WORK BUT MAJOR ONSTACLES STOOD IN MY WAY. MY TRUCKING BUSINESS HAS SUFFERED MAJORILY AND I AM IN TAX DEBT ALL DIRECTED AT THIS. THE BANK GAVE US UNTIL APRIL FIRST 2015 TO COMPLETE. WE HAVE CONTACTORS WORKING BUT IT WAS NOT FINISHED AND WE ASKED FOR ANOTHER 30 DAYS. THE BANK REFUSES AND HAS CALLED IN THE LOAN. WE DO NOT HAVE FINANCIAL MEANS TO GO ANYWHERE FOR HELP, WE HAVE SUNK $150,000 OF OUR OWN MONY INTO TRYING TO FIX THE DAMAG DONE BY THE ORIGINAL CONTRACTOR AND OTHERS WE HAVE HIRED TO TRY AND GET THE HOUSE COMPLETED. IT SEEMS LIKE WE ARE PAYING FOR THINGS 2 & 3 TIMES.
THE LAWYER WHO FILED THE LIEN AGAINST THE ORIGINAL HOME BUILDER WHO WALKED AWAY IS NOT CALLING US BACK. WE HAVE NEVER MISSED A PAYMENT ON THE INTEREST OF THE CONSTRUCTION LOAN.
WE AVE BEGGED THE BANK BUT THEY ARE NOT BUDGING. WE REMINDED THEM THEY HAVE A RESPONSIBILTY BECAUSE THEY LET THE HOME BUILDER WALK AWAY EVEN THOUGH THEY NEW HIS WORK WAS FAULTY.
IS THERE ANYTHING YOU CAN ADVISE US AT THIS TIME.
@Mac truck I'm really sorry you find yourself in this mess, what a nightmare! What is the balance of the loan you owe, and what is the value of the home once the construction is complete?
The second question I have is, if you can get more time, do you have the money to complete the construction?
I ask these questions because if there is enough upside potential, and equity, you may be able to find a private lender to give you a bridge loan for the duration of the time that it will take to complete the construction. Once the home is finished, you can refinance into a permanent loan, and restore some of your savings that you've spend on this project.
Last question - what State are you in?
Hello my wife and I are in the process of short selling a rental property and our primary residence. Our primary home has excellent payment history along with all of our other accounts. Despite not paying on the rental property since 2011, our credit scores remain in the mid 600's. Our plan after selling both homes is to rent for two years with the plan to get a jumbo mortgage in two years with at least 20% down. Is this feasible?
@HandT to qualify for the purchase of a primary residence using Jumbo financing, your waiting period is 4 years from the date that your name is removed from title. 20% would be required as well.
@HandT @ScottSchang There are definitely options. You are looking at private money. High interest rates, high cost. Nothing you would want to keep for more than a year or two. Michael Evans left his phone number as a reply to your comment, but I do not know him. I cannot say whether or not he is reputable, or experienced from my personal experience. If you do reach out to him, please report back to me so that I know if he is someone we can endorse in the future!
What State are you trying to in?
Hi Scott, in October 2012 we had a foreclosure. I see you posted children don't qualify as extenuating circumstances, but we had triplets which is usually a once in a lifetime event. There were large expenses we had to pay due to having triplets and my wife returning to work. For example, formula ($1000/month), nanny ($1500/month), and increase in other monthly expenses, such as groceries, utilities, insurance, etc. ($1200). My wife was furloughed ($800) and I had a loss in income ($800). There was a 30% change in our finances. If these qualify as extenuating circumstances, can we obtain a non-conforming loan for approximately $500,000 now? Our scores are above 740 and we can put approximately 10% down.
hi scott. we filed chapter 7 in January 2015. we pay car payment and rent and pay consolidation on student loan. our lease is up in October 2015. we have to give 90 day notice to move out in july if we like. what do you think of a lease purchase
Hello. I co signed for my father's house 13 years ago. He passed away 11/2013. I tried everything I could to save the house but I couldnt. The house was sold back to the mortgage company September 2014. Now it only shows on my credit report as closed account. I live in TN. How long will I have to be able to buy my own house? My credit score is awful right now its 596. I'm in a slump because my father didnt have the time of insurance that he passed away the house would be paid for........ HELPPPPPPPP are their any stipultations for co borrowers if the primary owner pass away??????
Hi Scott here is our situation we filed ch 7 bk and included a fha home loan that has been discharged 2 yrs dec 23 2014 the problem we are having is the home was never foreclosed on the deed is still in my husbands name and we are confused on when and if we will be eligible for any type of home loan we have gotten many different answers please help!!!!
Thank you for your reply Scott!
If we wait until 4 years after our chapter 7 was discharged, is the down payment a mandatory 10% since the mortgage was included?
Is there anyway our lenders underwriter can get the fha to approve a loan by the date of the sheriff's sale, instead of the 3 years after the claim was paid? We don't qualify for extenuating circumstances.
Just want to be 100% sure since our current lease is up My 30th
I would like to explain our situation and hopefully you can provide some advice.
During my divorce, I filed for chapter 7, conventional mortgage included. Discharged 6/2011.foreclosure finally concluded 12/2013.
During my husbands divorce he filed for chapter 7, fha mortgage included. Discharged 8/2011.
Foreclosure started in 10/2010. His home was unoccupied as of 11/2010.
We found out his was removed from the title on 2/21/2011. This is the date Suntrust mortgage transferred the deed to HUD.
The sheriffs sale was 4/16/2012.
I called FHA and they stated the claim was paid 7/23/2012.
He has a pre-approval for a fha loan. (I can't be on the loan since my foreclosure was in 2013)
The underwritter says she can get a fha approval using the sheriffs sale date. She said we do not have to go by the date the claim was paid...
I asked her numerous times about this. I always thought we had to go by the date the claim was paid?
Could we apply through fannie mae? We're almost to the 4 year past bk discharge.
Could we use extenuating circumstances? Since my situation was due to a divorce, my household income decreased 70% since my exhusband moved out.
My husbands bk and foreclosure was also due to his divorce, he filed for divorce because his ex wife was physically abusive. He didn't have a drop in income but he did have high divorce attorney bills.
@patrick724 You would be correct that if the foreclosed mortgage was FHA, it goes by the date that the mortgage insurance claim was paid. That would move your "buy again" date to after 7/32/2015.
You are also correct that in 8/2015 - you would both be eligible for Conventional financing because your mortgage debt was included, and discharged through Chapter 7 bankruptcy.
I do not believe you have an extenuating circumstance claim here, and if you did, that would require you have a minimum 10% down payment if using conventional financing.
In all scenarios, if you can hold out for Conventional financing, you will be much better off because you will not have the permanent FHA mortgage insurance to contend with!
Hope this helps?
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?
@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?
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.
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 firstname.lastname@example.org , we can discuss further?
Hope this helps!
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).
@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!
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.
@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
@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.
@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.
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.
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.
@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?
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.
@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.
@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