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/deed transfer date. FHA treats short sale, deed in lieu and foreclosure as the same waiting periods.
  • 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.

Click Here for Current Interest Rates

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 the sale/deed transfer date.
  • 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.

Click Here for Current Interest Rates

2016 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 the sale/deed transfer date.
  • 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 and subsequent 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.

Click Here for Current Interest Rates

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

Fannie Mae has reduced waiting periods in cases of extenuating circumstances

Click Here for Current Interest Rates

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.

Click Here for Current Interest Rates

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.

  • BeckySherwood1 Hi Becky, there is a way to buy right away, but it’s expensive.  Using a portfolio loan, you can buy 1 day out of bankruptcy, but you’ll see higher rates and fees, and it will require at least a 20% down payment.  I think that in most cases, this makes sense to do.  It’s a temporary measure to get you into a home, start taking advantage of the savings, equity and tax benefits of ownership, until you can refinance into a more traditional loan.
    The soonest you could qualify for traditional financing would be 2 years from the discharge for FHA or VA financing, 3 years for USDA, and 4 years from the discharge for Conventional financing.
    Hope this helps?

  • BeckySherwood1

    Hi
    We had a ch. 7 bk that discharged 9/2016. We’ve never had a mortgage, have a solid rental history and financially stable before and after the bk. We filed because a collection company quit working with us after a year of payments for hospital bills. When the garnishment started to put us in hot water, we filed. We did keep our car loan and that has actually helped our credit score. We would like to buy sooner rather than later. Do we really have to wait 2 years or is there a way to do this sooner?

  • Jkidahofalls The only option that may allow you to buy now would be USDA financing, if the home is in a USDA eligible area.  FHA is not at all friendly about making exceptions on the waiting periods.
    You can also approach the seller and ask if they will allow you to rent the place for the next 5 months.  It’s a negotiation that will have to be a “win/win” for all parties, but if you’re only 5 months away, you may be able to work it out?
    Hope this helps?

  • Wes41 The waiting period to be eligible for a conventional loan after a foreclosure has always been 7 years.  In August of 2014, that guideline was modified to allow you to ignore the 7 year waiting period if the mortgage was included, and discharged in a bankruptcy, and the foreclosure happened after the discharge of the bankruptcy.
    You could be eligible for FHA financing 3 years from a foreclosure.
    Hope this helps?

  • Wes41

    When did the foreclosure waiting period for conventional loans increase to 7 years?

  • Jkidahofalls

    Hi Scott! We filed Chapter 7 bankruptcy which discharged November 2013, but then to get the title from our name a short sale was completed in April 2014. We are beyond ready to buy again, are there any options for us to buy again now? Preferably FHA. I’ve read things saying they may make exceptions under the 3 year mark. Any help or suggestions are much appreciated. We’ve found a home that we really want to buy and don’t want to lose it by waiting another 5 months if possible.

  • belindaelaine

    Hi Scott, I filled Chapter 7 bankruptcy in 2011. The home was foreclosed on 2015 and title was taken out of my name. How long do I have to wait to buy a home with a conventional loan? I was told by a mortgage co. I have to wait 7 years. Please tell me this is not true. I am ready to buy now.

  • HAMP71

    Hello. My Chapter 7 was discharged in 2013; which did not include my home and auto loans. Both the mortgage and auto finance companies are no longer able to report my payments to the credit bureaus for the life of the loans because, though they were not included, they weren’t excluded. I have no late payments and the loan was modified. How long will I have to wait to get another mortgage? I’m hoping to buy a condo and rent my current unit out.

  • htate2373

    I filed a chapter 7 bankruptcy in 2010 which included my house. I used my VA loan to purchase the property. I want to purchase another home using my VA loan again and the last house is still in my name, what can I do.

  • Jamlaw

    Hi
    In was discharged from chapter 7 bankruptcy in 2011. I’ve remained in my home since making payments, some late. The bank sent me notice to modify the Loan and put me on a modified trial. At the end of the trial they wanted me to sign I didn’t. Now I’ve received notice to contact them regarding the modification in 60 days. I’m not going to sign because I don’t want it to be misconstrued as if I re-affirmed. I’m now ready to move on and my credit is goid was was told the deed is in my name. “At this point I need to save money, how long is the process for foreclosure, how long is deed for keys, and short? If I do any will I be able to stay during the duration the bank takes to transfer deed? Will any of the above show up my now re-established credit?

  • jacco44 If the home was never foreclosed, meaning title never changed hands, then you would follow the “loan modification” guidelines.  Most lenders will require that 2 years passed since the modification if there was a significant manipulation of the principal balance like deferral, or forgiveness.  The other part to this is that you have to have made your payments on time since the modification.
    The short answer is NO, you do not have to wait 7 years.  The long answer is that there are several other variables to consider when narrowing down the exact time when you could refinance (or buy?)
    If you would like to dig into this deeper, feel free to shoot me an email to [email protected] and I”m happy to help you figure this out.

  • jacco44

    If a mortgage was subject to foreclosure, but was never ultimately foreclosed upon, do you still have to wait 7 years for a conventional mortgage?  The house was never ultimately foreclosed upon because of a loan modification.

  • ARTY03 A foreclosure would not necessarily show up on your credit report, however, the the payment history leading up to the default on the mortgage should be reporting.  If the foreclosure did not result in a taxable event, and if the lender has not pursued a deficiency judgement for any losses they may have incurred, then I don’t know if you necessarily “need” to file bankruptcy.  That would only restart your waiting periods.
    You are eligible to buy now using FHA financing.  You would be unable to qualify for Conventional financing until 7 years from the foreclosure date, which would put you at January 2020.  Bankruptcy will only cause you to be ineligible for FHA financing, and will not shorten your Conventional waiting period.
    Hope this helps?

  • ARTY03

    We went through a foreclosure in Jan 2013 We’ve been told by people that we should file bankruptcy. The foreclosure stilldoesn’t show up on any of our credit reports. The only debt we have is my husbands student loans. Cars paid for and we’ve been in the same rental since ‘2013. Is it necessary to file for bankruptcy? We would like to purchase a home again by seot 2017.

  • mam16

    ScottSchang mam16 It does, but our lender in Georgia told us because the foreclosure mortgage was a “government backed loan” (Fannie Mae), we had to wait the seven years to even apply for a FHA loan.  That was incorrect information?

  • mam16 Your waiting period is determined by the type of loan you are applying for, not the loan that was on the home that went into foreclosure.  Yes, the 3 year waiting period would apply.  If the mortgage was included in a Bankruptcy prior to the foreclosure, then that waiting may be reduced if you wanted to use Conventional financing.
    Hope this helps?

  • mam16

    My husband had a Fannie Mae-backed loan that went into foreclosure 5 years ago.   Would we qualify for a FHA loan with the 3 year waiting period or do we need to wait for 7 because it was a Fannie-Mae loan?

  • JustinDavidson Hi Justin, your instincts are completely correct.  VA guidelines require a 2 year wait from the date your name is removed from title.

  • JustinDavidson

    I have a Fannie Mae loan. I qualify for a VA loan. If I do a Deed in Lieu of Foreclosure, who standard of wait time do I follow? The way I see it, if I go for another conventional loan then I would follow its terms but what If I’m going for a VA loan?

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  • Derrick107 First order of business, Thank you for your service!  It might be worth it to try to attempt to get an extenuating circumstances exception because this qualifies as a one time experience that resulted in significant loss of income.  The documentation process can be a hassle, but it might be worth it if you’re eager to buy before 2 years.
    If you would like, I will do a little more research and see what the manual underwriting guidelines say.  If you can shoot me an email to [email protected] , and let me know the State you’re buying in, and I will see if I can introduce you to someone that can help you buy as soon as possible.
    Also, VA allows 100% financing, so you should save your down payment, unless you absolutely need to use it, it’s better off as reserves than sinking it into equity that you cannot access in an emergency.
    Hope this helps?

  • Derrick107

    ScottSchang Derrick107 I was renting a house and never had a mortgage. My Chapter 7 was a result of my wife getting injured at work and we fell behind  on bills. So we filed a chapter 13 last August and I paid one full year of no miss payments. When my wife was unable to recover from her injury my lawyer suggested converting to chapter 7 and we just got a discharged a week ago. 
    We have a current FICO score of 690 and will have a 20k down payment when we are eligible to buy. I’m a veteran and have never used my VA secured loan process.

  • Derrick107 Hi Derrick, both FHA and VA are going to require a 2 year wait from the discharge of a bankruptcy.  When you say you have no mortgage, did you have a mortgage prior to the bankruptcy?  If so, the lien would have survived the BK, and may cause that waiting period to be extended.

  • Love22 Unless your rental property was included in a bankruptcy, there are not many options other than a portfolio loan.  A portfolio loan does not follow fannie mae or FHA guidelines, so it will allow reduced times for short sales, but that comes at the expense of higher rates and fees which may be counter productive to meeting your goals.
    If your mortgage was included in BK, you would be eligible for conventional financing 4 years from the discharge.  If it was not included in a BK, you would not be eligible for conventional financing until 4 years from the short sale date.
    Hope this helps?

  • Jose1982

    Hello,
    I saw you post on Find My Way Home which has great
    information. I have one particular situation that I could use some guidance. My
    name is Jose  and I live in North Carolina. I have purchased a home in 2013
    in North Carolina using FHA but I also owned a FHA home in New Jersey which I was
    renting. After I moved in to my home in North Carolina, the tenant in New
    Jersey bailed on my other home. This created a financial bind.
    The house in New Jersey was bought before the recession for an
    amount of 130k and now the house is worth only around 40k. The house could not
    be sold through short sale per the bank. I have paid for the home for a short
    period of time in hopes to renting it but could not find a new tenant. I
    consulted an attorney and I was advised to file for chapter 13 bankruptcy.
    I completed the chapter 13 plan and have been discharged
    from same for two years now. The house in New Jersey was included in the
    chapter 13 and now I’m not financially responsible for the property. The credit
    report for that credit line shows zero balance and also says included in chapter
    13. The bank has refused to foreclosure on the home.  
    While in chapter 13 I made all payments to my current home
    and vehicles I use without missing a single payment.  My wife and I now have a little one. We have
    found out that the house we live in now, is just too small for our growing
    family. I am exploring on putting my house up for sale to buy a bigger one for
    the family.
    With that be said, can I purchase a new home with a credit
    score of above 715 and with about 10k down payment? Will the house in New
    Jersey hinder me on buying a new home in North Carolina due to the bank not
    taking back ownership? I don’t have any financial responsibility for the home
    in New Jersey after being discharge. Any information will help. What would be
    my options? Thank you so much.

  • Love22

    I did a short sale on a rental property in May 2016. My credit score is 680. I am interested in refinancing my primary residence mortgage. It is an ARM with PMI. I have never been delinquent on this mortgage. What are my options?

  • Derrick107

    I received my chapter 7 discharge yesterday I have no mortgage and would like to know how long do I have to wait for a VA, FHA mortgage as of today?

  • HAMP71

    Hello Scott. I filed Chapter 7 in 2012, which was discharged in 2013; which did not include my home and auto loads. Both the mortgage and auto finance companies are no longer able to report my payments to the credit bureaus for the life of the loans because, though they were not included, they weren’t excluded. I have no late payments and the load was modified. How long will I have to wait to get another mortgage? I hoping to buy a condo and rent my current home out. Thanks in advance for any help you can provide.

  • amyp1118

    Hi Josh. Thanks for your response. The bank came to us and asked if we wanted to modify before the chapter 13 was discharged. We did the trial period and the actual modification went into effect Feb 2014. We have not missed or been late on any payments. Their is nothing on our credit report. No sign of the chapter 13 or loan mod under public reports. Under the mortgage company the loan does say non government modification but it also say up to date and current. Thanks for your help

  • amyp1118 Hi Amy, based off the Ch. 13 waiting periods you should be good as of August of this year assuming the payment history to the bankruptcy court is good and there are no late payments after the bankruptcy. Based on your scores, it sounds like that would be true. The issue with your mortgage is a little more complex and will depend on how the account reports on your credit. Does it show current with no late payments since the modification? When was it modified? Let me know where you are located and I can connect you with someone who can help! [email protected].

  • amyp1118

    Hello. We want to apply for a conventional loan. Our scores are in the 700s. We filed chapter 13 7 1/2 years ago and it was discharged successfully in August 2014. We did not include our mortgage. Our mortgage came to us and ask if we wanted to remodify our loan only lower interest and extend term. We were two payments behind that they included into it. We have been successfully paying on that for almost 3 years with no late payments. Do you think the bank would have a problem giving us a loan?

  • Successwoman

    I would like to but a house in 9 months from now, but I have a major issue, I claimed bankrupt in April, 2013 and it was discharged, a put my house down on this due to the fact that my ex refuse to pay, which lead to a divorce and me having to claim bankrupt.  The problem is the deed got transferred out of his name and my maiden name only a year ago.  Are there any other option that I have to purchase a home by October 2017.  My credit score isn’t the problem because it’s over 690.  I believe the waiting period is 3 years from the date it was transferred over.  I need to know because I’m renting and need to know my options before I sign another lease for another year.

    Please advise

  • Tspaxton

    Also, what is a grant deed. How long does this typically take? Thank you so much for your advice I really appreciate it.

  • Tspaxton

    Ok I sent you an email. Thanks

  • Tspaxton

    I’m trying purchase in Georgia. The deed and mortgage are both in my name. With the first mortgage I suggested putting the deed in my name and they said it wouldn’t matter because the mortgage is still in my name. what should I do?

  • Tspaxton Hi Tanya, are you on title to your mom’s home, or only on the mortgage?  You may be able to do a grant deed removing you from title, then you would not have to count your mother’s home against your debt to income ratios.  I would ask your lender if they’ve thought about this route.
    What State are you trying to buy in?

  • simba1 You should be eligible for FHA financing now.  The waiting periods are 2 years for the BK, and 3 years from the foreclosure.  Because the old loan was also FHA, it’s typically a little longer than 3 years, because it does not start the waiting period until the FHA mortgage insurance is paid from the previous foreclosure.
    Either way, you should not have any challenges as long as you’re using a lender familiar with these guidelines.
    If you would like an introduction to someone that can help, shoot an email to [email protected] and I can try to get you pointed in the right direction.

  • Tspaxton

    Hi Scott,
    My situation; filed BK (chapter 7 in Georgia) in Oct 2010, discharged in Jan 2011.
    Foreclosure included in BK deed was finally transferred out of my name Aug 2013.
    My moms home is in my name and was included in BK. She makes payments and it has not foreclosured. All payments made on time.
    Question; I’m trying to buy a home for myself and am having great difficulty getting approved. I’m currently under contract for a condo, they have my earnest money yet the mortgages company has said no after they initially approved me and I went and put a contract on a condo! They say that my moms home, even though it was not reaffirmed AND it was included in the bankruptcy, they are counting that loan on my moms home as a mortgage I already have. What do I do? I’m so upset and stressed out. I’ve gone to 3 different lenders. Will I ever be able to purchase a home for myself again? This condo is only $165,00. Please help. Tanya

  • simba1

    I bought a house in 2005 and had to foreclose and declare bankruptcy in 2011.This house was through FHA loan.Can I get a loan from FHA again. I have a credit rating of around 700  and have been paying all my bills. Please guide.

  • Smile1234

    ScottSchang Smile1234  Orlando Florida. Thank you 🙂

  • Smile1234 Your instincts are right, you want someone with experience that is willing to fight this fight for you.  Your loan officer is not wrong that it is very difficult.  What State are you trying to buy in?  I can see if I know anyone that I can introduce you to that has experience with extenuating circumstances

  • Smile1234

    ScottSchang Smile1234  Yes it is helpful and Thank you for the fast response.
    I do have medial records that align with the timelines. My situation is I have a credit score of 665 and my DTI is pretty low under 30%. I was working with a broker and they said they didn’t see any issues with getting it approved through a conventional 95 (can’t do an FHA because of the loan limits in my county are $274k) The home we want to build is just under $400k. We found the house well… the builder picked out our house we wanted to purchase and signed the contract. Of course contingent to the loan approval. I received a call from the broker saying she didn’t think it was going to work. Because the multiple BK would need to be over 5 years.  I did some research on my own and found out about the extenuating circumstance possibility. I called her back and she was very reluctant to move forward with trying,  she said it almost never works. At this point I am looking for someone with experience in situations like mine and  that would go to bat for me.

  • Smile1234 Were those bankruptcies dismissed or discharged?  It’s possible that you can get an approval with extenuating circumstances, it really just depends on if you can produce the paperwork to align with the timelines, and decrease of income, leading to the filings.  If it were me working with you, I would definitely consider pursuing that extenuating circumstances exception due to the fact that medical issues typically meet the definition of a one time event, completely outside your control.
    Another option might be using FHA financing 2 years from the dismissed Chapter 7.  FHA doesn’t appear to differentiate between a dismissed and a discharged bankruptcy.
    Hope this helps?

  • Smile1234

    Hi Scott,
    Have you seen a conventional loan get approved with an extenuating circumstance? We had a Chapter 13 dismissed in 2011 and a Chapter 7 dismiss in 2013. Both due to serious medical issues.

  • austinloyd Hi there, thanks for the question – The soonest you would be able to buy using a traditional loan (as opposed to a portfolio loan), would be 4 years from the discharge date of the bankruptcy, as long as the mortgage was included, and discharged.  FHA is going to require 3 years from the foreclosure date.  
    There may be one other option, but it’s only available if you’re buying in a USDA eligible area.  USDA has a guideline similar to conventional, except that it’s only a 3 year wait from the discharge of the BK.

  • austinloyd

    Hi Scott,
    I filed chapter 7 bancruptcy with a mortgage included back in 2013 it was discharged on 11/27/2013, but the bank did not for close until 03/2016. I have rebuilt my credit have 700ish scores with very little debt I am currently renting. TIRED of wasting my money and want to buy badly how soon will I be eligible for a new home loan, and what program will allow my situation the fastest purchase options.

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  • Patcha

    My bankruptcy chapter7 will be 2yrs in Nov. I own a home that is paid off that I am trying to sell. I need a lender in Ohio and fl who handles fha and usda loans as I want to prequalify before I start looking. My credit union added a two year layer for chapter7.I don’t know my real credit score but credit carma has it at 687 and 657 as fair.

  • MAX1lobo

    ScottSchang MAX1lobo Good morning Scoot and i want to thank you for the help with my situation,so you mentioned a portfolio loan-will i still need to wait to do this type of loan? I thinking of the tax deduction of owning a house at this point and need to weigh my pro’s and con’s, And know i am just wondering if this is why some of these lenders are saying yes we can get you financed-as the are thinking portfolio loan. Hmmm—So this is my ONLY option at this point correct?  And if i follow through with this portfolio loan should i us my bank or a diff lender-any help on this is appreciated.Do you know any good lender we can work with in Arizona????

  • activepassive

    ScottSchang activepassive
    Thanks so much for the info!!! I think we will just have to have them go ahead with getting the loan for us but that will affect rates because it will be viewed as an investment property, correct? Man, it’s so hard to get back on your feet!

  • MAX1lobo The challenge is that most loan officers do not encounter this often enough to have really explored, and fully understand all of the guidelines, for each loan type.  It’s not a malicious attempt to mislead people, it’s simply inexperience, and not having the sense to do their homework, or say “I don’t know, let me do some research”.

  • MAX1lobo No, it is not.  A mortgage is only in default if you stop making payments.  Bankruptcy does not make the loan go away, it simply protects you from any taxable event, or attempt at collection in the event that you are unable to make the payments and go into default.

  • activepassive unfortunately, adding a co-signer only helps you meet debt to income requirements, it will not affect the waiting periods.  You can most certainly have your parents buy the home and then sell it to you subject to the existing loan.  This basically just means that you make the payments on the mortgage.
    Was there a bankruptcy prior to the deed in lieu by any chance?

  • activepassive

    Scott,
    If I just finished up a deed-in-lieu within the past six months, what are my options? Could I be approved if I have my parents co-sign a loan or should they just take it out in their name and I pay for it? HELP!

  • MAX1lobo The reason other loan officers are not asking is because they don’t know to ask.  I literally speak to people every day that the loan officer didn’t ask that question, and the escrow fell out just before closing because of it.  You can read through this thread and you’ll hear plenty of stories very similar to yours.
    If the home was never foreclosed, and you didn’t do a short sale or deed in lieu of foreclosure, then you probably still own that home, and the mortgage is in default.  Do you remember if the loan that you discharged through bankruptcy was a FHA loan or not?
    This seems like it might get a little more complicated before it becomes more clear.  If you would like, shoot me the address to the home included in BK, and I will look up public records to see if you still own it.
    My email is [email protected] – please include your full name, and the address of the home.
    I promise you that I’ve done this many times, and I know the guidelines.  We will get you pointed in the right direction!

  • MAX1lobo

    Hi yet Again Scott-LOL just got off the phone with another lender that returned my call and he say 3 year wait after foreclosure, even though the discharge was 2 years ago with the home included-WOW-These lenders need to pull their heads out and get schooled up on this.
    I have even explained it to my bank and they said yes they can finance me now after my 2 year discharge wait. WTH

  • MAX1lobo

    One more question sir,is it considered defaulted after bk discharge.

  • MAX1lobo

    ScottSchang MAX1lobo
    A little confused here Scott,yes the house was in the bk7 and we stopped making payments before the chap 7 was filed.i am not sure that if we are on the title or not,are some lenders more forgiving than others in this situation? No one seems to be asking me if the title is in my name or not. Thanks in Advance.

  • MAX1lobo Yes, that is correct, AND this is why so many people lose time and money working with lenders that do not know what they are talking about.  The Bankruptcy waiting period IS 2 years, however, you cannot use FHA financing if you are still on title to a defaulted loan.
    If the mortgage is current, and the loan on that home is NOT a FHA loan, then it might be possible to buy another home if you can afford both payments on both homes.

  • MAX1lobo If you are expecting the home to be foreclosed on, I am assuming that you stopped making payments after the bk?  If so, you would need to have your name removed from title before you would be eligible to buy using traditional financing methods.
    There are several ways you can accomplish this.  The first way is to wait for the bank to foreclose…which is where you’re at right now.  The other two ways would be to do a short sale (if you owe more than the home is worth), or contact the lender and negotiate a deed in lieu of foreclosure, also known as “cash for keys”.
    Once your name has been removed, your timeline for buying again will depend on the type of financing you are applying for.  If you are applying for FHA financing, FHA is going to treat the removal of your name from title by any way other than the lender being paid in full as a separate event from the bankruptcy, and will require a 3 year wait from the date of the foreclosure, short sale or deed in lieu.
    For Conventional financing, you can ignore the date your name was removed from title (as long as the mortgage was included, and discharged), and you would be eligible in 4 years from the discharge of the bankruptcy.
    Based on your question, it sounds to me like your best, and quickest option is going to be conventional financing.  This gives you the next 24 months to resolve the title issue.
    If you are motivated to buy sooner than the four years, it is possible using a portfolio loan.  A portfolio loan will have higher rates, higher fees, and require a larger down payment, but it will allow you to get into the home, and allow you to take advantage of the tax deduction, and forced savings benefits of homeownership.
    Hope this helps?

  • MAX1lobo

    Hi again Scott,just want to add that i just got off the phone with Home mortgage alliance and he confirmed that it is 2 year after my discharge that included my house -but the house has not foreclosed  on yet..Is this correct He said (FHA)?

  • MAX1lobo

    Hi Scott,we filed chap 7 bk and included our house in the bk-it has been 2 years since the discharge this month,can we now purchase a home?  I’m hearing many different stories about this from lenders. WHAT ARE MY OPTIONS-THE HOME HAS NOT FORECLOSED ON YET.

  • Jenjewell My pleasure 🙂  I would start talking to a loan officer sooner than later.  I would keep the money, and pay down the credit cards more slowly.  With a debt to income ratio of 23%, you would not need to pay off cards for that reason.  If your balances are too high on those cards, that may be affecting your credit scores.  
    If you’re using FHA financing, your credit stores are good where they are at.  If Conventional financing is a better option for you, you may want to strategically pay down revolving credit lines to give your credit scores a push.  You will save thousands in interest and closing costs by increasing your credit scores from where the are at now.
    I can introduce you to someone I know and trust if you would like?  If you would like an introduction, shoot me an email to [email protected] and let me know what State you’re buying in.

  • Sbegley

    Hi,
    Are there any other programs for loans after foreclosure?
    Is there really only fha loans available?

  • Jenjewell

    We haven’t met with one yet…our lease is us 2/28 so we have 3 almost 4 months until then. Our debt/income ratio is right around 23% but obviously would come down a lot if we paid the CC off but then that would leave us with less of a down payment. I just know that we definitely don’t have 20% saved up for a down payment. We are currently looking to buy around $135,000 house. Just thought I would pick your brain first!!! Thanks for taking the time to answer me back 🙂

  • Jenjewell Great question!  I wouldn’t make that decision until you have the loan officer review your credit, and determine which loan program best suits your needs.
    For instance, a higher credit score is going to save you a ton of money if you’re using conventional financing.  If you need to use FHA financing because of debt to income ratios, then your 644 is “good enough”, and I would use that money for down payment.
    What is your loan officer recommending?

  • Jenjewell

    Hi Scott! Back in April 2009 I foreclosed on a “house flipping” job. Since then I successfully sold my home I actually lived in. I’ve been repairing my credit and it’s back up to 644 now. I have $16,000 coming in soon… but I also have 2 maxed out credit cards totaling $6000…my question is should I pay off all debt and use $10,000 on down payment? Or should I pay off half of my debt and use $13,000 for a down payment? That is IF we even get approved for a loan.

  • Seanclrls Yes, that is correct.  3.5% might be available if your loan balance does not exceed $417,000 and you have at least 20% equity.  You would be eligible for the best rates that are available, there is no penalty or expense because of the short sale.
    I am a lender in California, if you would like me to run some numbers for you, shoot me an email to [email protected]
    Hope this helps?

  • Seanclrls

    Hi Scott, we short sold our home in the end of November 2012. We purchased another house in December 2014 using a portfolio loan at 5.5%. Am I correct in thinking we can refinance with a conventional loan at the end of November (4 years)? If so, can we expect to get the current 3.5% rates? We have perfect credit other than short sale, around 720-730 now. We are in northern Cal.

  • Jan279 Were either of those mortgages discharged through a bankruptcy?  If not, you would have the option of either FHA, VA or USDA financing for your refi.  At a 7% rate now, you’re looking at potentially cutting that in half!
    What State are you in?  I may be able to introduce you to someone that is familiar with these guidelines and can help you explore your options.  If you are interested, shoot me an email to [email protected] and I will help in any way I can.

  • Jan279

    we’re looking to refi our firsth mortgage with a 7% rate. We had 2 foreclosure in 2012. Please advise

  • Ssimpson9272 That guideline does not exist for FHA.  Only Fannie Mae, Freddie Mac or USDA will allow you to use the BK discharge date.  FHA is going to consider the BK and the subsequent default as two separate events, with two separate waiting periods.  
    The waiting period for FHA will be 3 years from any foreclosure, short sale or deed in lieu.
    Is there any reason you cannot use Conventional financing?

  • EvanW1966

    Hello Scott,
    I’m not sure if you can help?  Here’s the situation…
    We had a Chapter 7 Bankruptcy discharged in April of 2009 (New Jersey). 
    Both our mortgages were included in Bankruptcy petition and discharged
    in Federal court.  *We tried to reaffirm the debt but the Property had a
    negative equity of $200,000.  According to our attorney, the judge
    would NEVER allow such a reaffirmation agreement.
    After our Chapter 7 discharge, the Lender accepted mortgage payments
    from us provided we agreed to have an auto-pay from our checking
    account.  Lender NEVER required that we reaffirm the discharged debt and
    our names still remain on the deed.  We’ve been making voluntary
    payments since 2009 with the hope that someday the home equity would
    return.  As of today, our home’s equity is still negative over $100K. 
    We attempted a refinance to at least reaffirm the loan to a FIXED rate;
    however, the Lender is NOT willing to lower the mortgage balance to
    match the current equity…
    Our Financial Advisor and CPA advised that we should simply buy a new
    home but we are having a VERY hard time getting a mortgage. The debt has
    been discharged since 2009; however, the fact that our names are still
    on the deed and we’ve made volunteer payments for over seven years is hurting us?
    Do
    you have specific underwriting guidelines that we can look at?  I can’t
    find anything online which addresses our specific set of
    circumstances…  We have reestablished credit and we are able to finance with 20% down or more?  I haven’t any idea why this is so difficult?
    Any insight to this will be very well appreciated!
    Thank you!

  • Ssimpson9272

    Hi Scott. Can you please tell me what mortgagee letter references the ability to go off the BK discharge date & not the foreclosure deed date with FHA. Has this recently changed? Thank you

  • Ssimpson9272

    Hi Scott. Can you tell me where to find the FHA guideline saying we can go off the BK discharge date & not the foreclosure deed date for an FHA loan.

  • stephaniecollins711 The waiting period depends on the type of loan that you are applying for, and yes, FHA is going to be 3 years from the foreclosure date.  If the mortgage was included, and discharged through a bankruptcy, you may be able to use the BK discharge date and ignore the deed in lieu date.  Lastly, if you are eligible for a VA home loan, the wait is only 2 years.
    Hope this helps?

  • stephaniecollins711

    Hi Scott,
    Our deed in Lieu went through on July 15 2015. Can you verify that we have to wait 3 full years to apply for a new home loan? FHA or otherwise. Thank you! We are in Illinois.

  • TFAMCF

    ScottSchang TFAMCF Thank you Scott. Are there any good Portfolio loan options in California that we should consider. We really want to buy again within the next 6 months if possible.

  • Jrush Yes, that’s correct, unless the mortgage was included in a bankruptcy that was discharged more than four years ago?  It sounds like you might be using FHA financing?  If so, you can start the process, but you would not be able to secure a FHA case number until after the 3 years is up.
    This shouldn’t prevent your lender from pre-approving you.  If you would like an introduction to a different lender, shoot me an email to [email protected]
    Hope this helps?

  • TFAMCF because your bankruptcy was dismissed, and not discharged, the foreclosure would need to be the event from which all waiting periods are measured.  The waiting period will depend on what type of financing you are applying for.
    In the order of soonest to longest, if you or your husband are eligible for VA housing benefits, your wait is only 2 years from the foreclosure.  For USDA or FHA financing, it’s a 3 year wait from foreclosure date.  Conventional is a bit down the road at 7 years.

  • TFAMCF

    Hello Scott,
    My husband lost his job and we could no longer afford our mortgage. We filed Chapter 13 bankruptcy in an attempt to save our home, we were unsuccessful in obtaining a payment that we could afford so we dismissed the Chapter 13 in 2013. Our foreclosure was completed in January of 2016. How long do we have to wait to purchase another home?
    Thanks!
    FC

  • Jrush

    We had a forclosure and it will be 3 years as of 10/31/16. We were told we cannot apply for pre-approval loan until the 3 years is up. We are in Wisconsin.

  • NatalieR If the seller will allow you to assume the loan, or carry a loan note for 3 years until you can refinance, those are both options that do not necessarily need a lender involved.
    You should discuss your situation with the seller first and see what their motivation for selling is, and if they are open to working with you. That will give you a much clearer path, and make your choices easier.
    I do know people in AZ, but I’m not sure if they can do portfolio loans, I will find out for you.  Please send me an email to [email protected] and I will be happy to make an introduction if needed.

  • NatalieR

    Scott,
    We didn’t file bankruptcy, so it was just a straight (and very long) short sale.  What you suggest, would that be assuming the loan? Or more like a rent-to-own option?  And can you tell more information about a portfolio loan?  We live in AZ, so I’m not sure who does that here.
    Thanks!

  • NatalieR is there any chance you filed bankruptcy prior to leaving the home?  If so, your waiting period may be shortened using Conventional financing.
    There are ways to do this, first and foremost is simply starting a conversation with the seller.  Explain your situation, and look for a “win-win” scenario.  How much do they owe on the home?  Would they be willing to accept a rent payment higher than market in order to have an option to buy the home at the end of a specific period?  
    There is also always a portfolio loan.  A portfolio loan could get you up to 75% to 80% of the value of the home.   The rates and fees are higher than a traditional loan, but if it can help you accomplish your goal, it might be worth it as a temporary situation.
    Hope this helps?

  • NatalieR

    Hello Scott,
    The short sale of our house was approved just a few months ago in August 2016.  We bought it at the peak in 2005 with an FHA loan and lost it due to my unemployment, family illness and frankly, it became a money pit. So we literally moved on. We have been renting a lovely house for a few months that and recently, our landlord said they would like to sell it within the year. They are offering us first dibs. After reading your comments, it seems we aren’t not eligible for an FHA loan for three years. What are our other options for buying? I just love it here and hate to leave. I appreciate your help.

  • RachelDunlap There are no options until you get your name off title, regardless of the bankruptcy.  FHA is going to count this as a totally separate event from the bankruptcy, with a separate waiting period (3 years from the date your name is removed).  
    Using Conventional financing, you would be eligible 4 years from the discharge of the bankruptcy, as long as your name is removed from title.
    I can definitely introduce you to someone that is familiar with these guidelines, and never would have allowed you to go into contract with a FHA loan.  I’m so sorry you had to experience that lack of professionalism and expertise.
    Feel free to shoot me an email [email protected] and I can make an introduction.
    Hope this helps?

  • RachelDunlap

    Hi Scott, I had a bankruptcy which was discharged I 2012 and the home was included in the bankruptcy. I was preapproved for an fha loan and had a p&s, deposit, inspection and all. They asked me for the final foreclosure document or HUD doc. and come to find out, there was a notice of sale in 2015, but after calling around found that aThird party bought the property but it hasn’t closed yet, so as far as the county is concerned I’m still on the deed. I was denied the loan because the foreclosure has to be within 3 years, though it’s still not finished. I thought if it was included in the bankruptcy it was not an issue. I’m in CT, would you know anyone that could help?

  • HartHoliday In terms of the waiting period before you would be eligible for a home loan, there is no difference between a short sale, or a deed in lieu of foreclosure.  A deed in lieu may give you the ability to have better control over the timeline, and possible even receive money from the bank to help you move out.
    I would also check with your tax professional and make sure that one of these options does not create a taxable event.
    Hope this helps?

  • HartHoliday

    I am considering a short sale of Deed in lieu of…which was is the best option for a resident of Alabama?

  • Cworsnop If you deeded the home to your ex husband, then you should not be showing up on title?  A quit claim is one way to do it, but a transfer deed is a better legal instrument to use.  Also, how the assets are divided, and who is responsible as described in the divorce decree can play a big role in how an underwriter will look at this scenario.
    I can only do business in California, and if you were trying to buy in California, I would try to get you approved under the Fannie Mae guideline, 4 years from the discharge of the bankruptcy.  It sounds to me like your name should be removed from title.
    If you would like to shoot me an email to [email protected] I can introduce you to someone that can help in the State that you’re buying in.  Also, if you send me the address to that home in NV, I can look up public records and let you know if you are still on title or not.
    Hope this helps?

  • Cworsnop

    Hi Scott,
    Divorced 2012 and filed bk7 2012. I did not reaffirm. Ex husband remained in home making no payments. Home still has not been foreclosed on. I signed quit claim deed August 2016 trying to put all this behind me. When am I eligible to obtain mortgage. Credit score 690 to 705. Thanks

  • KAM2016 Extenuating circumstances are very subjective.  An individual lender can have different tolerances for what it will allow as an exception.  The question an underwriter is going to ask is “why” did you suddenly have to close the business?
    If you would like to email me directly, we can discuss this further.  If you don’t mind sharing your hardship / story in public, we can keep the conversation here and maybe it will help others.
    My email is [email protected]

  • KAM2016

    Hi Scott,
    We suddenly had to close our business (restaurant) and ended up filing Chapter 7. Does this fall into extenuating circumstances for a FNMA? (one time occurrence, out of our control, currently both W2 employees). We are close to the 2year mark to be able to purchase using FHA, but since the max is 271,050, it won’t get us much in our area. I was hoping to not have to wait the four years. Our current home was not a part of the Chapter 7, however, we did have to do a modification. Thank you for your insight.

  • Carolc1 Yes, ONLY if you are using Conventional financing.  FHA considers the BK and the short sale as two separate events, with two separate waiting periods.

  • Carolc1

    Doesn’t the bk date override the short sale date? For waiting periods I mean?

  • Carolc1 Your waiting period will depend on the type of financing you are applying for.  FHA financing is going to require a 3 year waiting period from the date the short sale was recorded.  Conventional financing will allow you to buy 4 years from the discharge of the BK, and ignore the short sale date.  There are not many lenders that will do this though.  
    If you would like, shoot me an email to [email protected] and I can introduce you to someone that can help.

  • Carolc1

    What if you included the fha home in backruptcy in 2011 and home wasn’t shirt sales until 2016. When does the waiting period start?

  • js510mx I would encourage you to speak to a lender now.  There wouldn’t be any cost or obligation, and you would be able to “credit and income” qualify, all you would have to do is wait out the waiting period.
    Your lender can determine your debt to income ratio, and if there are any challenges, you will have time to resolve those, and be in a position to buy once your waiting period is up.
    There is no downside to getting pre-approved now.

  • js510mx

    We haven’t talked to a lender yet. My 3 yrs is up in Dec, so I’m just trying to get all my ducks in a row. Didn’t think it would be worth talking to a lender yet. Not sure what to do.

  • js510mx Ok, I’m so sorry, I understand your question now.  I would apply first, and let the lender tell you whether or not you will qualify.  What you’re specifically referring to is your debt to income ratio.  USDA does not have loan limits, it has income limits, which in turn determine the amount you qualify for.
    Depending on your qualifying income, if you are unable to qualify, then putting money down is one option.  Paying down your liabilities on your credit report is another option.  Which of these options is best really just depends on how much help you need to get your debt to income ratio in line.

    You may find out that you do not have to do either of these options, you may find out that you have to do both.  What is your lender telling you?

  • js510mx

    We are buying in Michigan. Looking at a rural development loan. Just wondering if paying down any last debtvwould help more than putting 10k down

  • js510mx

    Hi, I’m looking at buying a house 3yrs after a short sale. What would be best/help get approved, money down or no credit card debt? Thanks

  • Malone T Yes, that is accurate, and Yes, I can introduce you to someone in NY that can help.  Do you mind shooting me an email (copy and paste your question), and I will make an introduction.
    Hope this helps?

  • Malone T

    I have a Chapter 7 that will be discharged 4 years in Oct. My house included in the Ch 7 wasn’t foreclosed on until about a year ago and is now completely out of my name. I see that they updated the conventional (Fannie mae) requirements on 7/29/14 to eliminate waiting periods for subsequent foreclosures. Do you know any banks in NY that give a mortgage in this circumstance? Credit clean since ch7 score in mid 600s.

  • ChristineWolfe no problem at all!  I do not believe that FHA’s Back to Work program will be extended.  
    It wasn’t a very popular or effective program (in my opinion) and many lenders refused to even offer it because the burden of proof in order to get the exception was just too difficult for most people to meet.
    Conventional (Fannie Mae) is much more flexible with extenuating circumstances.  Before back to work, FHA required either the death of a primary wage earner, or the permanent disability of a primary wage earner in order to get an extenuating circumstances exception.
    Fannie Mae has always considered lay-off, reduction of income, and even loss of income through divorce as potential circumstances worthy of consideration for an exception to the waiting periods.
    I apologize if we’ve already had this conversation, but what was your hardship?  and what are the dates/timelines?  If you would like to keep it private, shoot me an email to [email protected] and let’s see if we can pin down an exact timeline, and any potential opportunity to speed up that timeline.
    Hope this helps?

  • ChristineWolfe

    So sorry for not explaining better. What I want to know is will the back to work program be extended in 2017? But it is good to know that these guidelines won’t change much.

  • ChristineWolfe Hi Christine, which program are you referring to?  The waiting period guidelines are not programs that will expire.  They may change, or be modified in some way, but it’s not likely.
    My personal opinion is that these guidelines will not change in 2017.

  • ChristineWolfe

    Are they going to extend this program next year into2017?

  • bigdream1956

    Hi Scott:

    I read this column with great interest.
    We filed Chapter 13 bankruptcy in 2010 due to my loss of job.  We fulfilled the terms of the bankruptcy and it was discharged as completed as agreed.  Our house was included in this (as we were going through the process of trying to get the servicing company to come to the table and do a refinance).  After being told by a superior court judge they had no obligation to meet with us (against the statute at the time), they finally foreclosed on the house in August of 2012, and we were officially of the title in September of 2012.
    We have already purchased another home, FHA, 3 years to the day.  We have now been in that home for a year, and I would like to refinance to a traditional Fannie Mae/Freddie Mac conventional loan, getting rid of the FHA PMI if I can.

    My question is, after reading HB-1-3555 Attachment 10-B, it looks to only speak to Chapter 7, and not Chapter 13.  Meaning, that I can’t utilize this exception if I filed Chapter 13 and successfully completed it. Is this correct?

    Thanks

    BD

  • nuclearsuz

    Hello Scott,
    My husband and I filed a Chapter 13 Bankruptcy  (2011) and sold our home in short sale (April 2015).  Our house was included in the bankruptcy filing and we had surrendered it at that time.  It took the bank 4 years to locate the loan documents.   All of these proceedings were a result of extenuating circumstances.  (Illness, loss of income and loss of job).   Now, we have completed our Chapter 13 and all debts have been discharged.  We are in the process of purchasing a new home.  We have applied for a VA loan.  (Our prior home was not a VA home loan.)  We have the VA COE and we are being told that short sale is being viewed the same as a foreclosure??  We have 6 % to put down on the purchase of the home.  We have submitted the loan application and it has to undergo manual underwriting.  We meet all the criteria otherwise.  Our credit scores, debt to income ratio.  Is this something that we should be worried about?  
    Thank you for your feedback.
    Suzanne

  • lifecoachcarly Hi Carly, thank you for the kind words.  Unfortunately, conventional financing still carries a 7 year waiting period after a foreclosure, unless the mortgage was included, and discharged through a bankruptcy.
    You mentioned two things that sounded like they may conflict a little.  You said you have not capital investment for the new home, but you are also selling your current residence?  Will there be any equity from that sale that you can use as a down payment?
    So, FHA will not work. Conventional is still a couple of years out.  The only other options are lease to own, seller carried financing, or a portfolio loan that will allow you to borrow the money to buy the home, and you can refinance into a conventional loan once you are eligible.  The challenge with portfolio loans is that it requires a larger down payment (15% to 20%), with higher rates and fees.
    In almost all cases, if you can come up with the down payment, it makes sense to buy with a “2 step” approach like this.
    What State are you trying to buy in?  If you shoot me an email to [email protected], I may be able to introduce you to a creative lender that can help you explore these options.
    Hope this helps?

  • lifecoachcarly

    Hi Scott,
    First, thank you for investing your time and energy into helping so many with mortgage and loan questions. My husband and I foreclosed on a non-primary residence (rental property) in June 2011 (when our names were cleared from the record) and we have had a conventional mortgage with our current primary residence for 8 years (no dings, payments made on time and all current) and our credit scores are finally back up to ~725. We are looking to sell our current home and purchase a home but have been told we only qualify for a FHA loan which caps our total loan amount. We are hoping to get approval for another conventional loan but were told the foreclosure stays on our record for 7 years (what the wha???). This is a very long way around asking you is this true?? We don’t have any capital to invest into our next home and are praying we would only be required to put 3% down (max). Is there any way around this 7 years?? Thank you so much!! Carly

  • Dixylady12 Lenders will absolutely add “layers” of guidelines over VA guidelines, these are called “overlays”.  VA actually does not recognize a short sale as a hardship, and with a waiting period of 2 years from the BK, you should be eligible now.
    I would say that probably 9 out of 10 lenders and underwriters I talk to are either not familiar with these guidelines, or are unwilling to try to figure it out.  
    If you would like an introduction to a lender that can do this loan, shoot me an email to [email protected] and I will see who I know in your State that can help.
    Last thought on this is that if you had a VA loan on the home that was short sold, that may affect the amount of your eligibility if you are trying t   .  That’s very strange that your UW said that VA told them 3 years.  That’s FHA guidelines, not VA.

  • Dixylady12

    Hi Scott,
    My husband and I filed chapter 7 which was discharged in January 2014. In our BK we included both homes that we had VA loans on. We were able to sell one at full value, but had to short-sell the other. Both closed in May 2014. The short sale one was recorded June 2, 2014 and our names taken off title.
    I work for a mortgage company and our underwriter was advised by VA that we are not eligible until June 2, 2017 for another VA loan. From what I read above, you say different. How can it be different between lenders?

  • MegP

    Hi Scott,
    I desperately hope you can help me! Even though I laid all my info out on the table with the loan officer to specifically ask if I would have any issues, and he said it would be complicated but I should be fine, I was just informed that my mortgage was denied by the underwriter 14 days before closing.
    In 2011 my husband at the time and I included our mortgage in our bankruptcy that was discharged. I continued to make the payments on it though while trying to sell it for awhile as we divorced. Finally I worked out a deed in lieu of foreclosure that was finalized in Feb 2015.
    The last few days I’ve spent trying to show I experienced a 20% financial hardship prior to the deed in lieu of to meet the 1 year exception that FHA loans will grant but we couldn’t show that much. So according to the mortgage processor I have to wait the full 3 years for an FHA loan and longer for conventional. They are giving me a letter of denial so I can get my deposit back.
    But I really want to buy the house. Is there anyway I still make this work?Ive repaired my credit since the BK.

  • ch5520 It should be the day of the close of escrow of your short sale.  As soon as the new deed is recorded, you are officially not on title, and your waiting period begins.  If you included the mortgage in a bankruptcy, that may change the start date of the waiting period.
    Hope this helps?

  • ch5520

    Quick question Scott, how can I find out the date that I was removed from the title on a short sale? Is it just the closing date for the short sale, or does it take longer to have your name removed?

  • mtate10 Hi Matt, the timeline for buying again is determined by the type of financing you’re using.  If there is only a short sale, and no bankruptcy, then the waiting periods are as follows:
    You can buy using Conventional financing 4 years from the date that your name was removed from title.
    You can buy using FHA financing 3 years from the date that your name was removed from title.
    You can buy using USDA financing 3 years from the date that your name was removed from title.
    You can buy using VA financing now.  VA does not recognize a short sale as a financial hardship, however, you must be eligible for VA benefits for this option.
    Hope this helps?
    As far as when these waiting period rules will change?  I wouldn’t count on any changes anytime soon.  The last major update was for Conventional financing only, and that change was made in August 2014.

  • mtate10

    Hi Scott,
    I was relocated by my employer in December 2013 and had to sell my home that was upside down.  We finally closed on a Short Sale in June 2015.  My credit score is built back up and want to buy a home.  One lender told us the waiting period is 4 years.  Are there any options to get a mortgage loan now?  When would these waiting period rules change, if they do?
    Thank you,
    Matt in Florida

  • MLAMF

    MLAMF Thank you, Scott.  I just emailed you.

  • MLAMF The quick answer to your question is Yes, short sale is considered the same as a foreclosure and will fit into the Fannie Mae guideline.  
    That said, the Fannie Mae guideline you’re referring to only specifically mentions foreclosure, and does not mention short sale.  The challenge is, unless a lender specifically fights to understand this guideline, they will tell you that you do not qualify.
    It sounds like you are eligible now to buy using a Conventional loan.  If you would like an introduction to a lender that understands the guideline, shoot me an email to [email protected] and I can point you in the right direction.
    Hope this helps?

  • MLAMF

    Hi Scott.  Our chapter 7 bankruptcy was discharged on July 3, 2008, 8 years ago, and our B of A mortgage loan was included in the  bk.  Bank of America did a short sale on the same property April, 2016, and we were finally removed from title.  Our question is . . . is a short sale considered the same as a foreclosure in order to fit into the Fannie Mae guideline to use the waiting period date of the bankruptcy rather than the short sale date?

  • PDV Technically, a deed in lieu is considered not as bad as a foreclosure, but in terms of waiting periods, there is no difference since the mortgage was included, and discharged in the bankruptcy.  A deed in lieu is going the best option in terms of having control over the process, however, there is a lot more paperwork for you if you go that route.
    The self employment income is going to be a challenge.  You must have a minimum 2 years experience being self employed, and your qualifying income is your most recent 2 years net taxable income from your tax returns.

  • PDV

    ScottSchang PDV Thanks Scott. Is there any benefit between a deed in lieu or foreclosure as far as getting mortgage? If I foreclose or do the deed in lieu by March will my income prevent me from qualifying for a mortgage? I will have only one year with self employment income. thank you!

  • PDV The waiting period for when you are able to buy again will depend on the type of financing you are applying for, and the current disposition of that 2nd mortgage.  The “soonest” you would be able to buy would be 4 years from the discharge of the bankruptcy, which would put you out to March 2017.
    You will have to address that 2nd lien.  You would not be eligible to buy a new home if you have a defaulted mortgage on your current residence.  If you foreclose, or do a deed in lieu, that would allow you to buy in March 2017.
    FHA financing is going to require a 3 year waiting period from the date that your name is removed from title, so that’s probably not a great option.
    Since you included those mortgages in your bankruptcy, and default, foreclosure, short sale or deed in lieu will not affect your credit report, or credit score.  It is still a matter of public record, however it will not affect your credit report.
    Lastly, is extremely difficult to find a lender that understands these guidelines, so if you need an introduction, shoot me an email to [email protected] and I will try to point you in the right direction.
    Hope this helps?

  • PDV

    Hi Scott. I owned two properties were included in a Chapter 7 BK which discharged march 21, 2013. I lost my job, lived on savings in 2015 and this year 2016 I have been self employed as a consultant. My income is over 80,000 on my tax returns for the past two years but not for my consulting work. My credit score is 685. 
    My current residence is included in the BK but is still underwater and I’m in default on the a private lien on the 2nd mortgage.  I would like to buy a home somewhere else and walk away from the house but I have been told I don’t quality for a mortgage. 

    Can I qualify for a mortgage in my situation? 
    Would it benefit me to enter into a deed in lieu with the 2nd? If I foreclose or do a died in lieu now will it affect my ability to get a mortgage in a year or two? 
    thank you!

  • loulou68

    ScottSchang loulou68 
    Hi Scott,
    The cash out refi is for a purpose which I expect to be temporary or I wouldn’t even bother. I need at least 60K now. However, within a year I will get it back. It’s for legal purposes.

  • loulou68 any savings vehicle would work.  My only concern was if you were going to borrow that money at 8% just to put into a savings account, that doesn’t make sense.  If you’re just putting away pay checks to save up for your down payment, anything is better than having it sitting in a non-interest bearing checking account.

  • loulou68

    ScottSchang loulou68
    Hi Scott,
    No, either way I need to to a cash out refinance due to an emergency situation. However, I could wait on the purchase until I qualify for a conventional or FHA. I would be saving in the meantime towards a down payment. If not a CD would you suggest a savings account with a higher interest rate such as FNBO? 
    Please forward the introduction to me.
    Thank You,

  • loulou68 great questions here.  I’m not sure if borrowing money at 8% to park in a CD is a great idea.  The yield on a short term CD is most likely much less than the 8% cost.  You’re better off leaving your equity in your home until you’re ready to buy the new home.  Did I understand your question correctly?

  • loulou68

    ScottSchang loulou68
    Yes this helps. I will email you for the introduction. I have another question, maybe a better scenario. Should I wait to purchase and just refinance with cash out at the 8% and put the cash into a cd to gain interest while remaining here as my primary until the 2 years after BK is up? At that time my credit will be better and I could do an FHA on my new purchase and a conventional with a better interest rate on this property as a secondary. This way I would save on interest while making interest income from the cd. Could that work?
    Thanks in advance,

  • loulou68 ScottSchang I do have portfolio lenders that will lend up to 80% of the value of the home.  The rates are in the 8% range.  The challenge might be that the money to take cash out of the duplex and to buy the new home will be in the 8% range for both transactions.
    You would need to hang on to the loans until your respective waiting periods are up.  You would be able to refinance the duplex using conventional financing in 4 years from the discharge of the BK (if you’re using it as a rental).
    You could refinance your primary residence using a FHA mortgage in 2 years from the discharge of the BK.
    If you would like an introduction to a creative lender in your area, shoot me an email to [email protected] and I can make an introduction.
    Hope this help?

  • loulou68

    ScottSchang loulou68
    Massachusetts

  • loulou68 There are definitely options for doing this, but they are really expensive.  What State are you trying to buy in?

  • loulou68

    Hi Scott,
    I filed chapter 7 and was just discharged this Feb of 2016, I know, very recent. I own a two family home with plenty of equity and need to take cash out.. I can’t find a bank or credit union that will touch me with a cash out refinance. I don’t want to sell my home. My intent is to buy a single family and use this as an investment property when I can. Do you have any suggestions?

  • campforlife

    ScottSchang campforlife Thank you!.  I sent an email to discuss further.

  • campforlife Yes, you would be eligible for Conventional financing as of August, 2016.  The differentiation between a second home and an investment property is substantial.  It’s important to discuss with your lender what your living situation intentions are, so that you do not have any last minute surprises due to occupancy questions.
    If you would like an introduction to a lender that is experienced with this fannie mae guideline, shoot me an email to [email protected] – if you include the State you’re buying in, and the address to the property that was short sold, I can nail down an exact date for you too.
    Hope this helps?

  • campforlife

    Hi Scott, my wife and I short-sold our home which was discharged in August of 2012.  I am now gainfully employed (past 4+ years) and my home is provided by my employer as a requirement of employment.  (I have to live at the location I work and they furnish the home and pay all utilities)  We are now 100% debt free and have minimum 10% down for a second home/ vacation property/ investment property in the area where our family lives (about 10 hours away).  Am i eligible for any type of loan under this scenario?

  • WendyAshley Traditional financing, namely Conventional or FHA will not be available until 3 years from the foreclosure for FHA, or 4 years from the BK discharge for Conventional.
    There are portfolio programs available that can help, and will require a minimum 20% down payment.  If you’re interested in a program like that, shoot me an email to [email protected] and let me know what State you’re buying in.  I can make an introduction to a lender that may be able to help you explore these options.
    Hope this helps?

  • WendyAshley

    Hi Scott, My husband and I both lost our jobs during the Great Recession back in 2009. We were on unemployment and struggled with low paying jobs for a few years afterwards. We were forced to file ch 7 bankruptcy and we included our mortgage in it, it was discharged in March of 2015. Our old home did not go to sheriffs sale until June 2016. Since last year we’ve made a huge rebound with our job situation, and we were able to do a lease with a purchase option home. We put $4k down on the house we live in and it has a purchase option of March of 2017. I’m not sure what to do? Our bankruptcy will have been discharged 2 years at this point but not the foreclosure. Do we have any options to get a mortgage in March or do you know of any lenders that could help? Any suggestions or guidance would be greatly appreciated.

  • CherieSerrano

    hi Scott I live in California and need help finding a lender to finance my new home purchase. I filed bk 7 in 2012, discharged the 2nd mtg debt. After they tried to sue me. But I never lien stripped the 2nd td. In may 2016, the 2nd Td filed an nod. I listed our home for sale. After getting a pre-approval qualification letter. For 300k. In escrow with buyers for my home. Put a deposit on new home. And my finance lender. Declined my loan! Due to the nod filed on the 2nd td may 2016. I need help. I’m hearing no one will finance me. And my home is in escrow. [email protected]

  • simmeja

    Hello! We had a Fannie Mae loan on our Massachusetts home when we moved to Indiana for work. We short sold our home in January of 2015. The primary mortgage and equity loan were both forgiven in writing. I understand that the new rules require a 4 year waiting period, but I am wondering if we had a 25% down payment (or more) if that would make a difference. Our credit scores are both in the mid 700s. My in-laws are selling their second home and plan to give us a portion of the sale proceeds as an early inheritance that we would like to use for a down payment on a new home.  Are there any good options for us to buy before 2019?

  • TriciaDelgado There are no inexpensive ways to avoid mortgage insurance if you’re under the 4 year waiting period for conventional financing.  While there are portfolio programs that will allow this, the rates and fees are so high, it’s cheaper to get in using FHA, and refinance at the end of the year to remove mortgage insurance.
    Another thing to remember is that mortgage insurance is tax deductible for 2016.  Take the FHA loan.  That is the lowest rate you’re going to be able to find, even lower than conventional financing.
    Then, review your situation at the end of the 2017 year.
    If you don’t have a lender that you know and trust, I can introduce you to someone that can help?

  • TriciaDelgado

    Hi Scott. My husband and I are going to buy a home in the next several months. His chapter 7 was final October 2013 and did not include our home. We have a lot of equity in our home and want to put 20 to 25% down and avoid FHA and the high expense of PMI but it won’t be quite 4 years. We are under contract to close our new home in March 2017. What are our options to avoid paying PMI? We are in Washington State. Thank you!

  • mws2300 You are absolutely correct on both counts.  If the defaulted mortgage was a FHA loan, then your waiting period begins from the date that the subsequent mortgage insurance claim is settled, and 36 months has elapsed.
    And yes, Conventional guidelines allow you to buy again 4 years from the discharge of your bankruptcy, as long as the foreclosure (or any other form of pre-foreclosure solution) occurred AFTER the discharge.  The date of the transfer of title is not a factor in determining the date that you are eligible to buy using a fannie mae or freddie mac loan.  5% is enough for a conventional loan.  Both fannie and freddie offer a 3% down program if your income does not exceed the limits in your county.
    Going for an extenuating circumstances exception can potentially be a very intrusive, paperwork heavy, low chance of success effort.  It is absolutely possible, as long as your circumstances meet the description of “A one time event, completely outside the control of the borrower, and you can show that it is unlikely to occur again” – it’s literally that “vague”.  Different lenders interpret “extenuating circumstance” in a different way depending on their tolerance for portfolio risk.  Some lenders choose not to entertain this exception at all.
    If you would like an introduction to a lender that is familiar with these guidelines, shoot me an email to [email protected] and with the State that you’re buying in.  I’ve met some really cool lenders along the way that are able to help anyone outside of my home state of California.
    Hope this helps?

  • mws2300

    Hi Scott.  My Chapter 7 Bankruptcy was discharged September 18, 2012.  Included in the bankruptcy was my old FHA mortgage which was going into foreclosure.  The FHA claim for that mortgage was paid on June 10, 2013; however, the certificate of title was not transferred until September 14, 2014.  I’ve been told that I am not eligible for a new FHA loan until 3 years from the transfer of certificate of title, no matter what.  However, I’ve been reading some updates for conventional loans show that I am eligible for a conventional loan FOUR years from my bankruptcy date and I saw one update sheet on FannieMae (derogatory credit event fact sheet) that shows the FOUR years has been reduced to TWO years with extenuating circumstances as of September 2014.  My FICO credit score is currently 671; however, it fluctuates amongst the three major bureaus between 670-705.  The reason for my bankruptcy, and subsequent foreclosure, was due to my divorce (had to refinance the home out of her name after the divorce and not able to afford the home by myself due to the loss of her income).  I thought I saw this was an acceptable extenuating circumstance. 

    I have the 5% down for a down payment, which the fact sheet states I need, but do I have to have a certain Loan to Value with that program or will I be good with just the 5%?? Does it look like I should be able to get a conventional loan?

  • GailVW with a large down payment (15%+), you can use a portfolio loan.  This type of financing will typically have an interest rate about 2% higher than market, or more.  All lender fees are also paid by you, which results in higher closing costs.
    Here’s the conversation I have with everyone that asks this question..Yes, there is an upfront investment in the form of down payment, but it’s not gone, it’s equity.  It’s in the bank.  All this to say, that if you set aside the larger down payment, the cost of one of these loan programs almost always pencils out and makes sense financially.  Opportunities don’t always come along.  When they do, you have to act, right?
    Consider this Plan B.  A strong plan B, but a plan B just the same.  Your question was about the FHA Back to Work exception.  That’s a tough question.  It definitely sounds like it would be worth the extensive documentation process to attempt qualifying for this program.  It might take a few calls to find a lender that offers this program.  Many lenders simply chose not to offer the program because FHA was really strict about proving the extenuating circumstance, and the approval level was very low.
    Armed with FHA Back to Work as your Plan A, work with a lender that also is experienced with portfolio loan options, and can give you a “worse case scenario” as Plan B.  
    If you don’t already have a lender that you trust, shoot me an email to [email protected] with a copy of this conversation, and the State you’re trying to buy in.  I have a really good network of lenders that I know and trust to help anyone from our site.

  • GailVW

    Hi Scott. I had a foreclosure on my home that was final in Dec 2013.  I was laid off my job in 2010 and subsequently out of work for 2 years. I was single with no other source of income. My unemployment benefits were about equal to my mortgage payment. I kept up the mortgage payments for a year after the layoff but couldn’t continue as my savings was depleting fast.  My credit was good great prior to the foreclosure and had been good since then.  I have no delinquencies on my credit report and a score over 700.   I have been retired since April 2013 and my income is SS and a small IRA distribution.  I have no debt.  I am 4 months short of the FHA 3 year penalty period but have found a small place I want to buy that will not till be available in 4 months.  Am I a candidate for the Back to Work Extenuating Circumstances mortgage? Or something else?

  • mcmcdo2 Yes, I can absolutely help.  I can think of a couple of reasons why there might be a problem.  Was there a mortgage included in the bankruptcy?  What happened to the home?  You can also email me directly at [email protected] – let me know what State you’re in, and I can get you pointed in the right direction.  If I can’t help personally, I will introduce you to someone that trust.
    Hope this helps?

  • mcmcdo2

    Hi Scott, I have waited the fours years, and have been turned down everywhere I try for a conventional mortgage. Do you know what the problem could be, or do you know anyone who can help? Thank you for your time sir.

  • jayrosen1576

    Hi Scott. I had a piece of vacant land foreclosed on in 2008 (filed with the court at the end of 2008). The bank sat on it for 6 years without claiming the title. In July of 2014 they finally claimed the title. July of 2014 is when the 3 year (or 7 for conventional) waiting period starts right? Is this waiting period mandatory or could a lender such as a credit union fund a loan prior to the end of this waiting period if they choose to do so?

  • DapperDi

    ScottSchang DapperDi Thank you for the quick response. Bank foreclosure on the home. Sheriff sale in July 2010, mortgage was charged off in July 2011. Went to buy a home in 2014 with an FHA loan. It was discovered at that time, the Home Equity Loan was not discharged at the time of the mortgage. The Equity Loan was discharged in Sept 2014. We are looking to float a $110,000.00 loan on a home. The payment would be much lower than 35% of our gross income. Again, FICO is 740 for myself, about 695 for my husband. We are renting the home we tried to buy in 2013. I would like to get a mortgage, if I am able, prior to Sept 2017.  I had never heard of a portfolio loan. Do I have any options, or do I have to wait until Sept 2017 when the Home Equity Loan is 3 years post discharge. Never filed Bankruptcy.
    Dianne

    • Hi Dianne,
      It doesn’t make sense that the home was foreclosed on, and the second mortgage lien wasn’t released until 3 years later. What State are you buying in? Honestly, it sounds like you may be eligible for FHA financing now, and your lender just isn’t familiar with what they are looking at. It’s hard to say. The Sheriff’s sale should have extinguished all liens. Your waiting period would start as soon as title is taken out of your name.

  • mininat Yes, you would be eligible for Conventional financing with a minimum of 3% down (with income limits), or 5% down (with no income limits). 
    What State are you in?  If you would like an introduction to a lender in your area that is familiar with these guidelines, shoot me an email to [email protected] and I will try to point you in the right direction.
    Hope this helps?

  • DapperDi  I am unclear about the events and the timelines from your description.  When you say “discharged” are you talking about a bankruptcy or just the fact that the foreclosure happened?  Also, was the home equity loan on the same home that was Foreclosed and mortgage.
    IF the mortgage was discharged through a bankruptcy, did the foreclosure happen before or after the bankruptcy?
    Sorry for all the questions.  I’m trying to wrap my head around all of the events and timelines so I can provide you with accurate options.

  • Hi Scott. I have a bankruptcy discharge date of 1/2009. Property included in bankruptcy has a clear title as of 7/2014. Do you know of any brokers or lenders near Cleveland, Oh that are familiar with programs I could qualify for?

  • DapperDi

    Hi Scott,
    Foreclosed on a home in MI and mortgage was discharged in 2011. I also had a home equity loan (not line of credit) that was not discharged until September of 2014. Fico score is 740. Looking to finance a $110,000. mortgage in OH. Do you think a portfolio loan would be an alternative to waiting an extra year to go FHA on a loan? Would you have any other suggestions to secure a mortgage now, instead  of in 2017?

  • mininat

    Good afternoon, I had a Chapter 7 bankruptcy that was discharged in June 2011, in that bankruptcy I included my home which went in foreclosure August 2015.  Am I able to get a conventional loan?  My credit score is in the low 700’s.

  • ejhilbert

    ScottSchang ejhilbert  Yes, have made payments. Looking to purchase in Pennsylvania.

  • ejhilbert When you say “still maintained current home”, does that mean that you’ve continued to make payments on-time on the mortgage that was included in the bankruptcy?  It’s not necessarily true that you have to get rid of the current home, but it might be necessary in order to afford the payments on the new home.  The 3 year wait is not accurate necessarily.  
    What State are you trying to buy in?  It sounds to me like this lender simply doesn’t understand your situation.  I might be able to introduce you to someone that knows the guidelines and can help.

  • ejhilbert

    Scott,
    Looking to purchase a new home, had a bankruptcy discharged in March of 2012. Still maintained current home, lender is saying title needs to be out of my name for 3 years to apply for new loan? Sort of confused with that answer. Not sure if it is right. Any help is appreciated.
    Thanks

  • ahicks004

    No bankruptcy. The foreclosure is not anywhere on his credit report. It only comes up on the caivrs database.
    Thanks

  • ahicks004 VA underwriting guidelines state that it is unlikely that you would be approved in less than 24 months from the foreclosure date.  It sounds like you would be eligible in November 2017, which is much sooner than most other waiting periods.
    Was the mortgage discharged through a bankruptcy by any chance?

  • Relame42 Yes, you are correct if you are applying for Conventional financing.  If you are using a FHA or VA loan, there is an additional waiting period from the foreclosure date.  I know lenders in FL that are familiar with this guidelines that can help.  If you are not currently working with a lender familiar with these programs, email me at [email protected] and I can introduce you to someone that can help.

  • Relame42

    Scot,: I have a question regarding the following statement:  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.
    The mortgage I defaulted was the reason why I filed for bankruptcy.  The bankruptcy was discharged in Feb, 2011.  Does this mean the foreclosure waiting period defaults to Feb. 2015?  The actual transfer of title took place on July 2014 due to the foreclosure backlog in Florida.  I will appreciate your help.

  • ahicks004

    Hi Scott,
    Our foreclosure occurred 9 months ago in November of 2015, it was an FHA loan. My husband who is a veteran received his certificate of eligibility from the VA a few months ago, We are looking to do a VA home loan in the future. The foreclosure is not listed on his credit report so we went to a mortgage company to find out our options, we were pre approved since the credit report was good but when they ran the CAIVRS report the foreclosure came up. Can you please advise me how long after the FHA foreclosure do we have to wait until we can get a VA home loan?
    Thank you so much for your help.

  • mcmcdo2

    Hi Scott, I sent this you back in Early July, and I have been turned down twice yesterday and today by lenders trying to get a conventional mortgage.  Any ideas why?
    Hi Scott, I live in Ohio. Here is my situation…My Chapter 7 Bankruptcy was discharged on 8/14/2012, my house was included in that, and I moved out after the bankruptcy. Before I filed bankruptcy I lost my job, and missed mortgage payments. I got forecloser papers, and that is why I filed bankruptcy. The house was finally bought back by the bank from a sheriff sale in march of 2016…yes a few months ago. When would I be eligable to apply for a coventional loan, and do you know anyone who could help? Thank you for your time Sir. Also, Imy credit score is 683, I make 80,000 a year and my only debt is a $2500 credit card.http://www.livefyre.com/profile/4946305/ moderatorJul 18, 2016
    mcmcdo2 You would be eligible to use conventional financing in 4 years from the BK discharge date.  If lenders are telling you different, they may be thinking of FHA guidelines.

  • Cheryl 30535 Any online calculator should be accurate if you’re just calculating your principal and interest payments.  To know what your actual payment would be, I would speak with a loan officer.  They will be able to give you an accurate answer that takes all of the qualifying factors such as credit score, down payment and your liabilities.
    If you need an introduction to a good lender in GA, shoot me an email to [email protected] and I can put you in touch with someone I know and trust.
    Hope this helps?

  • Cheryl 30535

    Thanks for answering so quickly! We are moving from Nashville, TN to Atlanta, GA. Our rental is also in GA, but is only about 75 miles away from where we want to buy. 🙁 It is not a reasonable commute to go back to our original home. We have claimed our rental on taxes, so that is helpful to know I can count the rent as income for qualifying. My husband makes around 90k and we are looking at houses in the 240k and under range. Do you have a link to any online calculators to judge what we might qualify for? I have found a few, but get wildly varying answers.

  • Cheryl 30535 there are a couple of FHA guidelines here that you will need to navigate.  As long as you’ve been reporting the rental income on your tax returns, you can use the rents from your Schedule E on your 1040’s.
    FHA recently came out with a guidelines that said that you cannot have 2 FHA loans if the homes are within 100 miles of each other.  Would the new home be 100 miles from the rental?
    You might have me a little stumped on the 25% equity, because I know that is the case for a departing residence (rent current home and buy new one), but if you’ve been reporting it as non-owner for the past 4 years, I think you’ll be able to use the rents to offset the payment.
    I guess the million dollar question really is…can you qualify for the new home even with the full payment on the previous home?  If so, all of this is a moot point.
    What State are you trying to buy in?

  • Cheryl 30535

    My husband and I filed for Chapter 7 in Sept 2013 and were discharged Dec 2013. We had an fha loan that we did not reaffirmed, but we have continued to make payments. We moved in 2012 and it has been a rental property for 4 years. We are interested in purchasing again and I had a few questions. Do we need to sell the rental property to purchase again? We are 2 1/2 years out, so we have to go fha again. I read thatin order to have 2 FHA loans, the rental property must have 25% equity in order for it to not count in our monthly obligations. We are close, but not there. We want to sell the house, but not sure how long that will take. My question is, does the rental still count against us even if we are legally not liable for the debt? Should we pursue purchasing now or wait until the rental sells?

  • Martahouston

    Hello, I just receive my loan of $48,000 from Mr. Joseph Tyler, after I was let than by other lenders, Mr. Joseph have really put a big smile on my face, now I can take good care of my business and others personal needs, you can contact him with his email via: ([email protected]) contact him now for your loan he is a legit loan lender.

  • jaminjackson77 Hi Jamin, thank you for your question.  If the foreclosure occurred prior to the discharge of the bankruptcy, then yes, there is a 7 year wait from the date that title transferred to the new owner (bank).
    The good news is that FHA allows you to refinance into a lower rate with very little paperwork, not income documentation, and no appraisal.  The only requirement is that you have made a minimum of 6 payments on the FHA loan, and you can lower the interest rate by a minimum .50%.  This is called a FHA streamline, and will most certainly give you a lower interest rate than a conventional loan.
    If you do not have a lender that you trust, I can introduce you to someone that can help you with this.  Shoot me an email to [email protected] and I’ll make an introduction.
    Hope this helps?

  • jaminjackson77

    Hi I went through a divorce and had to foreclose on my home in Colorado, the warranty deed for the sale after foreclosure is March 1, 2010.  The second mortgage company came after me later that year and I had to file bankruptcy in December of 2010. I bought a house in Utah where I now live last August 2015 and the lender said i had to go FHA so i did.  She said i would have to wait until 7 years after the warranty deed (March 1, 2010) to refinance conventional. Is that the case or is it 4 years since I filed bankruptcy on the second mortgage later that year 2010? Basically I am wanting to refinance my loan and get the rate down and want to know if i have to wait until March 1, 2017 or not. 
    Thanks!
    Jamin

  • Ivelyse

    My name is Evie I am from Orlando Florida. My husband and I had two investment properties that due to the market crash and after years of paying for those mortgages we had no other option that to sell those two properties as Short Sale November of 2015, One of the properties we were able to rent but still we had to pay for the difference of the mortgage the other one which was a $3,500 mortgage we were not able to rent that house at all so we for 4-5 years paid that mortgage in a timely matter of course until we decided to sell it as a short sale. The place we live now we love it and it is beautiful, however my husband and I are considering downsizing. I have herd so many different things about the time period needed to buy a house after a short sale and would like to hear it from an expert. Our credit is excellent my husbands credit is 740 and mine is close to that or higher as well. We don’t have any major debts as we paid off all of our credit cards. Only debts are the usual home expenses: car insurance/electricity bills/grocery/life insurance. We have three cars and they are all paid off. My husband is a physician and we have a private practice in Seminole County. This will be the other expense that we have which we pay a comfortable mortgage of $2,400. We are still surprise that even with our scenario that they have said that we cannot buy a home for 2-3 years I even have herd 4 years. Our current home is a custom home that we were planning to put on the market for $1,200,000 even if we reduce the price we should be able to have available when purchasing a new home anywhere from 20% to 40% for down payment. Is there any hope that we can buy sooner? Your expert advise will be greatly appreciated.

    I forgot to mention in regards to the prior message sent that my husband is also a Veteran

  • Chris_remodel When using FHA financing, you cannot get a new FHA case number until after the waiting period.  You would have to apply after 9/6/2016.  If the foreclosed home was a FHA mortgage, this timeline could change.
    I have an incredible lender in Illinois that is very familiar with these guidelines and can help.  Please send me an email to [email protected] and I will make an introduction.

  • TechieGuy2 Was the mortgage included in a bankruptcy?  If not, conventional is going to require a 7 year wait from the date your name is removed from title, that sounds like January 2013?  Whether the foreclosure shows on your credit report or not is not relevant, and will not affect your timelines.
    Also, you would be eligible for FHA financing now, 3 years from the foreclosure date.
    If you shoot me an email to [email protected] with the address to the foreclosed home,  I can look up the exact eligibility date for you.
    Hope this helps?

  • Chris_remodel

    Hi Scott,
    We are located in the western suburbs of Chicago, Illinois. My husband and I filed chapter 7 bk in 2010, our mortgage was not included and we reaffirmed (ch7 granted 5/2010). We then lost the home in foreclosure, action was filed in 2011, sale date and judge’s deed was entered on 8/23/13. I’ve been operating under the presumption that my husband could file for an FHA backed loan after 8/23/13 (his credit score is currently 669, no debt, 65k salary at same job for last 18 years – my name will not be included, but that’s another post entirely). I just pulled a copy of the deed and see it was recorded on 9/6/13. What date does he need to wait until to apply? And since this is such a confusing area, would you have any lenders you could recommend in our area? Thanks so much!

  • TechieGuy2

    I’m a little confused by the timeline for a new conventional mortgage after foreclosure.  Mine was in limbo for a while (conventional foreclosure), with last payment being made in Feb of 2010 however it wasn’t sold/transfered until January of 2013.  Above it states (7) years from the time of sale (which would be Jan. 2020), however my Transunion report states the foreclosure is due to be removed in April of 2017.  Would I then quality for a conventional mortgage starting 4/2017 if the foreclosure was no longer on my credit report?  Thanks

  • AshleyMillar August 2017 is would be for Conventional financing, 4 years from the BK discharge date, and they ignore the foreclosure date.
    Trust me, this is confusing for lenders too, as you’ve discovered with your lender.  To be clear, if the mortgage that was foreclosed was a FHA insured loan, then you will have a 3 year waiting period from the date that the mortgage insurance claim is paid.  This is always after your name is removed from title.  If you think your name was removed in September, then you’re probably looking at October to be eligible for “standard” FHA financing.
    Right now, it seems your only option to close by August 24th would be to get an extenuating circumstances exception under the Back to Work program.  Unfortunately, if you do qualify for the back to work program, you’re going to still have the challenge with getting your name cleared from CAIVRS (FHA MIP eligibility system).

  • AshleyMillar

    You wrote August 2017 so that confused me. We already got pre approved and are in the loan process. We are literally verifying funds today and this came up. This is the last of the loan process and the government won’t take our name off the list. The lender messed up…so your saying if the house was out of our name that would be a better date to go off of rather then the November date when the insurance was paid? We are supposed to be moving into our house August 24th so I want my husband to have the best argument he can provides the last bit of information and documents to try and get approved with the back to work program. Trying to understand this as a buyer is rough!

  • AshleyMillar That sounds like you have a really good case for FHA’s back to work program.  You’re going to have to shop around for lenders that offer this program, because I know that many do not.
    As far as waiting periods, you’re getting the waiting periods confused with a couple of different programs.  The date you are eligible to buy again depends on the type of loan you are applying for.  FHA is going to count the BK, and the foreclosure as 2 separate events, with 2 separate waiting periods.  The waiting period if you’re using FHA financing is 2 years from the discharge of the BK, and 3 years from a short sale, foreclosure, or deed in lieu of foreclosure.  In your case, since the foreclosed loan was an FHA loan, that 3 year waiting period does not begin until after the mortgage insurance claim is paid by HUD to your old lender.
    If the foreclosure occurred in September 2013, then you’re probably looking at October 2016 before you would be eligible for FHA financing.  If your lender offers the FHA back to work program, you should be eligible now.
    Hope this helps?

  • AshleyMillar Back to work is incredibly difficult to qualify for, so much so, that I’ve never been able to do one myself.  I know there are some investors out there that will consider that program, but many will not.
    I understand your frustration, and I am sorry you’re just now finding this out.  Your lender never should have qualified you for this loan in the first place, they made a mistake.

  • AshleyMillar

    We are in the oilfield and he was completely out of work for a year and put on the maxed amount for unemployment. It was enough to cover our mortgage and sent us into deep debt. He now is in a very stabled position and that Can’t happen. I would think that’s proof enough and he already has that information gathered.
    Also or name was off the title September 2013 I believe.
    I’m not fully understanding how it could be August 2017? That would be over 4 years from the discharge instead of 3?

  • AshleyMillar

    What about the back to work program where we can prove out hardships was what caused the bankruptcy/foreclosure? I don’t understand why some can get buy a house but we can’t. I feel like we should be able to send them the proof to get our name off that no lender list.

  • AshleyMillar Yes Ashley, unfortunately this is correct.  If the mortgage that was foreclosed was a FHA loan, then your waiting period starts from the date that the mortgage insurance claim was paid.  There is no way around this if you are trying to qualify for FHA financing, and conventional financing is going to be a 4 year wait from the BK.

  • AshleyMillar

    It has been over 3 years since the discharge of our bankruptcy /foreclosure. We ft pre-approved for an tha loan but now we are having a hiccup with getting off the federal government list of who cannot be lended to. My husband called the government part that deals with this and they are saying its from when the insurance was paid off which is 3 months after the discgarge. He is waiting for another call back on if it’s possible to get removed. Have you heard of this issue? From our understanding we should be able to get a loan 3 years after the discharge date and the government workers are saying its after the insurance was paid which happens to be after the discharge date.

  • jessycar78

    ok thanks for the info.

  • jessycar78 FHA’s back to work program is incredibly difficult to qualify for.  The fact that you were “fired” would probably make you not eligible for this extenuating circumstances exception.
    The loss of income from you choosing to become self employed is not going to be considered as a “one time event that is completely outside your control”.
    Your realistic timeline looks like this.  To buy using FHA financing, you must be 3 years from the foreclosure date (if your name was still on title at the time of foreclosure), and 2 years from the discharge of your bankruptcy.  Sounds like you would be eligible for FHA in August 2017.
    Hope this helps?

  • hcornel1178 Ok, great, I’m a lender in CA.  Conventional will offer as high as $625,500, and we have a piggyback loan that will go up to the 80% loan to value.  I’m happy to shoot you over some numbers to review.  We would not be eligible until 10/2016, but we can at least run some numbers now to see what options are available?
    There are also portfolio loans that will absolutely allow you to buy in this price range.  You’re looking at a higher rate and fees than if can do the piggyback combo loan, but it’s definitely a good option to get you into the home until you can refinance out of it.
    Worse case scenario is that you have a little higher tax deduction for a few years while you have the higher rates.
    Multiple options, it just comes down to whether or not it will accomplish your goals.
    Shoot me an email to [email protected] if you would be interested in exploring this further?

  • hcornel1178

    We are in CA and looking to buy in an area with high home values $1M+. Does conventional offer higher loan limits? We would have 20% down. BK was discharged 10/2012.

  • hcornel1178 Jumbo financing typically will follow it’s own guidelines, which is 7 years.  If you have the ability to use Conventional financing, or even a piggyback mortgage (1st and 2nd) to reach 90% loan to value, then you can use Conventional.
    What State are you buying in?

  • hcornel1178

    If a foreclosure was included in a BK 7, does the waiting period of 7 years apply to jumbo loans or can we use the 4 year wait time?

  • lito3313 I would agree with you and your loan officer.  The waiting period begins from the time that YOUR name is removed from title.  This is the date that you are no longer the owner of the property.  What the new owner (HOA) does with your home does not affect you or your timeline.
    Your loan officer is going to have to fight for you on this one.  It is not uncommon for underwriters to want to interpret guidelines inaccurately in order to reduce perceived risk to the lender.

  • lito3313

    Hi. Scott,
    I don’t know if you have seen a case like mine, but this is what I’m dealing with. In 2010 my ex wife stopped making pmts, and decided to to a loan modification, the bank started the foreclosure but stopped. In 2012 the HOA, initiated, and finished a foreclosure against us, they took title to the property, rent it out until 2014 when the Bank finished the foreclosure on the same property. So the situation is that FHA guidelines stipulates that the 3 years penalty start when the Borrower is removed from the title. This happens on 2012, so what the bank did in 2014, is a legal process to take the title back from the HOA. By the way the loan that foreclosed was conventional, so no Carvers.
    The underwriter seems to think that FHA will consider the 2014 as the start of the 3 year period. And me and the loan officer disagree with her. What she does not know this is becoming a new trend by the HOA, to force bank to move faster, or pay them to get the title back.

  • dhaas2833 You can absolutely do a deed in lieu and still use the 2 year waiting period from the discharge of the Chapter 13 (as long as mortgage was discharged).  It’s not unusual for lenders to not know this guideline, because the actual underwriting guideline does not mention DIL or short sale, only foreclosure after BK.
    I have done many of these loans in California, and I have a handful of lender friends around the Country that have been successful as well.
    Shoot me an email to [email protected], write a short description of your scenario, and what State you’re buying in, and I will make an introduction to someone that can help.

  • dhaas2833

    Hi Scott.  I am in the same boat as a lot of the other comments but need a little clarification.  I am 1 year out of chapter 13 but my investment property that was included in the bankruptcy still has not forelcosed.  It has been 7 years now and still we are on the title.  I am looking at getting a conventional loan next year but this foreclosure is still hanging over our heads.  Does it make sense to do a deed in lieu to expedite and does it make a difference. Will the lender count the waiting period in with the discharge date?

    And do you know any lenders that are using this guideline?  A lot of banks have thier own overlays above the Fannie requiements…thanks

  • Calgirl53

    Hi Scott I had a Chapter 7 bankruptcy that was discharged in 2010 my home was included we did not reaffirm it home was then foreclosed in December 2015 I would like 2 I again and was wondering what the waiting period would be in the state of New Jersey I have rebuild my credit to score of approximately 700 thank you

  • dollard01 The waiting period for you to be able to buy a home using traditional financing is determined by the type of financing you’re trying to apply for.  For conventional, fannie mae or freddie mac underwritten loans, the wait is 4 years from the discharge of the chapter 7.  FHA will be your shortest path to homeownership with only 24 month wait, putting you at February 2017.
    The interest rates are not different from anyone else applying for a mortgage.  There are no specific penalties or fees associated with past credit challenges, only a waiting period.  You rate is primarily influenced by your down payment and credit score.
    I am a lender in CA and can help.  I would recommend looking at your credit now, and looking for opportunities to raise your scores as much as you can while you wait out these last 6 months.
    If you would like help preparing, shoot me an email to [email protected] and I’ll see if I can point you in the right direction.

  • dollard01

    hi scott,
    i live in ca. and my ch7 bk was discharged back in feb, 15′. i didn’t own any property or had anything of value auctioned off. since then i’ve bought another vehicle and have been slowly building up my credit score. i’d like to purchase a home soon, possibly under the 200k. price range. my question is how much longer should i wait before buying and what would be the steps to get started? also, i’m a little late to the game but what is considered a fair or median interest rate for folks like me.

  • Bran_T You can certainly purchase a new home using FHA if you can “afford” both payments.  If you cannot afford both payments, your options become limited.  If you do a short sale, deed in lieu of foreclosure, or “walk away” and let the bank foreclose, you have an additional 3 year wait from the date your name is removed from title.
    If you stop making payments, your options are going to be very limited. 
    Hope this helps?

  • Bran_T

    Hi. My husband and I filed chapter 7 bankruptcy and after several attempts, our mortgage company would not reaffirm. We have always paid on time and have never been late and are now in a “pay to stay” situation (and continue to pay on time). We bought our home 3 years ago and it  turned out to be in very bad condition and would like to move.    My question is this: after two years following our recent discharge can we walk away from our home and purchase a new home (FHA loan) or do we need to sell our current home first? Even though we would have been paying on the loan for 5 years, there would not be much equity as the home requires too much in major repairs to sell for top dollar….we would more than likely have to sell it as a short sale or foreclose.

  • lpsiras You would be eligible for FHA financing in 1 year from the discharge of the Chapter 13.  Conventional financing is 2 years from the discharge date.
    Hope this helps?

  • Jatwood

    Hi, I’m trying to clear up a question. My husband had a short sale that went on for very long and finally was foreclosed. It took several several months for the deed of trust to transfer out of his name. Do we have to wait 7 years to buy again from the date the deed transferred?
    Thanks!

  • lpsiras

    Hi there.  My husband and I have been paying into a Chapter 13 for almost 5 years, and will hopefully be wrapped up in December.

    How long do we have to wait before we can apply for a purchase money mortgage?  We’re looking to move out of state at some point next year, so I want to be sure that it’s actually a possibility!

    Thanks in advance!

  • User0501 Yes, there is a 4 year wait to buy using conventional financing.  FHA financing is only a 2 year wait.  That sounds like your quickest route to homeownership.
    If rates are still good, you can refinance out of the FHA loan into conventional once you’ve hit the 4 year mark.

  • User0501

    Hi Scott! It’s a month shy of being a full year from being discharged from chapter 7.  My plans are to purchase a home by May of 2017. There were no housing mortgages included in the chapter 7, just a vehicle.  Do I have to wait 4 years to apply for a conventional home loan or is there a waiting period at all?

  • Jaxatax Definitely not a lot of questions Josh, I totally understand.  As far as hardship waivers, you’re talking about an extenuating circumstances exception.  This exception is pretty much only granted if there is a permanent disability, or death of a primary wage earner resulting in a significant and permanent loss of income that let up to the BK and eventually foreclosure.  Not usually an option.
    There are portfolio products, but not until after the foreclosure is complete.  Even though your foreclosure will not show up on your credit, and you cannot get a deficiency judgement after the foreclosure, you are still the owner of the home, and your mortgage is in default.
    There is nothing you can do until you get that lien removed by either foreclosure, short sale, or deed in lieu of foreclosure.
    If you were to look at a portfolio product in this scenario (1 day from foreclosure), you’re looking at 20% down, and interest rates in the 7%-8% range, depending on your credit scores.

  • Jaxatax

    Is there portfolio products for this situation? Would I be eligible now for FHA as no for leisure has taken place and I have not been personally responsible for the mortgage for almost 3 yrs? Also, what about the FHA hardship waivers of waiting periods? Could that apply in this case? Sorry, I know a lot of questions.

  • Jaxatax Hi Josh, FHA is going to count the foreclosure and the bankruptcy as two separate events.  You would be eligible for FHA 3 years from the foreclosure date.  I know, that’s not good news, but I do have good news.
    Conventional financing is not going to count the foreclosure date as a waiting period.  You will be eligible to buy using Conventional financing in 4 years from the discharge of the bankruptcy.
    Hope this helps?

  • Jaxatax

    I am currently 32 months post chapter 7 bk discharge. The mortgage was included in the discharge but forclosure just started. Proposed 11/16 sale date. I’ve rebuilt credit, have some money for down payment. When can I apply for FHA? It should be noted that BK was tied to a business failure. I have since changed industries and I am back on my feet I am glad to say. Thanks. Josh

  • You are correct. You cannot get a FHA case number until after the 27th. If the loan on the foreclosure was a FHA loan, the 3 year waiting period starts when the FHA mortgage insurance claim is paid. That can be months after the foreclosure.

  • Swerl

    I am currently trying to buy a home with a FHA loan. My home was sold at a foreclosure sale on Sept 27, 2013. The mortgage broker is saying that we can go ahead and apply for a mortgage but not close until after Sept. 27th. Is she correct? Everything I’ve read states that I can’t even apply until after the 27th.

  • Jusjamn ScottSchang The internet is a funny thing.  This information you posted is 100% wrong.  It sounds like it was written by someone overseas to help create generic mortgage content for a website.
    The 2.25% upfront MIP (PMI is for conventional loans) was reduced to 1% in October 2010, then changed 4 more times since.
    The last change that FHA made was to make the MIP permanent for the life of the loan.  Unfortunately, in the world we’re in today, you might have to use an FHA loan as a bridge until you’re eligible to refinance out of it, and remove the MIP, by getting into a conventional loan.

  • Jusjamn

    ScottSchang Jusjamn  Just got this on another website:  “FHA loans require borrowers with less than 20 percent equity in their homes to pay private mortgage insurance (PMI) premiums. Those premiums protect the mortgage lender in case of default by the homeowner. The U.S. Department of Housing and Urban Development (HUD) requires an upfront PMI premium of 2.25 percent of the total loan amount, due at loan closing. You will continue to pay a monthly PMI premium along with your scheduled principal and interest on the loan until you achieve 20 percent equity in your home. Calculating the monthly PMI charge is a two-step process.

    Sorry if I’m missing something here, but in my mind, if I put 50% down payment, I already have achieved > 20% equity in my home. But you stated above that PMI is required for any FHA loan, regardless of the loan to value.

  • js510mx  “When” you are eligible to buy using traditional loan programs, will depend on what kind of financing you’re trying to use to buy the new home.
    Using Conventional financing, you can buy in 4 years from the short sale date.  Using FHA financing, you can buy in 3 years from the short sale date.
    Hope this helps?

  • Jusjamn ScottSchang the foreclosure has absolutely nothing to do with FHA mortgage insurance.  Unfortunately, mortgage insurance is required for any FHA loan, regardless of the loan to value. 
    The way you are relaying the lender’s communication with you, that person sounds like they are not explaining things well, don’t have very much experience, or they are just a jerk.  I would look for another lender.
    You’re good to go using FHA in January 2017 🙂

  • js510mx

    Hi, I live in Michigan and had a short sale 2- 1/2 years ago. Wondering when I can for sure but a home again. My credit score is 720+ and I have 10k plus to put down. Thank you

  • Jusjamn

    ScottSchang Jusjamn 
    Scott,
    No, there was no bankruptcy. So it sounds like for the next 4 years, our only option is FHA and anything beyond the loan limits will need to be our down payment. That certainly works for me.

    Regarding the PMI, I’m not sure if you answered the question. Specifically, if I have a foreclosure on my record and now pursue an FHA loan putting 20% or higher down payment, will I be required to pay PMI? The lender we contacted said it didn’t matter if we put even 50% down – if you have a foreclosure on your record you are required to pay PMI regardless of how much you put down.

    Thanks!

  • Jusjamn Was the mortgage included in a bankruptcy?  If not, it’s a 7 year wait from the foreclosure before you would be eligible for conventional financing.  You would be eligible for FHA financing 3 years from a foreclosure, and yes, there are maximum loan limits based on the County you are buying in.As far as FHA mortgage insurance goes, unfortunately it is required as long as you have a FHA mortgage.  Don’t be frustrated by FHA.  It’s a great program if you can buy in that price range, or have the down payment to bridge the gap between the loan amount, and the purchase price.Hope this helps?

  • Jusjamn

    Hi Scott,

    We had a foreclosure Jan 2014. Since we are nearing our 3 year period, we contacted a lender to inquire about what is required for preapproval. We were told that we would qualify, but even if we put a 50% down payment on the new house, we would be required to pay PMI for 11 years after loan origination and that is the standard for all lenders. Is that true?

    Also, we were told there are state limitations on the amounts of the loan we can purchase by county in Nevada. For instance, they said a home in Douglas County can be for a maximum loan amount of $284,000 with no exceptions. Is that true as well?

    Thank you

  • wanthomenow

    ScottSchang 
    Thank you for the quick response! There was no mortgage in the BK. Just a car and some credit cards (yay divorce!). I will look into the portfolio loan as well as see if my cosigner would be willing to put the loan entirely in their name.
    Thanks for your help!

  • wanthomenow this is a great question, and I actually get this a lot.  A co-signer cannot make an ineligible buyer an eligible buyer.  Co-signers can only be used for income qualifying purposes.
    There are portfolio loans available that an make loans at a little higher rate and fees, but if you absolutely need to buy now, you have limited options.
    Your co-signer can also buy the property as a non-occupied property, and you can live in it and pay the mortgage payment until your BK is seasoned.
    Was there a mortgage included in the BK?  If there was, it could change your eligibility timeline.

  • ehess31

    Hi Scott,
    I had a deed in lieu of foreclosure in February of 2014. Last month it was removed from all three credit reports. Can I get a mortgage without waiting till March of next year? My fico score is 703.
    Thank you

  • wanthomenow

    Hi Scott,
    I had a chapter 7 bankruptcy discharged in September, 2015. If I get a cosigner, will I be able to get a home loan?

    Thanks!

  • Terinbboy The foreclosure not taking place will avoid the waiting period of 3 years for FHA, or 7 years for conventional, however, in order for the mortgage to be in foreclosure, it would have been severely delinquent at the time of sale.
    The automated underwriting engine will pick up on the fact that the mortgage was delinquent, and will factor that into any results.  Your new lender is going to want to see a minimum of 12 months with no late payments on that mortgage.
    You definitely saved yourself years of “waiting” by doing the sale.

  • Terinbboy

    It was not, I did not file for bankruptcy. And foreclosure never took place and the sale price was market value.

  • Terinbboy Chances are, the lender is going to need a minimum 12 months with no late payments.  It really just depends on how it shows up on your credit report, and how Fannie Mae’s Desktop Underwriter reads the information on the credit report.
    You may have an option with a portfolio loan if you cannot get the approval now.  Was the mortgage discharged in a bankruptcy by any chance?

  • Terinbboy

    Hi Scott, I received forclosure paperwork last year but I was able to sell my house in January for the full asking price, thus avoiding foreclosure.
    Am I able to get a mortgage? I have a hefty down payment and my only debt is a car payment at this time. Thanks!

  • mcmcdo2 You would be eligible to use conventional financing in 4 years from the BK discharge date.  If lenders are telling you different, they may be thinking of FHA guidelines.

  • mcmcdo2

    Hi Scott, I live in Ohio. Here is my situation…My Chapter 7 Bankruptcy was discharged on 8/14/2012, my house was included in that, and I moved out after the bankruptcy. Before I filed bankruptcy I lost my job, and missed mortgage payments. I got forecloser papers, and that is why I filed bankruptcy. The house was finally bought back by the bank from a sheriff sale in march of 2016…yes a few months ago. When would I be eligable to apply for a coventional loan, and do you know anyone who could help? That you for your time Sir.

  • dceber you should really be aggressive with your loan officer and ask these questions of them.  It sounds like there may still be questions.  If your conditional approval stated that they needed information about your BK, you’re going to want to make sure that these conditions have all by signed off by the underwriter.
    My experience tells me that the longer it is that you don’t have an update, the more likely it is that there are challenges.

  • dceber

    The letter this was in was dated June 23rd. I think we answered the questions for them. The Loan officer said the other day that the only questions the Loan processor still had was about our earnest money and our home insurance info.

  • dceber That wording really concerns me. There is no guideline that states that you cannot sell a home included in BK for less than 50% in the last 7 years.  Did you introduce you to this lender?  
    Maybe they want to make sure that the foreclosure is the only hardship and that there were no short sales on other properties?
    I have no way of knowing whether you’re close or not.  Those comments concern me, but the fact that they are sending it to the PMI company for prior approval seems to be a good sign.

  • dceber

    They noted on the Loan Commitment Letter that we need to confirm that we have not sold a property within the last 7 years for less than half of it’s full value. Our foreclosure date was Sept. 2013 and it was under a Chapter 7 that was discharged in Sept. 2010. We did not sell our property, it was taken back by the bank. Not sure if they are concerned about the dates. 
    If it goes for PMI review, does that mean we’re close.
    Thank you,
    Dave

  • dceber It sounds like it’s made it through the lender’s underwriting process Dave, that’s a good sign!

  • dceber

    Scott,
    We received information from you before and greatly appreciated it. We think we are possibly close to getting our loan approved. The loan officer told us that our loan request was sent to a PMI company last week to be approved. We received our appraisal and the property was appraised for the purchase price. Does it sound like we are close? We had received a Loan Commitment letter from the bank about two and 1/2 weeks ago that included a list of things they needed from us to approve the loan. All of these things were submitted immediately. Our realtor requested a Loan Commitment Letter at the end of last week that was dated for July 9, and it was the same letter that we received 2 and 1/2 weeks ago? I think they sent her the same letter with a different date? We are just confused as to whether we are close or not?
    Thank you, Dave

  • Hairs2you I couldn’t disagree with you more here.  At 3.5% interest rate, you could generate enough lender credit to pay the upfront mortgage insurance premium in it’s entirety.  This way your loan balance does not increase.  Even if you do pay monthly mortgage insurance (which is tax deductible in 2016), the difference between 3.5% and your current 4.75% makes this a no brainer.
    I completely understand where you’re coming from, I’m just telling you that the math does not work out in your favor if you wait.
    Hope this helps.

  • Hairs2you

    It’s the upfront premium and the monthly mip that’s such a turn off. We will just have to wait until the full 4 years to do a conventional. Rates are so great. Would love to get out of our 4.75 and into a 3.5 or so.

  • Hairs2you there are lenders out there that will do a portfolio loan with no mortgage insurance, but I think you’re too quick to dismiss FHA as an option.  FHA is going to be the least expensive, lowest rate, lowest payment option you can get until you can qualify for a conventional.
    I give this advice all the time, and It really comes down to the math.  If you have a high rate and payment now, or need cash out (especially if you are taking cash out) a FHA loan is the way to go.  Rates are so crazy low on FHA mortgages right now, it’s a great way to ride out the next year, and then refinance into a conventional and remove the mortgage insurance.
    The portfolio loan option will not have mortgage insurance, but the interest rate and fees associated with this conventional “alternative” will be much greater than the minimal investment associated with FHA.
    Don’t be afraid of FHA, it’s an unjustified fear.  Hope this helps?

  • Hairs2you

    When my Mom passed we refinanced her mortgage into our name and cashed out my brothers portion of the equity. We tried renting our original home we had for 7 years and our first renter broke contract and damaged the home. After fixing up and trying to re-rent, we couldn’t make both mortgages. We were able to complete a short sale. Now, we’d like to refinance and not do fha. We have 40% equity and have never missed a payment on any home that wss primary residence. Its been 3 years. Are there lenders out there that will do a conventional non fha?

  • raymay There are a lot of similarities between RD and FHA.  Both have an upfront mortgage insurance premium that is financed into the loan, and both have a monthly mortgage insurance premium.
    RD is much more strict with income.  There are 3 separate income qualifying calculations, and the final qualifying criteria is that you have to have a minimum amount of disposable income after your monthly bills with RD.
    FHA tends to be a lot more flexible with your debt to income ratios, and there is no income limitation.
    There shouldn’t be any points with either loan since the loan officer is paid by the investor, not the buyer.
    I would say that it ultimately would come down to whether or not you have the down payment.  I think both loans are fantastic options.
    You also shouldn’t have any challenges finding a lender that understands the guidelines, short sale should be pretty cut and dry.
    If you would like, shoot me an email with the State you’re trying to buy in, and I can make an introduction to someone that I know and trust, and is familiar with these guidelines.  My email is [email protected]

  • raymay

    My husband and I will be three years out from our short sale this coming December, and looking to buy in the new year. How are RD and FHA loans different besides the down payment? Are there points with an RD loan? how do i shop for a lender that is familiar with a loan purchase after a short sale? 
    Thank you!
    Rachel

  • dmriz

    Can you refer me to a lender who would consider a mortgage 3 years after chapter 7 bankruptcy? we have rebuilt our credit and have low debt to income ratio. We are looking for something other than FHA because the townhouse complex will not apply for approval. 

    it seems the companies I’m finding are very disreputable and even scams. 

    thank you

  • mknosco

    ScottSchang mknosco i’m in Colorado

  • mknosco Yes, you would be eligible for a Conventional loan as far as waiting periods go.  What State are you buying in?  I can introduce you to a lender that understands the guidelines and can help.

  • mknosco

    My BK discharged in 2005.  My mortgage was included.  I never reaffirmed the mortgage.  It was foreclosed 11/09 and I was sent a letter from the mortgage company that I was not held responsible for the debt.  It was never on my credit.  I have gone under contract for a home and was called today asking about the foreclosure just under 7years ago.  I didn’t understand that it was a foreclosure since it was included in the BK.  Am I unable to get a mortgage because of this.  I need a conventional loan.  Thanks.

  • helpwithfha If the mortgage that was foreclosed was a FHA loan, then your waiting period is 3 years from the date that the Mortgage Insurance Claim was paid.  Was your mortgage discharged in a bankruptcy by any chance?
    Also, how much do you have for a down payment?  There might be some creative financing options available that will help you.

  • helpwithfha

    Good Evening,

    We were forclosed on in January 2013.  We are in the process of closing on a home as of June 30, 2016.  Around 21 days prior to that date, we were notified by our mortgage lender that we had a CAIRVS flag.  We have contacted FHA multiple times with copies of the Sherriffs deed which has a date of January 2013.  Bank of America drug thier feet and didn’t file until August 2015.  HUD says we are not elligible until August 2018.  Which date is the date that we can finally purchase a home?

  • tcaudill1948

    Hi Scott,

    We had a bankruptcy in 2013 and the trustee allowed us to do a short sale outside of the bankruptcy.  We completed the short sale on 11/6/13 and were discharged from the Chapter 11 bankruptcy on 1/7/14 so both events were more than 2 years ago.  Do you know of a lender who would do a portfolio loan on home price of $360,000?  I have solid income, re-established credit with a score of 683 and can put 20% down.

  • zlatevm00 If the mortgage was not included in a Bankruptcy, there is a 7 year waiting period after a foreclosure before you can be eligible for conventional financing.
    You do not need 20% down.  If you loan balance is greater than 80% of the value of your home, you would need to have private mortgage insurance.  PMI may or may not be less expensive than FHA mortgage insurance, depending on your loan to value and your credit score.
    The good thing about PMI is that you can remove it once the principal balance on the loan is under 80% of the value of the property.

  • zlatevm00

    Hi, my old property was sold on foreclosure sale in October of 2010. In November of 2013 I have purchased the new house with FHA loan. My question is when I can switch to conventional loan and do I need to pay 20% down if the property price is up approximately 25%? 
    Thank you!

  • If the mortgage was discharged in the bankruptcy, you are eligible for conventional financing 4 years from the discharge date. You would be eligible now.
    If you apply for FHA financing, and if the lender doesn’t know any better, there is a 3 year wait from the short sale, and you would not be eligible at this time.
    If you would like, shoot me an email to [email protected] and I can introduce you to a lender that can help.

  • bocagirl54

    Hi, my husband and I live in Florida, had Chapter 7 discharged in January 2011, short sold our home which will be 3 years August 2016. We both have credit scores in the 700’s now. We have been renting for almost 3 years and want to start looking to buy a condo. Will we have a difficult time financing if it’s not exactly 3 years?

  • gene123456 It sounds like you should not have been turned down because of either the BK or the foreclosure.  What State are you in?
    My experience over the past 5 years writing on this topic, is that most lenders do not understand the guidelines, and are unwilling to try to help folks in your situation.
    Shoot me an email to [email protected] and I will introduce you to a lender that can help in your State.

  • gene123456

    went bk 7 7 years ago foreclosed property is 3 years out of my name 685 credit score not late on any payments i was turned down yesterday i also have 26000 dollars to put down on a 183000 dollar home whats up with that

  • mycache

    Scott –

    Thanks so much.. email sent…

    Linda

  • MikeinKY

    Hello, I have a question.  My wife and I live in Kentucky and we filed bankruptcy (Ch 7) and it was discharged 3 years ago.  We are currently making payments and live in the house that was included in bankruptcy.  My question is, could we actually obtain financing for a different house and walk away from this one? I have tried once and the loan officer said no, we have to wait three years after we walk away from the house. I was wondering if this loan officer was correct.  Our current loan is VA/FHA.

  • mycache

    Scott –
    ·Chapter 13 Discharge 4/18 /2013
    ·Short Sale 6/20/2014
    What is the waiting period for Fannie Mae? It is my
    understanding it would be 2 years from Discharge 4/18/2015? All of the lenders
    I contact are telling 4 years from 6/20/2014 be because it was a Short Sale not
    a Foreclosure.  Please advise. I live in Charlotte NC

  • Sandra olivo

    In New Jersey

  • Sandra olivo Hi Sandra, using a Conventional loan, with a minimum payment of 3-5%, you can buy 4 years from the discharge of the BK.  There are not many lenders that know how to do this however, so you’re likely to get conflicting information.  The rates are not any higher, it’s just a normal Conventional loan.
    What State are you trying to buy in?  I can introduce you to a lender that understands the guideline and can help.

  • Sandra olivo

    Hello Scott, I filed bankruptcy back in 2009 and it was discharged 2012 along with my home. However the house sold via a short sale in 2016 even though it was discharged in 2012. How soon can I buy again? Or is there a program that I can got into with a higher interest rate? Any feedback is much appreciated. Thank Sandra

  • Hon1234  hopefully you are still making your payments on-time?  FHA financing will allow you to buy again in 2 years from the discharged date of the BK.  If you stop making payments, and allow the home to go into foreclosure, you’re looking at 3 years from the foreclosure date to qualify for FHA, or your best (shortest) option would be Conventional financing 4 years from the discharge date of the BK, and any subsequent default or loss of the home could be ignored.
    What State are you trying to buy in?  I can probably introduce you to a lender that is familiar with these guidelines, and they can help.  Shoot me an email to [email protected], and let’s see what we can do to help.

  • Hon1234

    Hi Scott,

    We have an adjustable rate mortage interest only and effective 08/2016, our mortgage will go up by $800.  However, in Oct 2014, we had filed chapter 7 and this mortgage was included in the bankruptcy. We have been struggling to remain in this home, but the adjustable mortgage payment and payment increase gives us no option but to move on.  Our credit score has gone up since the bankruptcy to 650+.   I want to know how long do we have to wait until we can repurchased again?  Also, will they look at the bankruptcy date or foreclosure date.  Any advice is much appreciated! Thanks!

  • ritrak123 ScottSchang In California, where I live, it’s a matter of public record and I can look it up online.
    Jim should be able to do the same for you.  We are utilizing public record data from the title companies to find that document.

  • ritrak123

    ScottSchang Thanks for your referral. Is there a way to find out when our name was removed from the title and transferred back to the bank?

  • ritrak123 Using FHA financing, you would be eligible 3 years from the date your name was removed from title (transferred back to bank).  I would look for a local broker, because they will have more flexibility and options when it comes to finding an investor that knows the guidelines.  
    Local banks and credit unions are less likely to offer FHA loans, and may fall back on the Fannie Mae waiting period of 7 years.
    If you would like, I have a good friend that is a lender in MN, and I am happy to make an introduction.  Please email me at [email protected] and I will introduce you.

  • ritrak123

    Hi Scott,

    Our home in Minnesota was foreclosed and the bank bought the property back in sheriff’s sale in Feb 2013 with a six month waiting period for redemption. We are thinking of buying a home again. Is it a possibility now? We have been paying all the bills on time for the last 3 years and our credit score is back to 730+ now. Is it a good time to start looking for a home now? If we go to a bank for a pre-approval, is there a chance to get a pre-approval? Should we start with the local banks or credit unions first? Please suggest.

  • Jw123 Yes, that is correct.  Whether you include your mortgage in the bankruptcy or not makes absolutely no difference in terms of waiting periods.  It only matters in terms of whether or not you are liable in the event that you should default.  The waiting period to buy a new home is determined by the type of loan you are trying to qualify for.
    Your shortest waiting period would be 2 years with a FHA mortgage, or VA mortgage.  A USDA mortgage carries a 3 year wait, and Conventional is a 4 year wait.
    You may be able to look at a portfolio loan that will allow you to buy with a recent bankruptcy.  Expect higher rates and fees, and you can simply refinance it into a better, long term loan as soon as you are eligible.
    Hope this helps?

  • Jw123

    We recently had to file chapter 7 but reaffirmed our home and did not include it in the bankruptcy. I have now completed my degree so our income has doubled and we are looking to relocate. Am I understanding correctly that we will have to wait a minimum of 2 years before we can even apply for a loan? Is this still the case even if we weren’t foreclosed on and did not file against our mortgage?

  • ScottSchang samantha8585

    Sellers freak out with a 30day contingency removal because makes it sound like the lender is not sure of the loan.

  • ScottSchang samantha8585 Please help asap. I am in California. We are ready to go except most loan officers are freaking out about this situation and think its not possible.

  • samantha8585 You are absolutely correct, Fannie Mae will use the BK discharge date to start the 4 year waiting period.  There are no many lenders that understand this guideline, so many will tell you it’s not possible.  
    What State are you buying in?  I can introduce you to a lender that can help 🙂

  • Hi Scott, your website is so helpful. Thank you so much. 

    I have a very unique situation that I hope you  can clarify. I have a Chapt 7 BK that was discharged in Nov 2011. Our 2 Las Vegas properties were included in the BK. However, subsequently 1 of the homes didn’t foreclose on until 2013. And then the other home short sold April of this year. Will FAnnie Mae go by the date of the BK as the waiting period time? (Not the dates of the short sale and foreclose?) Your help is appreciated.

  • ClaudeFL

    ScottSchang ClaudeFL  Thank you very much Scott, I check it out.

  • cthelper Conventional is definitely an option, and finding a lender that can do this can be a challenge.  Shoot me an email to [email protected] and I can introduce you to a lender that can do the conventional loan.
    The Fannie Mae guideline, and the USDA guideline only address a foreclosure after BK, not Deed in Lieu.  I am able to help folks with short sale or deed in lieu, and most lenders don’t even try.

  • cthelper

    ScottSchang cthelper  Thank you for the quick reply. So my understanding that if USDA is not going to help us, we would still be able to get a loan in January 2017 with conventional financing? That’s great news, as at least we have options. I just was not sure if a deed in lieu was considered different from a standard foreclosure. And yes, the mortgage was included in the bankruptcy, so we should be all set. Thank you for the advice! And for this site!

  • cthelper USDA might be a challenge.  They did change their guidelines in December 2014 to allow you to disregard a foreclosure date on a mortgage that was discharged through BK.  I don’t have enough personal experience with USDA that I have investors that I know will do it.
    Worse case scenario is that you can use Conventional financing with as little as 3% to 5% down payment in January 2017.  Fannie Mae guidelines allow you to use the BK discharge date, and a 4 year waiting period, as long as the mortgage was discharged through the bankruptcy.

  • cthelper

    Hi Scott,
    My husband and I declared bankruptcy back in September 2012 (it was discharged January 2013). We included the house in the bankruptcy with the intention of staying there. Long story short, we decided to do a deed in lieu with our mortgage company, which we are currently in the process of completing (I anticipate it being done by the end of July). My question is how soon would we be able to obtain financing for another house? We are considering a USDA loan, but I’m not sure if they look at a deed in lieu differently than a foreclosure — so would we be able to start looking immediately? Or do we need to wait several more years at this point? I appreciate your time and response in advance.

  • ClaudeFL Hi Claude, yes, unfortunately you have a little longer to wait before you will be eligible to be included in the financing.  Conventional guidelines require a 4 year wait from the date of your short sale.
    FHA financing is a little more expensive when you consider the forced mortgage insurance, but the waiting period is only 3 years instead of 4. Sorry I don’t have better news.
    I would contact your bank, where you have your deposits, and see if they have a HELOC that your wife could qualify for, based on the strength of your equity position.  It’s worth a shot

  • ClaudeFL

    Hello Scott,
    My wife bought a small house in December 2013 and I did finalize the short sale on mid March 2015 on my house. I am now on the deed of the house but not on the loan. We are getting ready to do some remodeling and I was wondering what is the time frame before I can even get approved for refinancing. My wife has perfect credit but low income and my credit score is 715 with higher income (But with a short sale over my head), we have no depts. and no late payments, the house is appraised over $250K and the existing mortgage is below $100K. We are interested in a conventional loan with 20% down, but can’t seems to find any landers. I guess I might have to wait longer…please advise.
    Thank you in advance.

  • RalphFL Hi Ralph, FHA requires a 3 year wait from the date your name was removed from title.  This would most likely be the foreclosure date.
    The 15% down quote must have been for a portfolio loan, which would require a higher down payment, higher rates, and higher fees.
    If you haven’t paid the $45k from the deficiency, I would recommend that you speak to a bankruptcy attorney.  FHA only has a 2 year wait after BK, and with the 3 for the foreclosure, they would both be done at the same time, and you would not be liable for the deficiency.
    I am not aware of any solution other than a portfolio, or hard money loan.
    Hope this helps?

  • RalphFL

    Hi Scott, Thank yo – I hope u can help me figure out what to do. Our MD condo was foreclosed 9 months ago, no BK filed, and not military. We divorced 2 months ago and in our divorce settlement, the 90k deficiency judgment from the auctioned condo foreclosure was divided equally among the 2 of us.  I have been working on getting my credit back – my x left me in financial ruin. I have been working on building my credit back up. I managed to bring my credit score up by 80 points, however my credit score is still only 645.
    I live in FL and spoke with my realtor financial guy (for mortgage preapproval) because I want to buy a home. He advised me that I need to have a 15% down payment and wait 2 years to get a FHA loan before I can apply for preapproval. He recommended I contact the bank with the inevitable deficiency judgment so that it doesn’t show up on my credit report when I apply for a new FHA loan next year (otherwise it would show up as a lien). My divorce attorney on the other hand told me not to worry about the deficiency because they haven’t sent me anything other than notice of the condo date of foreclosure and that it is NOT inevitable.  My x has no intention of paying off his half of the deficiency from the MD condo. To date I haven’t received a Deficiency Judgment. Confused. Any thoughts would be appreciated!
    Thanks,
    Ralph

  • RalphFL Hi Ralph, I am so sorry!  I am just one person trying to help as many people as I can.  I’ve looked through the comments and I don’t see a question asked of you before this?  I try to answer everyone, but sometimes I miss one…
    I am happy to comment on your question if you could please ask again.

  • RalphFL

    Please remove post from 6 days ago since I received no comments. Thank you.

  • RalphFL

    Please remove post from RalphFL since I got no responses. Thank you

  • mamibear04 her name is Katy Parsons, her email [email protected]

  • wannabefarmers

    Hi Scott.  We are in southwestern Ohio and had a bankruptcy 3 years ago that was discharge in March 2013 and included a house.  We are pursuing a USDA loan for a property that we found and have a contract to purchase.  I was just contacted by our mortgage broker and told that we cannot qualify for the loan because the foreclosure was not recorded until December 2013.  Since the bankruptcy we have rebuilt our credit and I now have a credit score of 715 (if that matters).  I read the above article and it seems like we should qualify, am I correct?  I asked the mortgage broker again and forwarded the link to the USDA regulation above and he still says no that we need to wait until December or pursue another type of financing – possibly through a local bank with 20 percent down (which we do not currently have).  Any insight or help you could give would be greatly appreciated!

  • mamibear04

    Send me the info and I’d be happy to contact him when the time comes. Preferably on a VA loan. Thanks

  • mamibear04 You’re very welcome!  Again, I can introduce you to a loan officer that will run the numbers for you and NOT give you a pushy sales pitch!  We don’t do pushy sales pitches around here…just the facts 🙂

  • mamibear04

    Sounds good. Thank you for all the info. We will definitely look into getting another VA loan when we get close to the date of last payment which is March 2017, if not May 2017 is not far a long. I will check with my husband how he feels about conventional loan since putting a down on high loan plus PMI might be something we have to consider or we can just wait. Thanks

  • mamibear04 your credit report is only one factor in qualifying for a home loan.  Just because it doesn’t report, doesn’t mean that it wasn’t late.  Bankruptcy doesn’t mean that you don’t owe your mortgage, or own your home, it just means that if you do happen to fall behind on your payments, or have to short sale, that it will not be reported on your credit twice.
    This is where you may have not received great advice from someone.  You could have continued to make your payments, and pay the home off if you like.
    Since it was not a short sale, or foreclosure, now we only have to use the Bankruptcy discharge date, and the late payments as timelines before you are eligible again.
    Bankruptcy is a 2 year wait, and since your mortgage lates were consecutive, you’re going to want to show 12 months with no late payments.  Your payment history is going to be verified from your previous lender, not your credit report.

  • mamibear04

    We stopped making a payment last March 2015 and sold May 2016. Does it matter when we stopped because it wasn’t even being reported in our credit report? And we never missed a single payment until we decided we had to let go.

  • mamibear04 from the last month that you were late on the mortgage payment.  The goal is to show that you have not had any late payments in the last 12 months.  It sounds like the sale date might be where the clock starts if you were delinquent at the time of sale.
    I have an amazing lender friend in WA, let me know if you would like an introduction.

  • mamibear04

    We live in WA State. When do we start counting the 12months? Is it from the date we sold our home?

  • mamibear04 Yes, I can help you figure this out…oh boy, you really got bad advice about what it means to have your mortgage included in your BK.  Unfortunately, since you stopped making payments you will need to show a 12 month history of no late payments.
    The good news is, you would qualify for a Conventional loan 4 years from the discharge of the BK, and the late payments are not counted against you.  I would almost suggest getting back into the market now using a conventional loan with as little as 3-5% down payment.  Then, if interest rates are still good, look at refinancing into a VA loan once you have the 12 months distance from the last late payment.
    This strategy will allow you to take advantage of today’s insanely low interest rates, and the tax advantages of owning your own home for the rest of 2016.
    You will have to run the numbers, but I think it will make a lot of sense to at least consider this option.
    Thank you for your service!  I hope this helps?  Last question, what State are you trying to buy in?  I might be able to recommend a lender that understands the conventional guidelines, which will make it much easier should you choose this path.

  • mamibear04

    Hi Scott, hope you can help us figure this out. We had a VA home loan purchased in 2009. In 2012, we filed for BK and we asked to keep the house. Later to our knowledge after 2+yrs of continuing payment, we found out that house was included in the BK. We called atty and was told that reaffirmation letter from bank was never sent. That’s when we decided to stop making payments. We were ready to foreclose on the house until we found out we were able to sell it without having to short sale. We sold our house and paid loan in full last May 2016. We were told we have to wait for a year to get another VA loan. Is that true or when exactly are we allowed to get a new one? Thanks

  • birgitj ScottSchang Fannie mae guidelines allow you to buy 4 years after the dismissal of a chapter 13 bk, or 2 years from the discharge of a chapter 13.  FHA requires a 1 year wait from the discharge of a chapter 13.

  • This sounds like you might be looking for a local bank or hard money lender. I’m sorry, I do not know anyone.

  • JRoll07

    ScottSchang JRoll07 Thanks for the response. I will shoot you an email.

  • JRoll07 VA guidelines only require a 2 year waiting period after a deed in lieu.  Conventional financing is 4 years. It sounds like you’ve already ordered your COE and your benefit is available, that was going to be my next question – was the DIL a VA loan?
    If you shoot me an email to [email protected], I have a great lender in that area of the Country that I love and trust, and would be happy to make an introduction.

  • JRoll07

    Hi Scott, 
    We are in Ohio now and two years ago we were in a situation that left us in a deed in lieu for our home in WA. My husband and I were both separated from the navy and our realtors let our home sit on the market for a year; and we were no longer in the area. Our lender suggested a DIL and now we are hoping to purchase another home again. In December we were told that we could do so at our two year mark. Now we are being told that we have to wait another two years. Understandably we are frustrated with all the different responses that we are getting. We both have our COE for our VA benefits as well. Any help and guidance would be greatly appreciated.

  • Limartin made the introduction – Mia is awesome!

  • Limartin

    Awesome. Thanks so much! I’m in Houston, Texas

  • Limartin As long as your other credit lines are current, 12 months of on-time payments should be enough to get an approval for FHA.
    Student loans are a tough one right now.  Recent changes in both FHA and Fannie Mae guidelines require that we have to use a fully amortized payment when calculating your debt to income ratio.  If no payment shows on your credit report, and if the student loan company cannot provide a statement showing a fully amortized payment, the lender has to use a payment equal to 1% of the balance when calculating your debt to income, which would be $720 a month.  
    If the payment is not showing up on your credit report now, I suggest you contact the student loan servicer and ask for a statement showing what your fully amortized payment would be.  I guarantee it’s less than $720.
    What State are you trying to buy in?  I might be able to introduce you to a lender that you can start working with so that you’re in a position to buy as soon as you are eligible.

  • Limartin

    Hi Scott. How long after a mortgage reinstatement can I apply for an FHA loan? I was 10 months delinquent but the lender allowed me to reinstate the loan. How long after making on time payments might I be approved for a new FHA mortgage loan? Also, how does student loans affect the loan app? I owe 72k in student loan debt. I will soon be in forbearance . What’s the best way to go about applying and getting approved and what is a the time limit in which I can do this?

  • dceber

    Scott, 
    We’re in Ohio. We were not sure if we could keep our home, but were told we should protect it under BK. My wife lost her job and I had trouble finding a job after graduating with my degree. We had to relocate to another part of the state. What can we do to help ensure we can get the loan? Should we share a copy of the rule from 2014?
    Thanks again for your help,
    Dave

  • dceber Hi Dave, Yes, you absolutely qualify for conventional financing using the 2014 guideline that allows you to use the BK discharge date as the start of a 4 year waiting period.  If the lender does not have experience with this guideline, they may have a challenge getting it through the underwriter.  The biggest challenge that inexperienced lenders have is when they look at the bankruptcy petition.  If you checked the box that your intention was to retain the property, that freaks most underwriters out.  Also, if you continued to make payments on the mortgage after the bankruptcy, that freaks out underwriters as well.
    You would have no problems getting a Fannie Mae Approve/Eligible, it’s when the underwriter starts digging into the file that they start to ask a lot of questions and the confusion starts.
    What State are you buying in?  I do these types of loans all the time in California, and I know of 2 or 3 other lenders nationwide that can do these loans.  The overwhelming majority of other lenders seem to have challenges.
    The BK, and subsequent foreclosure will not prevent you from qualifying for a conventional mortgage.

  • dceber

    Scott,
    Would appreciate your opinion on our situation. We were discharged from BK Chapter 7 in September of 2010 and had a subsequent foreclosure after this in November of 2014. The house was protected under the BK, and we currently do not see a foreclosure on our Credit Report. The balance on the home loan shows “0” on the credit report. We were able to get a Pre-Approval letter for a Conventional loan at 5% down. He is not sure what will happen when it goes to the Underwriter, but says that he was fairly confident we would be okay. Will they go by the date of the BK to determine whether we can get the loan. Our credit score is around 640.  Our BK attorney didn’t have a good answer for this when we went through the BK. She that there is no definite answer. Hope you can clarify for us.
    Thank you,
    Dave

  • Cuqui357 Using FHA financing, you would be eligible to buy 3 years from the foreclosure date.  Was there a bankruptcy involved prior to the foreclosure?  
    I’m not sure how the foreclosure could be amended…maybe foreclosure proceedings were started in 2013, but not competed until 2016?
    If you email the address to the home, I can probably look it up in public records and get a better idea of what’s going on.  My email is [email protected]

    • I saw an email from you this morning with the address to the property, I wanted to look up public records for your to try to determine what options, and timelines you’re looking at before you can buy again.
      I’m not sure what happened, but I can’t find the email. Can you please resent that email?

  • Cuqui357

    Hello Scott curious to know if I can purchase a home with my mother even though my name is on deed not on Note on previously foreclosed home? The property was foreclosed in 2013 then the foreclosure was amended and there is a second date which is April 2016 thanks

  • Cents47 the seasoning period will depend on what kind of loan you are using.  If you are using FHA, it’s 3 years from the deed in lieu of foreclosure….more specifically, the date your name was removed from title.  
    If the loan that you did the deed in lieu on was a FHA mortgage, the seasoning will go by the date that the FHA mortgage insurance claim was paid.  Your lender would refer to the CAIVRS report to determine that date

  • Mscee00

    Oops I forgot to add the state of purchase is Georgia

  • Mscee00

    Hi Scott, just a quick update, we did contact VA and was told the loan would NOT be illegal and they would back/insure the loan all that would be needed was for the lender to give them a call so they could give the steps needed to get it done. Lenders response was VA is not the one giving the loan, they have lending guidelines they have to follow so basically CAIVRS will need to be removed or no loan, period. On a side note we did hear from HUD and our request has been forwarded to the Atlanta homeownership center appeals department for a CAIVRS suppression request, the problem with this is 1.) Our closing date is scheduled for June 30th. 2.) We are told it would take between 30 to 60 days. I’m not sure what to do at this point other than finding a more knowledgeble lender to help deal with this matter. The current lender still isn’t doing anything to provide assistance. Communication has also came to a crawl.
    If you can refer a lender that is knowledgable in this matter please send an email with the additional information. Thanks

  • RG2016 please let me know if you find the magic loophole!  I have been looking for that crazy thing for years now, and it continues to elude me 🙂
    Using rental income from a departing residence is different from using rental income from an investment property.  Unfortunately, USDA changed their guidelines in November2015 to disallow the use of rental income from a departing residence.
    Fannie Mae Conventional financing allows you to use 75% of rents, and you only need to have a signed rental agreement, and deposit check to use it.
    FHA requires that you have a minimum of 25% equity in the departing residence to use rental income from a departing residence.
    As far as USDA DTI ratios, they are among the most strict actually.  They will give exceptions for “compensating factors”, like reserves, and high credit scores, but they will never be as lenient or flexible as FHA financing.  Conventional financing DTI ratios will fall in the middle between USDA and FHA.
    As long as you are still current on mortgages on your current home, you may qualify if you can afford (DTI ratios) the payments for both homes.  That is always an option 🙂

  • RG2016

    ScottSchang RG2016 Thank you for all the great information!  I figured the quit claim was a long shot but I was hoping for some magic loophole haha. 
    If we go the renting route, how long do you have to have documented rental payments to have them count as offsetting the current mortgage payments?  I’m sure loan types are all different; I believe I read that you need 24 months with USDA…
    There’s actually a possibility that he may be approved (even having both current and new home loan) for an amount that could get us into a house that will work for us and in the area we want. It would definitely limit our quantity of homes to shop from but could still work out, which would be great! 
    We don’t mind looking into other loan options, however there are now two more reasons we are leaning towards USDA. They seem to allow higher DTI ratios, which will help if we apply with both mortgage payments.  Also, I read that in October they will be reducing their upfront guarantee fee and monthly fee?! That sounds good too!
    One other question. Have you ever done a guaranteed USDA loan for someone who owned another home and that home became functionally not adequate? From what I see on their guidelines, I believe we would fit their requirements for overcrowding and be able to get approved while still owning this home. Just wondering if you ever dealt with that and if it caused problems getting approved.
    Thanks again!  Learning so many things!

  • Cents47

    Hey Scott,
    I got my discharge chapter 7 in March 2015 I did a deed in Lou from a home loan that was included in the in the bankruptcy in July 2015 I’m a bit confused what is the seasoning period . For me when he comes to buying a new home I understand it’s two years from the discharge date for my bankruptcy for FHA loans but my question is will I use the discharge date or the date of my deed in Loie or does The bankruptcy trump the deed in loie
    Thanks

  • RG2016 Just to be clear, you do not “have to” get your name off title.  You are eligible to buy 3 years after the discharge of the discharged of the BK.  You only “have to” have your name off title if you defaulted on the mortgage.  Since your payments have been, and continue to be on-time, you now only have the issue of having to qualify with for the new loan.
    You have a couple of different options.  The first, and probably the best possible option is to rent out the current home, and use the rents to offset the mortgage payments on the current home.  The next, and not as great of an option is that if you can afford both payments (current and new home), then you do not have the pressure to rent out the current home right away.
    I do not believe that the quit claim strategy will work because you’re essentially trying to “hide” the fact that you currently own a home.  It will immediately be discovered by the underwriter, and the same questions about affordability will come up.
    Last, and worse case scenario is that you do a short sale or deed in lieu of foreclosure on the current home.  There are a couple of reasons why this isn’t a great idea.  Probably the biggest hurdle is finding a lender that knows about the guidelines that allows you to use the BK discharge date, and ignore the foreclosure date when buying using a USDA guaranteed loan.  The guideline only specifically mentions a “foreclosure” that occurs on a mortgage discharged through BK.  Before you can get the home foreclosed, you have to default on the mortgage.  Doing so is going to put a lot of pressure on your ability to find a lender that can help.
    Another option is to use a conventional or FHA loan to buy the new home.  Conventional will require 3-5% down, FHA requires 3.5% down payment.
    I know this is a lot of options, I hope it helps?

  • RG2016

    Hi Scott. I see that you give people really good advice so I
    thought I’d ask for your help too.  Here’s
    our story.  We had our chapter 7 bankruptcy
    discharged in July 2009.  We didn’t
    reaffirm the mortgage loan but we have continued to live in this home since and
    have always been on time with payments.  Both
    of our names are on the mortgage and the title. 
    We have had children since 2009 and we have absolutely outgrown our
    house. We would like to purchase a new home and we are interested in the USDA
    guaranteed loan. It seems perfect for us. The new mortgage loan will only be in
    my husband’s name as he has the income and better credit score. I understand
    that my husband’s name needs to be off the title to our house we have now, that
    was not reaffirmed. I do not believe we will be able to sell the house for what
    we still owe on the mortgage. I understand some options could be short sale,
    dil, or foreclosure. But my question is, can we quit claim my husband off the
    title and into my name alone, and will this clear him for getting approved for
    the new loan in his name only since he will be off the title to this house?  We are in Ohio if that makes a difference. I know
    Ohio is not a community property state but I’ve heard that doing the quit claim
    wouldn’t work because we’re married and the house would still be considered
    part his ownership too. What are your thoughts? Thanks!

  • Hamberd you are correct, all of these timelines can be shortened if you can meet the extenuating circumstances exception threshold.  The challenge is that it is so rare that anyone can meet those guidelines.  The paper trail and timing of the Back to Work Program was so strict that many lenders chose not to even offer the program…which I think is a shame. 
    The even bigger shame is that many families exhaust their savings, borrow money, and hang on as long as they possibly can, which throws the timeline off for meeting the BTW extenuating circumstance exception. 
    You will see a lot of marketers write articles about buy one year after foreclosure, and they are talking about extenuating circumstances.  These articles are designed primarily to generate leads to sell to other lenders, not to actually help consumers.

  • Hamberd

    “FHA insured loan THREE (3) years after”

    False.  FHA has the Back To Work program, which is 12 months after.

  • Priscila4483

    Thank you so much for your input @ch5520. I appreciate the information you provided.

  • Priscila4483

    Thank you so much for your time and response. We will definitely try to start the process early so that once we’re over the waiting period, we will be able to just go ahead and close.

  • ch5520 Priscila4483 This is an excellent strategy!  I always encourage “boomerang buyers” to consider portfolio loans as a stepping stone back into ownership.  When you do the math, the difference between the rates and fees paid for a portfolio loan, and what you can get with traditional financing, compared to the tax benefits, and earned equity that comes only from ownership – it almost always pencils out to make strong financial sense.  
    Never underestimate the power of an informed, strategic approach to getting back into the market.  The longer you wait, the higher home values go, and the higher the risk that rates will go up as well.
    Thanks for [email protected]

  • ch5520

    Priscila4483 We are in a similar situation, as our 4yr waiting period isn’t up until March 2017. What we did was we got a pre-approval letter for a portfolio loan, even though we didn’t really have any intention of using it since it was at 7.5%. We just wanted something in hand in case we wanted to put in an offer on something that wouldn’t close until after the waiting period was up but was too soon to get a pre-approval letter. We also thought it would be good to have an option in case our dream home came on the market now, in which case we’d use the portfolio loan now and just refi with a conventional loan next March.

  • Priscila4483 It may be possible to get a pre-approval letter stating that you “credit qualify”.  I absolutely recommend that you speak with a lender, and start initial process of reviewing your credit, income, assets and gathering your supporting documentation.
    The guideline states that you cannot get a FHA case number until after the 2 years.  That means that you will not be able to be officially approved until you’ve met the waiting period.
    Hope this helps?

  • Priscila4483

    Hi Scott,
    My husband and I went through a chapter 7 bankruptcy and were discharged on May 14th, 2015. We know we must wait two years to apply for an fha loan, however is it possible to get a pre approval letter perhaps a couple of months before the 2 year anniversary or no one will pre approve us prior to that? We’ve been working on rebuilding my husband’s credit and he’s almost at 660, I’m sure, by then, we will be able to raise it even more. We are intending on using the GA dream act to help with the purchase of our first home.
    Thank you.

  • kchlk I just responded to your email 🙂  I do not have any experience using the bankruptcy date only with USDA.  USDA has a similar guideline to the Fannie Mae guideline that allows you to use the BK discharge date, and ignore a subsequent foreclosure.  
    I am able to  use this guideline if there is a deed in lieu on conventional financing, but I’m not sure about USDA.  I’m sorry I cannot answer with more confidence.
    Also, keep in mind that when you are talking to USDA lenders, that there are two options, USDA direct, and USDA guaranteed.  Make sure you speak to a lender about the differences between the two.  I only have experience with USDA guaranteed loans, and I have heard that USDA may be more lenient.
    Hope this helps?

  • kchlk

    Hi Scott, 

    I sent you a detailed email. I am looking to find out if I am reading your post accurately. We had BK discharge July 2014 which included our mortgage. We did not sign deed-in-lieu until February 2015. When will we be eligible to apply for a USDA loan? 
    Thanks!

  • Mscee00 Oh boy…..Yes, definitely call VA and see what they say

  • Mscee00

    Thanks for your fast response! Unfortunately, the lender isn’t doing anything to help. We were told today by the lender that if we can’t get the CAIVRS removed that they won’t be able to proceed with the loan because it would be illegal. We did contact the 1-800-225-5342 number for HUD and was told that we would get a call or email within two days with an eligibility date, that was 5 days ago. Today we received this response:
    D
    DoNotReplyFHA
    to me
    9 hours agoDetails
    RE: CAIVRS #
    Homeowners must place their requests for this information in writing to us.
    Your inquiry MUST include evidence- PROOF of your Social Security number. Failure to include this documentation will result in a letter of denial for information.
    Address to:
    Dept. of H.U.D.
    ATTN: CAIVRS
    40 Marietta St., SW
    Atlanta, GA 30303
    Thank you.
    We sent the requested information today so now we are still just waiting for a response. I will try to call the VA number tomorrow. I will keep you posted and thank you so much for your help!

  • Mscee00 It’s pretty unusual that CAIVRS hasn’t been cleared if the FHA claim was paid in December 2015.  It’s even more unusual that the foreclosure took place in 2012, and the insurance claim wasn’t completed until December 2015.
    Hopefully your lender is working on this on your behalf, but if they are not, here is a place for you to start on your own:
    1. Call the FHA resource center to get your eligibility date. Contact number: Toll free: (800) CALL-FHA or (800) 225-5342
    2. If you are beyond your eligibility date, it can take up to 45 days for the CAIVRs to be cleared. Have your lender run the CAIVRs, and let you know if it is clear.
    3. Beyond the 45 days, if you have not been automatically removed email: [email protected]. Give a brief explanation of the situation and include the eligibility date you were given by the resource center.

    What State are you trying to buy in?  If your lender is not helping, I may be able to recommend someone that I know and trust that will work harder for you.
    I hope this is helpful, and thank you for your service!

  • Mscee00

    Hi,
    I wish I would have came across your information earlier. My wife and I are in the middle of the home loan process and have gotten pre- approved for a VA loan. We have worked hard to rebuild our credit and have gone through the process of finding a home, and depositing earnest money only to receive an email from the lender stating that I’ve been flagged in the CAIVRS system. Please keep in mind this is my first time ever hearing about CAIVRS. The lender provided me with contact information to find out what I could about the report. I found out this is due to a FHA foreclosure that happened in 2012. The home in question was a home that I had purchased in 2004 and had moved out of back in 2009 due to the understanding that the home would be sold at auction. At the time of home purchase, I was active duty military. We ended up losing the home due to a lupus diagnosis by the Navy and I was medically discharged from the Navy in 2005, which was the following year after purchase. Please keep in mind I had no indication that I would be loosing my job when purchasing the home. After the time of my discharge, it took me approximately 3 months to obtain gainful employment again. By this time, I had gotten behind on all bills. We discussed the situation with the lender but according to them there was nothing they could do to assist us so we ended up leaving the property and as far as we knew the property was foreclosed on by the lender. This was 2009. Now, in 2016, when we go to apply for a new mortgage using my VA eligibility certificate, we’re finding out the house was foreclosed on in 2012 and that there’s additional time we have to wait because of HUD insurance claim which was filed December 2015 by The lender? Now we’re facing getting denied and I’m at my wits end. Please tell me if it’s possible to get them to back date to the foreclosure date and remove the report or is there any other course of action that I can take? I have been contacting HUD but It seems I’m getting the run around and no solid information.
    Hi,
    I wish I would have came across your information earlier. My wife and I are in the middle of the home loan process and have gotten pre- approved for a VA loan. We have worked hard to rebuild our credit and have gone through the process of finding a home, and depositing earnest money only to receive an email from the lender stating that I’ve been flagged in the CAIVRS system. Please keep in mind this is my first time ever hearing about CAIVRS. The lender provided me with contact information to find out what I could about the report. I found out this is due to a FHA foreclosure that happened in 2012. The home in question was a home that I had purchased in 2004 and had moved out of back in 2009 due to the understanding that the home would be sold at auction. At the time of home purchase, I was active duty military. We ended up losing the home due to a lupus diagnosis by the Navy and I was medically discharged from the Navy in 2005, which was the following year after purchase. Please keep in mind I had no indication that I would be loosing my job when purchasing the home. After the time of my discharge, it took me approximately 3 months to obtain gainful employment again. By this time, I had gotten behind on all bills. We discussed the situation with the lender but according to them there was nothing they could do to assist us so we ended up leaving the property and as far as we knew the property was foreclosed on by the lender. This was 2009. Now, in 2016, when we go to apply for a new mortgage using my VA eligibility certificate, we’re finding out the house was foreclosed on in 2012 and that there’s additional time we have to wait because of HUD insurance claim which was filed December 2015 by The lender? Now we’re facing getting denied and I’m at my wits end. Please tell me if it’s possible to get them to back date to the foreclosure date and remove the report or is there any other course of action that I can take? I have been contacting HUD but It seems I’m getting the run around and no solid information.
    Thanks

  • KAKonicki ScottSchang I have a couple of options Kelly, I’m reaching out to them now

  • ang8907

    Hello
    Scott,
    I found
    your sight as I was looking into adding myself to the mortgage of a home my
    husband and I share. However, I have a previous Short Sale on my credit.
    Long
    Story Short;
    Purchased
    a home at 23years old in 2007 for around $212K, unknowingly the height of the
    housing market. I was proud to be buying a home so young! No idea what it would
    turn into later.
    5
    years later, 2012, was preparing to move in with my fiancé (now my husband) and
    looked into selling the house which was now valued at less than $90K due to the
    downturn. I had even renovated it almost completely (new kitchen, carpet, deck,
    paint, bathroom, everything)
    Fast-forward to 2015, by
    husband and I bought a home, with only his name on the mortgage since I was
    awaiting the 3 year waiting period. Once that was up we tried to add my to the
    mortgage and the loan officer was saying that the mortgages were not “cleared”
    on my credit report and I couldn’t be added. I called both mortgage companies
    of my previous home and they were less than helpful.
    I reviewed my credit report
    and both show the missed 3 payments (luckily I only had to miss 3 payments
    before the house sold) and the Status says “Current; paid or paying as agreed”.
    What does it need to say on
    my report to be considered for a loan? And I see now that the waiting period
    was adjusted to 4 years in 2014. Shouldn’t those that have been waiting prior
    to the change be held to the original 3 year waiting period?
    Thank you for your help!
    A

  • KAKonicki

    ScottSchang Hi Scott, after the information you provided here we’ve contact two different lenders.  Both have denied us a loan because of my short sale in 2014.  Both have said they need to go by the short sale date and not the bankruptcy discharge date.  So, I can’t seem to find you actual email address on this thread.  Can you share it here so I may email you directly to get the names of lenders you would recommend in Washington state given my cicumstances?  Thank you so much.

  • Deb58lynn I have experience scenarios like this, and it depends solely on the wording of the divorce decree.  It sounds to me like you are going to be ok if you are using a fannie mae loan.  However, you will probably not be using a fannie mae loan for the construction portion of the loan, which means that this will be subject to the interpretation of the underwriter.
    The fact that you quit claimed, and the divorce decree is clear about the responsibility going to your ex husband, my experience is that you will be ok.
    Hope this helps?

  • Deb58lynn

    In 2011 my divorce was final. My husband was granted our home and it is stated on the decree that he was to be held responsible for all payments, leins etc on that property. He was to refinance but the market fell and he did not. I signed a Quit deed over to him and walked away. In 2013 he stopped making payments and short sales the house. My name was still as co-borrower on the loan. I am now remarried and we are looking to buy a home in Florida. We have approx 55% to put down and my new spouse has excellent credit. Although my credit score had dropped due to the ex allowing to short sale, my credit score is still 793. I have missed no payments on a property I purchased after the divorce and have never missed a payment on anything in my life. Is this going to be a problem to get financed for this loan? We are building. Loan officer called and asked about what happened but I’ve been unsuccessful at getting answers. Just being told that the underwriter we call soon. We currently live in Michigan and that’s where the short sale took place. I’m transferring with my place of employment.

  • 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 [email protected]

  • 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

  • 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.

  • 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.

  • 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?

  • 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.

  • 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?

  • 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?

  • 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.

  • 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.

  • 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

  • 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

    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.

  • 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

    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

  • 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 [email protected], I will try to help

  • 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?

  • 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

    If I received a disclosure noticed 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?

  • 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 [email protected]

  • 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.

    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?

    Thanks for your response.

  • 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

    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

  • 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

    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?

  • JohnCarlson2

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  • ChrisandGang

    Thank you Scott!

  • 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

    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?

  • 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

    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

  • 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?

  • 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?

  • b_allen5

    We are looking to buy in Texas

  • 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

    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.

  • 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?

  • 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!

  • 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

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

  • 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

    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.

  • Mknk11

    Mknk11

  • 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?

  • 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

    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.

  • 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

    ScottSchang vicsicily Maryland

  • 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.

  • vicsicily

    ScottSchang vicsicily We only had a short sale no Bankruptcy

  • 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.

  • 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?

  • 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 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

    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 ?

  • Chynas17

    I will review more…thank you for this information. Very helpful.

  • Chynas17 This is a question for a licensed tax preparer, and I am not one, so I would just verify this information  If you have a foreclosure, and the mortgage is not discharged through bankruptcy, the bank can report the “losses” they incur as income in the form of a 1099-C for cancellation of debt.  Here is more information from the IRS website – https://www.irs.gov/uac/Home-Foreclosure-and-Debt-Cancellation
    There are many circumstances that would prevent the lender from issuing a 1099-C, which you would need to consult a licensed tax professional for more information about.
    Hope this helps?

  • Rn_jeeper

    ScottSchang Rn_jeeper the mortgage was discharged through the bk. We never reaffirmed the mortgage and then ended up short selling the house. We have been talking to veterans united mortgage and they keep saying we can’t settle before the 2 year mark but want to prequalify us. I can’t understand why they ant us to prequalify if we can’t do anything for 2 more months.

  • Chynas17

    If you gave the home back to the bank- Foreclosure and they sold it. Are you due to pay the income taxes for the property if the bank owned it and sold it?

  • Rn_jeeper for a VA loan, the Application date must be after the 2 year waiting period.  Was there a mortgage discharged through the BK?  If so, there could be a separate waiting period in addition to the BK discharge date.

  • Rn_jeeper

    Do you need to wait the full 2 years after chapter 7 to place a contract on house for a VA loan or just ensure that settlement is a full 2 years post bankruptcy discharge? Thanks

  • whitebow04 Oh boy, you really did get bad advice throughout this process.  No problem though, you’re in a good position now, this is an easy answer, and I promise you that it’s 100% accurate.
    If you are purchasing in your name only, using your income only, you can buy using a conventional mortgage now, with a minimum 5% down payment.  Conventional guidelines will allow you to disregard the foreclosure date as long as the mortgage was discharged through the BK, and use the BK waiting period, which is 4 years from Discharg.
    If you do not have a lender that you trust in NJ, I can introduce you to someone I know.  If you would like an introduction, shoot me an email to [email protected]

  • zsprague15

    Hi Scott,

    I had a chapter 7 BK in Dec of 2012 it was discharged in Mar 2013 it included our home and a notice to the creditor was sent to them which I have. Bank of America dint foreclose on the home until June of 2014. Is there any programs I would qualify for now with only putting down 5%. I’m relocating for work in a month and a half and already have an accepted offer on a home, but Quicken called me today and told me, my loan wouldn’t go through because of this. I’ve seen programs like the Back to work FHA program that I believe I would qualify for, or is their different ones? I really don’t want to lose out on this house as I got a really good deal on it.

  • whitebow04

    HI Scott, 
    I had a chapter 7 BK in June 2010 which included our FHA mortgage. The mortgage was never reaffirmed. We lived in the house and paid the monthly payments every month until Feb 2014. At this time we were given false information, told we could purchase a new home and was advised by a real estate agent (who was also family) to simply stop making the monthly payments and let the home go into foreclosure. We actually got to the day before settlement, and thousands of lost dollars later, until we were told we could not get a mortgage. We were heartbroken and very confused. At this point we were now 6 months behind in our mortgage payments and we considered a short sale, however we were advised by our lawyer that if we did short sale my husband would then assume the difference of the debt which was estimated at minimal $60,000 since the home value dropped significantly. He said this would happen because the mortgage was in both our names but the BK was just mine, so he was still liable. Our lawyer advised us to just let the home go into foreclosure to avoid this. He also advised my husband to claim BK. So in July 2014 we moved into a rental and have been here ever since. Since then my husband claimed BK in June 2015 and the mortgage was included in his. Our house sold at auction about a month ago, March 2016. 

    So here we are, paying $2300 a month in rent. I make $116000 a year, my credit score is almost at 712 and my only debt is student loans, and we want to move forward to purchase a home. Everyone we call gives us difference advice… The next mortgage would be only in my name… do we count from my bankruptcy in 2010, or from the date the deed was out of my name during the foreclosure auction which was a month ago? Thank you for your advice. We live in NJ now but our home was in PA. Planning to buy in NJ.

  • dimplz18

    ScottSchang I am going to email you soon!! I actually have the Notice to Creditors so any help you can give me would be greatly appreciated!!! Thank you!!

  • dimplz18 ScottSchang You have stumbled into the single biggest hurdle that most folks run into when working with inexperienced or uninformed lenders.  You have to contact your attorney, or the court, and get the Notice to Creditors.  This is a list of creditors that the court notified that their debts were discharged.  The consumer normally would not get this document, you have to ask for it.  Even then, you will have to find someone that understands these loan programs.
    Shoot me an email to [email protected], I may be able to introduce you to a lender that can help.

  • dimplz18

    ScottSchang I am trying to buy in Connecticut. I have all the bankruptcy paperwork and the house is on there but because it is listed under the Statement of Intention, I am being told that I cannot get a mortgage. I never signed a reaffirmation agreement and from what I have read elsewhere, just because it was under the Statement of Intention, that it was not the same as a reaffirmation. Is that true?

  • Cuqui357

    ScottSchang Cuqui357 oh boy…..we did quick claim the deed to the realtor his explanation to us was that it would be easier to short sell the property because they could not put a lien on it.( which I know now is BS)…but when he could not get a short sale we ended in foreclosure 2013 and since he was on the deed they ended up vacating the foreclosure and serving him a summons one they realized …its almost like they foreclosed on us in 2013 and then foreclosed on him 2015..dont know if that makes any sense…sorry and a lawyer i spoke to told me unless we got served foreclosure papers again..that we did not need to call him..sooo frustrated….do u happen to know any experts in florida, In this field that could maybe guide us? thanks so much again

  • dimplz18 You would qualify for a Conventional loan if we can show that the mortgage debt was discharged through the Bankruptcy.  What State are you trying to buy in?

  • dimplz18

    Hi Scott, I had a chapter 7 BK discharged in 10/2005. My house was included but was listed under Chapter 7 Individual Debtor’s Statement of Intention but I never “officially” reaffirmed the mortgage. The house was sold in a short sale 6/15 and my credit score is 712. Would I qualify now for a mortgage or do I need to wait?

  • Cuqui357 ScottSchang how in the world did you realtor get on title?  Did you quit claim title to your realtor?
    I apologize, I am just a lender in California that is familiar with the underwriting guidelines for most traditional loan programs for when you are eligible to buy after a financial hardship.
    It is my understanding that if your name was on title, the waiting period begins from the date that your name was removed from title.  Now, if there is a mortgage on the home, and you transferred title without the lender removing the lien themselves, and absolving the debt, then you probably need to hire a real estate attorney to sort this all out.
    I hope this helps?

  • Cuqui357

    ScottSchang Cuqui357 hello Scoot just saw your reply. thanks for responding…..in the credit report says foreclosure redeemed? we received a 1099-A, Dec of 2013, filed it in our taxes ,no we did not file bankruptcy..i was not on the loan just on deed…does this mean i also have to wait for the seasoning period to end so that i can apply for a mortgage? i spoke to a lender and he said he was gona send my info to an underwriter since he too doesnt know what date to go from..since our foreclosure was vacated in 2014 and the realtor on the deed got a summons ,,i think from what i understand was that the mortgage company could not take ownership of the property because our “realtor” was now on the title….does that implicate us? do we now have to wait another 3 years? we are sooo baffled by this dont know who to turn to for answers sorry again 🙁

  • emillz1967 Thank you for your question.  Ny experience is that construction loans do not necessarily follow traditional loan guidelines.  While the permanent loan may be a FHA or Fannie Mae Loan, the construction loan is much higher risk and the lender will determine what their guidelines are.
    Unfortunately, because construction loans are temporary financing, you’re likely not going to find a lot of consistency between lenders.
    Hope this helps?

  • emillz1967

    Hi Scott, my husband and I had a deed in lieu on Commercial property that was recorded 7/2013.  We sold our primary residence and purchased land now we want to build.  What is the waiting period in Connecticut for a construction loan.  Different banks give me a different answer. Our credit score is 740.  We own another rental property with a lot of equity.

  • jerseycoach83

    ScottSchang Hi Scott, I am in the exact same situation as infodoug above except in NJ.  The other difference is the short sale was in my name only but I wish to buy with a co-borrower who has excellent credit and great income.  Are there any investors that offer a program like that in New Jersey that you know of?  Thanks.

  • confused vet

    ScottSchang confused vet

    We are moveing to Portland, but wanted to look at buying on both the WA and the OR sides of the river.  

    The whole thing upsets me because we paid out of pocket for 8 yrs as landlords on the property because of the market crash, hoping it would recover enough to sell.  We finally couldn’t afford it anymore in 2013.  And now it haunts us.  Had we done a short saie when we transferred from that location we would be free and clear from it.  

    Thanks for your help!

  • confused vet I am so sorry you are being lied to. It is not uncommon to receive inaccurate advice from this type of a high volume lender.  FHA requires a 3 year wait after a short sale, VA only considers a foreclosure, or deed in lieu as derogatory, and even then will typically approve a Veteran after 24 months of re-established credit.
    Another challenge may be that many investors will have “overlays”, which means that they will have additional guidelines that are more strict than those established by VA.  As far as the short sale rule, it does not say in the guidelines that there is no waiting period, it simply fails to identify it as a derogatory event at all. You would still have to qualify for the loan, and most likely receive an approve/eligible from the automated underwriting engine.
    What State are you in?  I will introduce you to a professional loan officer that knows the underwriting guidelines and can give you more accurate advice.
    Thank you for your service,  I am so sorry that people like this are in my industry.

  • confused vet

    Hi Scott, I am a active duty and am unexpectedly transferring this summer.  My husband and I did a short sale in july of 2013, Quicken told me today that I am not eligible until july to start the home buying process, 3 years.  I wondered where you found the information above on the va not considering a short sale a deliquency any longer.

    Thanks for your help.
    Confused vet

  • dwasicki73 Thank you for the great question!  Unless the mortgage was discharged in a bankruptcy prior, the Conventional waiting period is 7 years from a foreclosure.  That only puts you out to March of next year, 2017.
    I would recommend that you use another FHA loan just to get you into the home, then refinance into a Conventional as soon as you are able.  Do not be discouraged by FHA financing.  The interest rates are significantly lower than Conventional rates right now, and you easily qualify to make the move now.
    Hope this helps?

  • dwasicki73

    Hi Scott,  my husband and I had a foreclosure in 2009, due to financial hardship. However our names were not removed from the title until March of 2010. Since then we have had great credit and have even had an FHA loan. We want to sell our current home in Colorado and move back to Washington state. Would we qualify for a conventional home loan now? Our credit scores are about 715-720.

  • TracyYoung2 I completely agree, this is not something you want to take a risk with.  Here’s a little secret – MANY lenders will underwrite your file before you find a new home.  This is a company policy for me on any scenario where this type of risk is involved.  An underwriting approval means that you apply for the mortgage, submit all of your documentation, and an underwriter will review it just like you are in escrow for a purchase, except that you do not yet have a property identified.
    The only things “missing” will be your down payment, which could come form the sale of your home, and the appraisal and inspections on the new home that you have not identified yet.  Essentially, this is a credit qualifying approval.
    I do not do construction loans in my State, so I’m not sure if those lenders will offer this level of service, but it’s worth asking?  Just keep in mind that it’s possible, and ask around to see if anyone will offer this service.
    Hope this helps?

  • TracyYoung2

    Well I could sell my current home now to free up a chunk of cash but then I’m scared I do all that and I still can’t get a loan and I’m going to live in a tent on my lot! Lol. I’ve reached out to several banks and a couple brokers and it doesn’t sound like there are lenders for this. Frustrating!

  • AmieG  Hi Amie, yes, I’m sorry – I misread the BK, that does make a difference.  In that case, it’s 4 years from the discharge of the Bankruptcy for Conventional financing, and you can ignore the foreclosure.  That will put you at 3/2017.  
    I do have a lender that can help.  If you send me an email to [email protected], I can make an introduction.

  • AmieG

    Our BK was a Ch 7. not Ch 13. Do you by chance know any lenders in KY that are knowledgable and will be able to help us? Thanks so much

  • momof38553

    ScottSchang momof38553

    Oh… so excited …..I will!!!! Happy..happy.

  • momof38553 ScottSchang A recording will go out to anyone that registered, and I will probably be posting a new registration link for the next one in a couple of weeks.
    I am not kidding, and I am not surprised that no lender told you what you qualify for.  Most lenders do not see these types of scenarios often enough that they know what the guidelines actually are, and they would rather tell folks the wrong information than take the time to research it before misleading consumers.  It’s a sad thing, and it happens every single day.
    Shoot me an email to [email protected] and I will introduce you to a lender that can help 🙂

  • momof38553

    ScottSchang momof38553

    Hi Scot thnx for quick response, I am in Ft. Lauderdale Florida. But are u kidding me…. I can really buy now with a conventional loan???? Are you definitely sure about that?? I ask that because I was trying to buy a house last May 2015 under the FHA back to work and did not qualify and therefore was denied but none of the loan officers told me I could go conventional ….none…they told me there was nothing they could do for me and I wold have to wait until 9/2016. I mean ….had I known I simply would have gone conventional. Boy I wish I was at the seminar last night, is there a recording??? THnx.

  • AmieG See my answer to your first question 🙂

  • AmieG Hi Amie, in regards to your question about construction loans, take a look at my answers to the two questions below, they had the same question 🙂
    As for your other question – both lenders are wrong.  This is very common to get advice like this, they are kind of mixing up guidelines between a couple of different loan options.  Using conventional financing, you can buy right now – 2 years from the discharge of the Chapter 13, as long you have no other properties that are in default.  Conventional financing will not hit you for a separate waiting period from the foreclosure if the mortgage was discharged in the BK.
    The other lender is referring to FHA financing waiting period, which is accurate, but they do not understand the guidelines, so they did not suggest that you are eligible using Conventional financing with as little as 5% down now.
    Hope this helps?

  • TracyYoung2 I am getting a lot of these questions lately about construction loans, and I will admit up front that I do not have a lot of experience with investors that offer this type of financing.  My guess would be that the construction lender will at the very least want to follow Fannie Mae or FHA waiting periods due to the fact that they will want to convert this loan to permanent financing as soon as the construction is done.
    The specific terms of the construction loan would be dictated by the investor/lender offering the construction arm of the loan.  Depending on timelines and cost of construction, it also sounds like there might be equity in your current home that you can use to help with the construction?

  • momof38553 I am so sorry that you were unable to join us, we will do that webinar again.  We had an overwhelming response, and I think it helped a lot of people.  We will probably reschedule it for another 2 weeks.
    Let’s tackle your question now though – Portfolio loans are available as early as 1 day out of a foreclosure, and the less the waiting time, the more expensive the rates and fees.  This should not be a concern for you though because you would be eligible for Conventional financing 2 years from the discharge of the Chapter 13, which would make you eligible now.  FHA is going to use the actual foreclosure date to start a 3 year waiting period, which would put you at 9/24/16.
    A Conventional loan will require as little as a 5% down payment.  What State are you buying in?

  • adheiniger Since construction loans are not necessarily Fannie Mae or FHA underwritten loans, the waiting periods will vary by lender to lender.  The “construction” part is the challenge.  I would think that it would follow more restrictive guidelines because once the construction is completed, that loan will convert into a permanent loan that would be Fannie or FHA eligible.

  • AmieG

    One more question…. My husband wants to know if there is a better chance of building or are those guidelines stricter?

  • AmieG

    Hi Scott, we live in KY and filed CH 7 BK in 3/2013 and our house was included. We had mostly medical bills and had a substantial loss of income and our BK clearly shows it. The BK was discharged 8/6/2013. We did not reaffirm on the house. Based upon conversations I have had with a few lenders it seems WF did not transfer the property out of our name till mid 2014. We are being told different things. One lender said because the house was included in the BK then we are able to purchase after 8/7/2016. The other lender is saying not until 3 years after it is out of our name. We have money for the down payment and our credit is in lower to mid 700’s. Can you please help sort through this and if there is any hope point us in the right direction? Thank you

  • TracyYoung2

    Hi Scott, we live in Tampa and are just about 3 years out from a short sale. We purchased a lot and would like to apply for a construction to perm loan. What are our options?

  • momof38553

    Hi Scott I can’t register for ur webinar tonite… the site seems to be down……however I do have a question for u. My Ch.13 BK was discharged 4/23/13.I also had 2 houses that were foreclosed on 11/14/12 (primary) and 9/24/13 (secondary).Both homes were included/surrendered in BK. When can I buy a home again if I wanted FHA/Conventional financing???  Also would I qualify for a portfolio loan???Thnx.

  • EK_82 The waiting periods are a requirement by HUD, and they will not issue mortgage insurance if those guidelines are not met.  If Wells Fargo is willing to give an exception to this and hold the loan, that would be incredibly unusual.
    My experience, and my gut reaction here is that the loan officer made a mistake, and tried to cover it up by pointing out something else on your credit report, saying that was the reason.  That is what I see most often.

  • EK_82

    This definitely does help us. I guess I’m a little confused as to why or how the WF loan officer could get FHA based on the BK date and not the deed. Saying since he could see it was a part of me dicharged. Is this something they could make the decision to go on or is it pretty much up to FHA?

  • adheiniger

    ScottSchang KAKonicki Perfect.  Sending email 🙂

  • adheiniger

    ScottSchang adheiniger Thank you so much.  Looks like I should start by talking to some builders.  You have been a great resource during all this as we are approaching the end of our waiting periods.  My only hope now is finding an experienced lender familiar with all of this in WA.

  • adheiniger Great question!  Most new construction loan lenders are not necessarily following FHA or Conventional underwriting guidelines specifically.  Fannie Mae and FHA do not currently offer Construction loans, these are going to be private lenders that are doing the initial construction financing, and then they will convert it to a conventional or FHA loan after construction is done.  So you’ll have to meet their specific guidelines, which I assume would be pretty conservative, and guidelines for the permanent financing that follows the construction phase.

  • adheiniger

    KAKonicki ScottSchang –  I am also in WA state, so would be interested if you find a good lender we will use next year.  Thanks

  • adheiniger

    One more question for you Scott… Where do construction loans fall into waiting periods?  We are contemplating buying some land with owner financing and building next year after our 4 years after Ch 7.  But I just want to make sure we will be able to obtain some kind of construction loan before we decide on the land.  Thanks

  • was there a bankruptcy during this hardship in 2007? Unfortunately, what you experienced was quite common during this period of time. Unfortunately, you have a waiting period from the date your name as removed from title. The timeline will be determined by the type of loan you are trying to qualify for. Unless the mortgage was dictated in a bankruptcy, your shortest waiting period is 3 years from the forfeiture (auction) using FHA financing.
    Hope this helps?

  • lylabel

    Hi Scott, we are in a unique situation and need some advice… We applied for a mortgage and found out that a house my husband thought was foreclosed on in 2007 was still in his name! The bank had not done anything with it all that time. Needless to say, we couldn’t qualify for a mortgage. The house was sold at auction in December of 2014. We have great credit, great income and a large down payment but can’t get a mortgage for 3 yrs. bcuz of this foreclosure. Is there any way around this? We feel like we’re being held hostage bcuz the bank took so long to auction the house. We live in NJ. Thank you for any help/advice you can give.

  • EK_82 This is a great example of the kind of “partial” information that many lenders will give, without fully explaining the circumstances around each scenario.  All of what you are being told it mostly true.  What you are not being told is why, and the fact than any of these scenarios may be correct.
    The timeline for you to buy again is determined by the type of financing you are trying to qualify for.  conventional financing will allow you to buy 4 years from the BK discharge date, as long as the lien has been removed.  FHA is going to use the Sheriffs Deed date, and the waiting period is 3 years from the date your name was removed from title.
    So here you go – you are eligible for Conventional financing, and you cannot sign your loan documents until March of 2017 (after the BK discharge date).  You can buy using FHA financing on 3/28/17, but cannot attain a FHA case number until after the 3 years has lapsed.
    Hope this helps?

  • EK_82

    correction the sale and Sheriffs Deed was executed on 3/28/14.

  • EK_82

    Hi Scott, My wife and I reside in Ohio. We filed for BK in March 2013 and included our mortgage within the BK. We filed a letter of abandonment with WF and moved out at that time and were discharged in June 2013 from the courts. We are now looking to buy a home and were looking into what options we have at this point. In the process we found that our home went to a sheriffs sell on March  282015 but did not sell and was at that time given back to WF. In speaking with a several lenders to get pre approval we have heard several variations of what timeline we are looking at. One lender who was (WF) stated we only had to wait 2 years and we could qualify for FHA again since they could see when we were discharged and that the mortgage was included. Another leader advised us we would have to wait 3 years from the time our name was removed from the deed. The last lender we spoke with advised we would have to wait 4- 7 years for a conventional loan or 3 years from the time that WF sold the home again. Hoping you could help with pointing us in the right direction and possibly give us some insight on what kind of time we are facing. 

    Thanks!

  • KAKonicki

    ScottSchang Thank you for the information.  I will see if I can find a lender familiar with these guidelines, if not, I will definitely be contacting you for some recommendations.  Thank you again!

  • The conventional guidelines only require a 4 year waiting period from the discharge date. Also, in 2014, Fannie Mae changed their guidelines to allow you to ignore the date the lien was removed by foreclosure, short sale or deed in lieu, as long as the mortgage was discharged in the BK.
    The challenge is finding a lender that is familiar with these guidelines. I can only lend in California, but may be able to refer you to someone if you are unable to find a lender that is familiar with those guidelines
    If you need help, shoot me an email to [email protected] and I will see if I can point you in the right direction.

  • KAKonicki

    Hi Scott, I live in Washington state an I declared chapter 7 bankruptcy in 2010.  I had a condo included in the bankruptcy.  In 2014 I short sold the condo.  There are public records of the transfer, etc., but there is nothing on my credit report about the short sale.  Does this mean I would be able to qualify (assuming my credit score is high enough) now for a conventional loan?

  • DixieLeeThomas

    ScottSchang DixieLeeThomas 

    First of all, wow! Thank you for your response and for having and maintaining this website. You must be passionate about what you do to invest your time in helping so many people with few, if any, returns on that investment. I am sure I am not alone in my gratitude. Thank you.

    Secondly, I did want to say that I feel confident in our lender. The folks we have been working with are really great and seem to be nitpicking (which I prefer) over getting every little detail taken care of. My concern was/is mainly that I was under the incorrect impression that once we were pre-approved, we were home free (provided the appraisal checked out). I discovered the error in my thinking after we had already made some commitments that require that we live in the specific area we are looking to buy in. We might have held off in making those commitments if I had known that there was even the smallest chance that things would not work out. As you might imagine, this adds a whole new layer to the stress of buying a home, but once it is all said and done … whew. I will feel so amazing.

    Honestly, I already feel a little more calm after your response. Having to make the decision to do a short sale was somewhat traumatic for us. We have never carried unnecessary debt and looking back, I suppose that we bit off more then we could chew with our previous home. If we had either lived in the home one or two years longer, had a down payment or had bought well under what we “qualified” for in order to pay down the principal in a more efficiant manner, we might have been in a better position. I can’t say it was a total wash because I received an educational experience through this entire process. We never struggled to make payments, but now I see that buying a home isn’t just about “what you can afford.” Honestly, this query is a result of being overly anxious more then being frustrated or lacking confidence in our lender. Our lender recommended that we got to the underwriter once before paying for the appraisal, “Just in case.” That phrase set off the proverbial alarm bells. 

    My husband is currently a Captain in the AF and, although I do not currently work or report income, I think we have sufficient income to offset any debt. I feel much less anxious after reading your response. We are buying in Ohio and if we hit any bumps in the coming weeks, I will reach out once again. Thank you again, your explanation has been more helpful then you can know.

  • DixieLeeThomas VA guidelines actually do not recognize a short sale as a hardship, and there are no restrictions due to a short sale existing.  The amount you qualify for is based on your debt to income ratios (payments as a percentage of your gross income).  Sometimes, where this goes sideways is whether or not you have a sufficient history of consistent income.  Part time work, overtime, bonuses, seasonal income all need to have a history of 2 years before you can use it as “qualifying income”.
    I’ve also experienced very flexible debt to income ratios if you have compensating factors like good credit, or reserves.  A short sale over 12 months ago, with no late payment leading up to the sale, should not have impacted your credit that much.
    I would be happy to try to point you in a direction to get a second opinion if you are concerned that your lender is not doing a great job.  Believe me, there are lenders out there that have restrictions, or a lack of experience, or are just not great at what they do….and they’re not going to tell you that!
    If you would like, shoot me an email to [email protected], let me know what State you’re buying in, and I’ll see if I know anyone I can recommend for a second opinion.
    Simply based on the fact that you had a short sale, you should not be having any issues with your approval.  It might be something else, but should not be due to the short sale.
    Hope this helps?

  • DixieLeeThomas

    We finally went through a short sale on our home after paying the mortgage for more then a year and having to pay rent somewhere else while we tried to sell the property and just break even. The market was/is terrible and we are a military family who had orders. The loan was a  VA loan and we had no late payments. About a year later we are wanting to buy a home at our new duty station and were pre-qualified/pre-approved for a significantly lower amount then we “can afford” according to paper etc. (I believe because we have a recent short sale) How likely is it that we won’t be granted the loan. We have provided proof of “hardship” and good payment history etc. and numerous other documents.

  • AshleySBoise Fannie Mae, Freddie Mac, FHA, VA and USDA do not offer land loans.  Any guidelines for buying land loans would be unique to the lender that offers the financing.  You will just have to ask around.
    Put yourself in the lender’s shoes when you seek financing.  If you were them, you you lend you money?  What was the reason for the short sale?  Was it a one time event that is unlikely to happen again?  Lending money is all about risk.  If you can reduce the risk to the lender, they are going to feel more comfortable lending you money.
    Hope this helps?

  • AshleySBoise

    What about a land loan? We have zero debt, credit score of 702 and $30 k to put down. Had to do a short sale on an investment property in March 2015. No late payments ever except that short sale. Kept our residential home, just sold it. No one will help us with a construction loan. But what about bare land? Does that fall under same conditions as mortgage?

  • agata2605

    Illinois. I was also interested if I can quality for any of first homebuyers credits. I did got pre-approved by a lander about a month ago, but I didn’t like them that much, so if you have any names I would appreciate it.
    I got pre-approved by that lender and they said my foreclosure is not on my credit report. I can’t find it on credit karma either. How is this possible?
    Thanks again! Agata

  • agata2605 living in the home and continuing to make payments does not mean that the mortgage debt was not discharged.  Bankruptcy does not affect your ownership in the home.  If you pay, you get to stay. You are the owner until you sell, or lose the home.
    If you want to use FHA, it would be 3 years from the date your name was removed from title through the foreclosure.
    If the mortgage was discharged (which I think it probably was), you would be eligible now with as little as 3% down payment using conventional financing.
    You can order a copy of your credit report online, or you can contact a lender and ask them to “pre-qualify” you for a new mortgage.
    What State are you trying to buy in?  I may be able to introduce you to someone that specializes in this type of situation.

  • agata2605

    Well I lived in the house for 2,5 years after foreclosure and paid my mortgage,so I think my mortgage couldn’t be discharged in my BK. Right?
    If I want to buy a house now with FHA loan is it 3 years from discharge date or 3 years since the deed was recorded/ transferred?
    How do I look back on my credit report?
    Thanks a lot for all your advice!
    Agata

  • agata2605 You may want to make sure your home was excluded from the bankruptcy.  Unless you specifically executed a reaffirmation agreement with the lender, your mortgage may be discharged.
    Your timeline for being eligible to buy is determined by the type of financing that you apply for.  If your mortgage was indeed excluded from the BK, your shortest waiting period would be using VA financing if you have served in the military, which is 2 years from the foreclosure date.  If the next soonest would be FHA or USDA financing which is 3 years from the foreclosure.  Last is Conventional financing, which is 7 years from the foreclosure, unless the mortgage was discharged through the BK, then it’s only 4 years from the BK discharge.
    Hope this helps?
    P.S. You can tell if your mortgage is discharged by looking at your credit report.  If the mortgage no longer reports after the BK discharge, there is a very strong possibility that it was discharged.

  • agata2605

    I had a bancrupcy in October 2011, that didn’t include my mortgage. Then I had a foreclosure on March 13 2013, but my deed wasn’t recorded till Aug 26 2013.. I would like to buy another house. When could I apply for a loan?
    Thanks! Agata.

  • CHRISSELLS Hi Chris, Fannie mae guidelines allow you to use the BK discharge as the waiting period (4 years) as long as the home is out of your name.  The guidelines specifically states that a “foreclosure” after BK would use BK waiting period, but I’ve built a network of lenders that will also allow short sale under that guideline.  Fannie mae will allow it, but most lenders do not know this, and will not even try.
    Shoot me an email to [email protected] and I’ll introduce you to a lender that can help in Florida

  • CHRISSELLS

    Hi Scott,

    I declared bankruptcy in 2011 and was discharged towards the end of 2011. I surrendered my home in the bankruptcy. Fast forward to 2014 the trustee contacted me and said they were giving the home back to me. I had no idea the home was still in my name as I thought it had been foreclosed on. I contacted my attorney and he said I need to do a short sale. I completed the short sale at the end of 2014. My bankruptcy has now been discharged for 4.5 years. I’m a realtor / investor and make $140k a year. My lender I always use says that my only option is doing a conventional portfolio loan which will have a little higher interest rate and would require 20% down. Is he correct? If not do you have someone I can speak with in the Tampa, Florida area? I’m wanting 3%or 5% down if that is a option. I have over 300k in savings, but that is used for my investing / flipping business.

  • mookie8484  that is only the case if you are using USDA or Conventional financing Mookie.  FHA and VA still use the transfer date.  FHA is 2 years from bankruptcy discharge, however you will have a separate 3 year wait from the foreclosure, deed in lieu of foreclosure, or short sale date.  VA is 2 years from each event.

  • mookie8484

    From what I have found -although it takes a knowledgeable loan officer, underwriter n lender- if you included the mortgage in a BK, the discharge date of the BK would be the date considered and NOT the transfer date. For FHA, the wait is then only 2 yrs from discharge instead of 3 from transfer date.
    Good luck.

  • lacey96

    Thanks so much.

  • Cuqui357 This isn’t confusing…I mean, yes, it’s confusing why the Realtor did that, but I think you and your husband need only be concerned about the September 2013 date.  Signing title over to the Realtor would not have absolved you from responsibility for the mortgage.  Was the mortgage charged off?  Does it show as a collection?  Were you issued a 1099 from the lender?  Did you file a Bankruptcy at any point during this process?
    Assuming you did not file bankruptcy, and the mortgage debt was written off, or charged off in September 2013, your ability to buy again would be determined by the type of loan you are trying to qualify for to purchase your new home.
    The soonest you could buy would be using a VA loan, 2 years from the foreclosure date, if you are a Veteran.  The next “soonest” would be USDA, or FHA financing, which are both 3 years from the foreclosure date.  Last, would be 7 years from the foreclosure date before you are eligible to buy using Conventional financing.
    Hope this helps?

  • Cuqui357

    Hello Scott, we live in florida,, lost our home to a foreclosure our situation is a little complex and my husband and i are confused as to when we can apply again for a home loan…we were served with a foreclosure in 2012 and from the advice of our realtor that was trying to short sell our property told us to transfer the deed to him..for reasons im still confused about…well the property ended in foreclosure Sept 2013…and then Oct 2015 the foreclosure was vacated and the “new” owner was served a summons to appear in court, we were never served again but from what i have gathered is that they amended the original foreclosure and they have a new sale date/transfer of deed which is april 2016….i dont know who else to ask I’ve spoken to a lawyer and he basically told me that whatever the realtor did worked in our favor and that if we got served again then give him a call….so is the property my realtors??  I know were still on the mortgage and the credit report shows the default as Sept 2013 ….sorry if this sounds confusing …trust me i wish we would’ve handled this differently but we were inexperienced and 2009/2010 was a cpl of rough yrs  …we have been renting for 3yrs and were financially ready to buy …….thanks

  • laylaka

    ScottSchang We’re in California. There was no bankruptcy.

  • laylaka Was there a bankruptcy at any point?  If not, you would be eligible for FHA financing in 3 years from the short sale date.  They could buy in June.  If your dad is a Veteran, he can buy now.
    What State are they in?

  • laylaka

    Hi, Scott. Asking a question for my parents. They had a short sale that was finalized June 2013. It was the result of my dad losing a great deal of his monthly income (car business). They’ve done very well financially since then (no late payments on anything, credit is well over 700). They’re currently looking at a home that is $360,000 and they have between 10 and 15% for a down payment. My question is if they can get the ball rolling now for any type of loan, or if they have to wait another year. Thanks.

  • lacey96 As long as you have been current, and continue to be current on your mortgage, the Bankruptcy waiting periods are determined by the type of loan you are applying for.
    For conventional financing, the waiting period is 4 years from the discharge.  FHA is only 2 years from the discharge. VA is is also 2 years from discharge of the BK.
    If you have to short sale the home, or if you stopped making payments, that can change the waiting periods.
    Hope this helps?

  • lacey96

    My husband and I filed bankruptcy in 2014. The discharge date was October 2014. We reaffirmed our auto loan and mortgage. We filed bankruptcy on our credit cards and unexpected high medical bills. Our credit score is 707 right now. I was wondering when we may be able to purchase a new home and get a decent/good interest rate. We have a growing family and want to sell our current home and buy something with more room.

  • lesmall40  Hopefully someone following this post knows someone who can offer legal help in Ohio, I do not, I’m sorry.

  • lesmall40

    Have a question. As you know my bankurptcy was dis charged 2012. I stayed living then until this present time. I received a letter lasted Thursday’s stating the loan has been included in the bankurptcy on 3/1/2016 and my house was already included back 2011 when I started the process with the bankurptcy which was a chapter 7. What happen with monies as far as I paid mortgage up until 2015 of May . The lender stop taking my house payment for June .. And they did not really want to work with me. What really makes me makes mad they should of took the house back in 2011. I really feel I need some legal help.Do you know legal firm here in Columbus Ohio who can help me? Thanks you.

  • ljason I do have a friend in New Jersey if you cannot find a lender that you trust.  You should have no problems though.

  • ljason

    Yes, thank you. There was no bankruptcy and the state is New Jersey.

  • I am most amazed that someone would even charge an application fee, that’s crazy. And at the very least it should have been reimbursed to you because the lender had no idea of what they were doing.
    Second, your credit report is not the indication of when you are eligible, the foreclosure is a matter of public record and it is very easy to verify.
    Assuming you are trying to qualify for a Fannie Mae loan, the guideline states that you cannot sign loan documents until after the 7 years is up.
    Based on what you’ve stated here, I can’t imagine you would have any challenges qualifying as long as you do not sign loan documents until after the waiting period.
    2 more questions though – was the mortgage discharged through a bankruptcy? And second, what State are you in? I can recommend a lender that knows the guidelines and will not charge an application fee.
    Hope this helps?

  • ljason

    I purchased a home 5 years after a foreclosure and am currently paying PMI. Last year the foreclosure was removed from my credit history since the lender (Saxon) is no longer in business. With a recovered credit score, good cash flow and the foreclosure removed from my history, I attempted to refinance to go forward without a PMI payment. At application the lender included a question if there was ever a foreclosure; I acknowledged there was. I then spoke to the rep and explain the above situation asking if I would be declined even though my credit report was clear. I would have stopped the process at that point but was assured that if my credit history was clear of the foreclosure it wouldn’t be a problem. You guessed it, I was declined on the basis of foreclosure and out my $525 app fee. My question now is whether the decline occurred b/c it was in fact 6.5 years and not the full 7 years when foreclosure is generally removed More importatnly when I will reach the 7 year mark in a few months can I expect an approval clear of PMI or am I stuck? My current score is about 730.

  • MelissaOman

    Hello, 
    Question about USDA financing and timelines.  Were wanting to apply for a USDA mortgage but waiting until my Chapter 7 bankruptcy hits the 3 yr mark which is Sept 16, 2016.  Do we need to wait until after that date such as Sept 17th, 2016 to even submit loan docs?  My bankruptcy did not involve a home loan btw.  Our lease for the rental we have now is up Sept 30th, 2016.  So I’m trying to figure out if we need to negotiate an extension for a month or two with our landlord.
    Thanks Melissa

  • fredlane Great question!  Fannie Mae recently came out with clarification of their 4 year waiting period and stated that the loan cannot be consummated (loan documents signed) prior to the 4 year period.  You should be fine as long as you do not sign loan documents until after May 8th.

  • JenBrew82

    Do you have a name of a loan officer in Missouri that is educated in this area? The lender I spoke with said we would have to wait 10 years after bankruptcy discharge for conventional loan. This doesn’t seem right??

  • hello scott I did a short sale on May 8, 2012 and I recently found a house which i am putting 20% down on. My credit score is 702 and I know i can apply for the conventional loan after 4 years. So on May 8, 2016 would be 4 years and that is when we are planning to close escrow on that day.  I am currently doing 45 day escrow right now and I was wondering if I would have any problems getting approved for the loan since it hasn’t been the whole 4 years?
    Thanks for your time!

  • lesmall40

    Thank you I will check tomorrow with recorder .

  • lesmall40 That still doesn’t make sense, it couldn’t have been a short sale.  It must have been a sheriff sale, or foreclosure (same thing).  It makes sense that you should stay put until they tell you otherwise.  Check with your county recorder office, if the home is not in your name, then I’m not sure you can insure a home that you don’t own.

  • lesmall40

    Short sale was 2/19/2016 .The lender brought back the house. I am still living in the home until they tell me different.

  • lesmall40

    Good morning, I just rec’d a letter from lender Third Federal Savings and Loan. And it states 03/01/2016 Escrow Disbursement amount, then it has 03/01/2016 Charged off of 68,217.34 the lasted thing listed on 03/01/2016. Escrow Receipt of 2,026.40 Now, my questions is at this point, since the I had a short sale on 02/19/2016 and the lender brought the house back, What is going to happen now with the house.  Can please give me some direction.

    Also, since my bankruptcy of Chapter 7 filed 2011 and discharged 2012, I have  lived in the home since. If the loan was include in bankruptcy what happens now?  Thank you and your staff for advising me and thank you for  the quick responds.

  • pdstevens

    ScottSchang pdstevens Thanks for the reply.  I suspected the website might be shady. It will be in WA.  I doubt the income and score will be an issue.  I’m looking for a lender.  I talked to BoA and they told me the hard limits of 4 years no jumbo.

  • pdstevens No, the guidelines have not changed.  Unfortunately, that website is designed to generate leads to sell to mortgage companies, and not to deliver actual news.  They will occasionally republish this same article, which is referring to Fannie Mae’s extenuating circumstances exception.  That exception has always existed, it’s not new.
    I have written about creative ways to get jumbo financing after a bk, foreclosure, or short sale.  4 years after a short sale, you may be able to use piggy back financing up to the conforming loan limit in your County, then put a second mortgage behind that to bridge the gap up to 89.00% loan to value.
    There are income and credit score requirements that must be met, but it’s definitely possible.  There are also portfolio lenders that will lend 4 years after a short sale, and even some jumbo lenders.
    What State are you buying in?

  • pdstevens

    Have the requirements changes for buying after a short sale since the 2014 change.? The linked website indicates that it has, but I can’t find any corroborating evidence to confirm this.  It’ll be 4 years since my short sale in Jun, but I’m also interested in a jumbo loan. 
    http://themortgagereports.com/16750/fannie-mae-waiting-period-bankruptcy-short-sale-foreclosure

  • JuanGGarcia Conventional guidelines require that you must wait 7 years from a foreclosure before you can buy again.  As long as there are no other financial challenges after this foreclosure, yes, you would be eligible to use conventional financing to buy now.
    What State are you trying to buy in?

  • JuanGGarcia

    Hello,

    I had a foreclosure in October 2008. Do I qualify for a conventionl loan yet?

  • Chris1270 When you say you “surrendered” the home, has the bank foreclosed yet?  Has your name been removed from title?  Why didn’t you just sell the home and take the equity?
    There are potentially 2 options for financing 1 year from a BK.  The first is a portfolio loan with a little bit higher rates and fees, but they will lend much sooner than traditional financing options.  The second, and a little more challenging, is going for an extenuating circumstances exception using FHA financing.
    If you can send me an email to [email protected], I will see if I can make an introduction to a lender that can possible help with both of these options in Alabama.

  • jerzforu If you are buying an investment property, Conventional financing is the only option (assuming it falls into conforming loan limits).  You will need to follow Fannie Mae guidelines, which is 4 years from the short sale date.

  • jerzforu

    I sold my primary residence in a shortsale due to a military move (hardship) in 2013, when can I apply for an investment loan? One website says after 3yrs and another says after 4yrs. Which is it? Or I’m I eligible now.

  • lesmall40

    Thank you for your response about the homeowners insurance I will cotiniue paying for the insurance until the lender who brought the house back at short sell on 2/19/2016 ask me to leave. Thanks again.

  • lesmall40 Thank you for your question.  I am not sure I understand your question.  Did you short sell your home already, or just got an approval?  Normally, if there is mold, a buyer would not be able to get financing to purchase the home.  It sounds like if you are still the owner of the home, something may need to be done about that before you can sell, unless an all cash buyer comes in and waives all of the inspection contingencies.
    I would also maintain your homeowners insurance on the home as long as you are the legal owner.  To let it expire could bring great expense in the event that someone is hurt, or something needs to be fixed.
    Hope this helps?

  • lesmall40

    Good evening I have question I would like to know should keep homeowners insurance on the house . I had my short sell on 2/19/2016 and I have tried to contact the Foreclosure Department with no letter or return call back. I have bad feeling about my basement . With leaking and mold. Now with all the rain I just do not want to be stuck with anything more than I have to. What should I do? I have some many questions with no answers.

  • mdefran23 ScottSchang You are correct on all counts.  You can have the second lien removed with a settlement, but the only way to remove your name on the first is to pay them off, or settle, or they foreclose.
    If the first lien holder forecloses or does a deed in lieu of foreclosure, the second lien automatically goes away.  The second lien holder would have to give permission to do a short sale.

  • mdefran23

    ScottSchang mdefran23
    Thank you for the response.  The house is upside down by at least 100K as per the November appraisal.  So if went Conventional financing the wait period is 4 years from the discharge date as long as my name is removed from both titles?  There is no way to my name removed from titles while still living in the house?  The second company would remove my name by settling but the first mortgage would not be removed until the short sale, deed in lieu or foreclosure?

  • mdefran23 I guess my first question would be, if you do settle with the second lien holder, will you have equity in the home?  If so, it might be worth considering a settlement.  Whether you settle or not, it’s not going to affect your timeline for buying again.
    The waiting period for buying after a BK, foreclosure, short sale or DIL will depend on the type of financing you are trying to apply for.  Using Conventional financing, allows you to use the BK discharge date as the start of your 4 year waiting period, as long as your name is removed from title. FHA financing is going to consider the BK, and any subsequent foreclosure, short sale or deed in lieu for foreclosure as a separate event that will start a 3 year waiting period.  VA also considers any subsequent default as a separate event and requires a 2 year wait from the foreclosure, short sale or DIL.
    If you ignore the pay-off for the second, that could come back to bite you later in a couple of ways – The first way is if your home value increases enough in the next few years so that the second lien holder has equity enough to securitize their lien, they have the right to foreclose on you.  The other way is if you try to do a short sale in the future, the second lien holder does not have to cooperate, and can hold out for whatever amount of money they want to be paid off.
    Hope this helps?

  • mdefran23

    Hello,
    I have a question.  I filed a Chapter 7 in 2014 and both my first and second mortgage were discharged through the bankruptcy.  I did not re-affirm the debt, however I was able to get a in house modification on the first mortgage, which I have been paying on.  The second mortgage I have not made a payment on in nearly 2 years.  I spoke with the second mortgage company and I owe approx 80K, they said they would settle for 12K and remove my name from the lien.  I am not sure I will be doing that.  My question is, If I continue to pay on the first mortgage for the next several years and then I want to walk away from the house either short sale, deed in lieu or foreclosure how long will I need to wait to get a mortgage from the short sale, deed, or foreclosure date?  My credit has been re-established and my score is about a 675 at this point.  Please let me know what options I have to buy a new house, we are in New Jersey.  Thank you

  • Ladytee20019 The foreclosure will not show up on your credit.  BK specifically forbids creditors from reporting lates, defaults, or attempting to collect on a debt if it is discharged through bankruptcy.
    The waiting period before buying again will depend on the type of loan your are applying for.  The shortest waiting period would be to use conventional financing, which will use the BK discharge date.  The waiting period is 4 years from the discharge of the BK, which means you would be eligible essentially the day after the foreclosure occurs.
    Hope this helps?

  • Ladytee20019

    Hi Scott,

    We filed Chapter 7 BK in Maryland that included my mortgage and it was discharged March 9, 2009, the house was not reaffirmed. The mortgage was paid on time until Nov 2014 after my ex-husband lost his job. I just receive a notice about foreclosure. How long will I have to wait to apply for a loan since the mortgage was in my name and will the foreclosure be reported on my credit report?

    Thank you,

  • JenBrew82

    ScottSchang JenBrew82 Yes it does, thank you for your quick response.

  • JenBrew82 if you sign a deed in lieu, or do a short sale, or even a foreclosure, it will not show up on your credit.  That’s the law.  The waiting period before you would be eligible to buy is determined by the type of loan you are using to buy the new home.  FHA financing is going to be a 3 year wait form the date your name is removed from title (by deed in lieu, short sale or foreclosure).  USDA will allow you to buy 3 years from the discharge of the bankruptcy if you lose the home to foreclosure.  Finding a lender that will consider a DIL after BK might be a little more challenging.
    You can use Conventional financing, with as little as 5% down in 4 years from the discharge of the BK, as long as your name is removed from title.
    Hope this helps?

  • JenBrew82

    Hi, my husband and I were discharged from a chapter 7 bankruptcy in Jan of 13.  We have never reaffirmed our current FHA mortgage.  We are currently upside down of the value of the property/loan amount.  We have always made timely payments to the lender, and even with that load not appearing on our credit, we have built up our score to 720 since our discharge.  We have really out grown this home and would love to move.  We were looking into a USDA loan or FHA.  We were wondering if we signed a Deed in Lieu for our current home, what would be the date from which the lender would consider the beginning of our seasoning period?  When we signed over our home, or when the bankruptcy was discharged? I can’t seem to find a lender who really knows the details, and would hate to sign over my house without another one in the works.  I am also told that even if the home was discharged in the bankruptcy, a foreclosure or Deed in Lieu at this point would still negatively affect our scores and put us in jeopardy of qualifying for another load even if the seasoning period began at discharge.  Would you please clarify as to what our options are at this point?

  • lawsuit I believe you already spoke to Rick Kent about this?  There are several issues here that don’t make a lot of sense.  Requiring 2 years of impounds is obnoxious, I don’t think it’s illegal, but it’s certainly excessive and unnecessary. Another red flag for me is that they are retroactively charging you for PMI?  I’ve never heard of that.
    There’s an answer here, and it most likely simply requires that you get away from that lender.  When you get an opportunity, I would recommend sending Rick the complete modification agreement.  
    Again, I don’t think anything they are doing is illegal necessarily, and hopefully there is an opportunity to resolve this by refinancing into a traditional loan with much better terms.
    Hope this helps?

  • retired2011

    Greetings Scott, thanks for responding with great news of information. Your information was a relief to hear. I am really excited about this new and fresh starting that’s getting ready to take place in my life.. This new and fresh start will not be taken for granted. I have a plan and will work my plan. I won’t allow this plan to work me. I thank God for this new and fresh start. If this is God’s will and he allows me to continue my life on earth, I will use my VA loan to purchase my first home. Once again, thanks Scott for your time and effort in your explanation on rebuilding my credit after filing for a Chapter 7 Bankruptcy.

  • retired2011 Clinton, thank you for your question, and thank you for your service!  I am sorry to hear that you have temporarily fallen on hard times, I hope this response comes as good news and a light at the end of the tunnel.
    This is a REALLY good question, and I wish more people would ask it.  The ONLY reason you would have bad credit after a BK is if you do not purposely build good credit.  I actually had this experience myself, I had credit challenges many years ago and decided to just stop using credit all together, boy was that a mistake!
    The first thing you need to do is to get revolving credit cards.  Start with one card, and it will probably have to be a secure card.  This means that you send them $500, and they will send you a credit card with a $500 balance.  Use this card for convenience only, and pay it off at the end of every month.  After about 6 months, you will probably start receiving offers for other credit cards.  I would shoot for 2-3 card in the next year.
    As you know, you are able to buy a home using VA financing in only 2 years from the discharge of your Chapter 7 Bankruptcy.  The only thing that VA will look at (in regards to the BK) is that you do not have any defaults, or late payments after the BK.  As long as you keep your credit cards paid off, and your payments on-time, your credit will be in great shape for getting approved for a VA loan.
    Hope this helps?

  • lawsuit

    Scott, My question is about Escrow Impound accounts in the state of California.  My daughter and son-in-law received a loan modification approval from Wells Fargo in 2009, and have made all payments since then as agreed.  Their loan was converted from an FHA to a conventional in that modification and all PMI was dropped.  This loan was sold in Nov of 2015, the new company is SLS, a servicing company.  They conducted the annual escrow impound review this month and notified my daughter and husband that they added back $1100 annually for PMI, and the taxes, but have told them that it is their policy to hold 2 years of Impounds in reserve and that their payment would be modified from $1074 per month to $1682 to cover the current deficiency, they also stated that the new payment is effect April 2016 and if they do not pay the new amount they will foreclose, I can not imagine that this is legal, can you advise?

  • retired2011

    Greetings Scott, I am a disable veteran and fell upon some bad times. I am in the process of filing a Chapter 7 Bankruptcy. I will be sixty within the next three years and I will be able to collect my retirement from the military. Within the two years waiting period time frame from  filing my Chapter 7 Bankruptcy, i hope to use my VA loan to purchased my first home. Will it be difficult to purchased a home with a Chapter 7 Bankruptcy? Can you give me some pointers the importance of rebuilding credit after filing for a Bankruptcy? I appreciate any information that can bring about a new level of awareness concerning the Chapter 7 Bankruptcy. Thanks for your time and effort. 

    Sincerely, Clinton Earl Butler

  • mjpark60 Yes, I think that is good advice.  If you are unable to get the cash out that you need by refinancing using conventional financing, look at FHA financing.

  • mjpark60

    Thank you for you response. I talked to a lender after I wrote to you. They said the same thing you did. They suggested doing a first mortgage on our property. That way we would qualify under the Fannie mae quide lines. We could get the cash out and make our improveements etc. Do you think that is good advise? Again thank you for your time

  • mjpark60 Thank you for your question.  HELOC guidelines are going to be determined by the lender offering the line of credit.  An equity line would not necessarily follow the fannie mae guideline that you are referring to.
    Your best bet would be to talk to a local credit union or bank.  If that doesn’t work, there may be a portfolio lender that would be willing to do a second mortgage, 2 years from a foreclosure, but it will be quite expensive.
    I’m sorry, I don’t really know anyone that offers those types of loan programs in FL

  • mjpark60

    Hi Scott,
    We live in Florida. My husband lost his job in 2008. We went through BK which was discharged in Dec. 2009. We did not reaffirm the debt on our home. The home was finally foreclosed on Feb2014. My husband parents gave him his inheritance and we bought a home on 2 ac. We would like to take a home equity loan out to do some improvements. Our problem is we have been told by a few lenders we have to wait 3 yrs past the foreclosure even though we did not reafirm the debt. is that so with a home equity loan, or a HELOC? Can you put us in touch with some one who knows the new rules here in Fl.? We live in Volusia County which is in central Fl. My husband has been working since 2013. I have been working through this whole process. Thank you for your time.  MJ.

  • galanim1

    Hi Scott,
    I filed bankruptcy in 2012 that included a mortgage from BOA. The bank has still not foreclosed on the property and my husband and I would really like to buy another home. My husband did not file bankruptcy and has good credit but doesn’t make enough income on his own. I have reestablished credit. Wondering if I would qualify for a loan even though the bank has made no attempts to take possession of the home? How do I get my name off the title?

  • I just found that out today, thank you! I did connect to her today. I will find out where she’s at now, and see if she’s still available to help. If not, I will find another lender that can help

  • Phillip1950 Hi Phil, thank you from the question – I grew up in Michigan 🙂
    There is something being lost in translation with your loan officer – if you did a short sale on the property, Conventional (fannie mae) financing will allow you to buy in 4 years from the date your name was taken off title.  FHA will allow you to buy in 3 years from the short sale.
    Any lender should be able to help you with this – maybe just not the one you’re talking to now.
    I might suggest that you keep your money in your pocket, purchase using FHA with a minimal down payment, then refinance next year into a conventional loan once the 4 years is up.
    Hope this helps?

  • Phillip1950

    Hi Scott, I am from Michigan and 3 years ago I sold my home on a short sale. I did not leave my home and kept up with the utilities until it was finally sold. I am in to process of purchasing once again but on a smaller scale. The homes that I am looking for are around 100K and I am putting down 22 %. I was told by a mortgage expert that I can only buy with an FHA loan and not conventional because they want 7 years of waiting period. He tells me that the although it was a short sale and since I didn’t continue paying the monthly rent, that they treat this as a foreclosure . The problem with FHA is that even with 22 % down, they still want to charge me a P.M.I.  I was told back then that my short sale was not like a foreclosure, but today, I am hearing a much different story. Is what they are telling me the truth? Phil from Michigan

  • If you had equity in the home, and the bank forecloses, you will forfeit that equity. I’m sorry for your challenges.

  • lesmall40

    The short sale for my home was on 2/19/2016. Third federal Savings and Loan brought the house back.. I have called them Savings and Loan to ask when I’m supposed to move out of that nature in the one lady from the foreclosure department is really nasty she told me not to call the unit anymore will contact me by mail when I’m going to move out home now I’m just trying to find a place to go I live here in Columbus Ohio .l do not have a lot of miney so I hope let me get to pay weeks in this month. So I can move. My questions now is with basement has mold conditions with a lot water leaking through the through the walls. The cost to get fix from an estimate is about 10,000 .00why will they sell the house to someone else. Really crazy to me. And what happens to the equity in the month for all the months I have been here since 2005 April.

  • lesmall40

    I live in Columbus Ohio

  • infodoug

    Hi Scott,
    We finalized our short sale one year ago.  We have an opportunity to buy a friends house and this will allow us to get into a neighborhood we want to be in.  We have 20% and our credit is back up to the low 700’s.  Are there any lenders in California that would give us a loan 1-2 years after a short sale?
    Thank you.

  • I would think that this would affect your current loan. I’m so sorry to hear that you had to go through this, and I’m afraid it’s going to be another battle to clear your name.

  • Tiff5150

    I just spoke to the loan officer again and he is saying that because after the BK was discharged, we continued to pay the mortgage for 2 years, this is why its being looked at as 2 separate events and that’s why they are going to go with the foreclosure waiting period verses the BK. Does that sound correct to you? When we decided to do the BK, we never had any intentions of foreclosing on the home. We only ended up foreclosing 2 years after the BK because I went through a very unexpected divorce, which gave me no choice but to foreclose on it due to its value being upside down and neither me or my now ex wanting to pay for it on our own.

  • Thank you for the update figit320!

  • figit320

    Tiff5150 I had a very similar situation, BK but then a short sale and had the same issues with mirtgage broker, Scott put me in contact with a knowledgable mortgage person and I just today received my clear to close, closing on Friday on a Fannie Mae 5% down loan. Hopefully Scott can refer you to someone as he and his circle of people seem to really know how to get things done!

  • Tiff5150

    ScottSchang Tiff5150  I just spoke to the loan officer again and he is saying that because after the BK was discharged, we continued to pay the mortgage for 2 years, this is why its being looked at as 2 separate events and that’s why they are going to go with the foreclosure waiting period verses the BK. Does that sound correct to you? When we decided to do the BK, we never had any intentions of foreclosing on the home. We only ended up foreclosing 2 years after the BK because I went through a very unexpected divorce, which gave me no choice but to foreclose on it due to its value being upside down and neither me or my now ex wanting to pay for it on our own.

  • Tiff5150

    ScottSchang Tiff5150  Ok, so if I go back to the loan officer and tell him I am looking for a Conventional loan, not FHA, he should come back and tell me the 4 year waiting period for the BK is what we need to go by and we should be good to go once the house is no longer in my name. If he still comes back and says a Conventional loan isn’t even possible once the 4 years is up, do you know of anyone in the Chicago area that is familiar with the Conventional, Fannie Mae guidelines that I can contact?

  • Schoentube Tiff5150 Quicken is not a good place to call to do loans like this.  They are staffed with low paid, less experienced people that simply answer phones, and know very little about actual underwriting guidelines.
    I assure you that you are not crazy.

  • Tiff5150 You are both correct – this is where a lot of the confusion comes from.  The loan officer you are talking to is reciting FHA guidelines, you are citing Conventional, Fannie Mae guidelines.
    The waiting period is determined by the type of financing you are trying to qualify for to purchase the new home.

  • Tiff5150

    Hi Scott,

    I filed Chapter 7 BK that included my mortgage and it was discharged March14, 2012…..so I am just almost at the 4 year mark. My home is currently in the foreclosure process which should be completed hopefully in the next 3-6 months. I understand that you said that once the home is foreclosed on and my name has been removed from the title I should be able to qualify for a mortgage since I will be past the 4 year BK waiting period. I contacted a mortgage broker to feel them out about the possibity of qualifying for a mortgage once the house is foreclosed on and out of my name. I was told that I wouldn’t qualify until 3 years from the foreclosure date. I told them they are incorrect, but they don’t agree. They are trying to tell me that since the foreclosure wasn’t completed at the time of my BK, the BK and the foreclosure are considered 2 separate events. I explained that the mortgage was discharged in the BK and that it is nearly impossible to have a BK and foreclosure occur at the exact same time. The mortgage broker didn’t agree. What are your thoughts on this?? I’m I incorrect or is he?

  • Latoya latoya

    Hi Scott, between 2007 and 2009 I was in a fatal relationship this guy bought homes opened accounts used other people to get a car all in my name  when I finally gotten enough courage I did a short sale on the house I knew about returned the car and legally changed my name which I’ve been using ever since. I didn’t fight to try to save my name because I was so afraid of him finding me under my name moving forward I’ve established my good credit again and in escrow.  I never mentioned my story to my agent or broker because I hate my past  when she ran my name she asked do I have properties I said no I was a victim of identity theft and now I’m waiting on the county to record ? Will this effect my current life being it’s the same county.

  • JoeShmoe25 Hi Brad, you are being given accurate advice.  VA only requires a 2 year waiting period after a bankruptcy, or foreclosure.  With your credit scores, the other main factor for qualifying would be your income, and employment history.  Retirement is ok too.
    VA loans tend to be very flexible when it comes to helping veterans getting into homes, I don’t think you will have any problems getting approved, at least not because of the bk or foreclosure.
    What State are you trying to buy in?  I might be able to help recommend someone that can help.

  • dt3813

    Thank you so much. This definitely does help.

  • dt3813 ScottSchang Yes, it will definitely be “found”.  You are probably looking at Jumbo financing in the $500 to $700k range, so conventional guidelines would not apply.
    Jumbo financing is portfolio lending right now.  Each lender will determine their own level of risk.  Portfolio lenders are definitely not a waste of time.  They do tend to be a little more expensive, and their tolerance for risk will vary greatly from one lender to another.  Assuming your credit scores are very good, and you have a large down payment, you shouldn’t have any problems finding a good lender.  It might just take a little more research.
    Hope this helps?

  • dt3813

    ScottSchang dt3813 Hi Scott thank you for responding.  My bankruptcy is chapter 13, which stays on my report for 7 years.  I filed in 1/2010, so 7 years is 1/2017.  I had a 5 year repayment that took an additional 4 months or so to discharge.  I guess I was wondering if it it’s not on my report will it even be found that I had a ch. 13, when I’m applying for a mortgage.  I suspect it will if there is a public record search.  As far as the foreclosure, it was before I filed for ch. 13.  I’m not sure of the date it was repurchased from BoA.  I’m not even really sure of the exact foreclosure date.  It feels like it was so long ago.  Unfortunately FHA limits are too low in my area.  I live in CT and the limit is $305k.  I’m looking more in the $500-700k range.  Thank you for your response.  I suppose I could try some portfolio lenders, right? Or in your experience, will it just be a waste of time to search?

  • dt3813  I am not completely sure what you mean that your discharge will be off your report in 1/2017 – most bankruptcies stay on your report for 10 years.  Also, whether it shows up on your credit report or not is not really a factor.  Bankruptcy, foreclosure and deed in lieu are matters of financial disclosure (on your application) and public record.  While credit reports do contribute to the process of getting approved for a loan, it is only one of many checks and balances that occur.
    Conventional financing will allow you to buy again in 2 years from the discharge of a Chapter 13.  It sounds like your DIL is already past it’s waiting period.  Did the foreclosure take place during the BK process, or did you file afterwards?  That would affect the waiting period.
    The good news is, you are eligible for FHA financing now – 1 year from the discharge of a Chapter 13, and it’s been at least 3 years since the DIL and foreclosure.
    What State are you trying to buy in?

  • Jess078

    Hi Scott,

    My home foreclosed in july 2013. I understand the waiting period is 3 years, however do I have the option to make an offer on a short sale being that the wait time for those are typically past 100 days? I heard that if I made an offer on a house it just cannot close until July 2016. Is that correct?

  • dt3813

    Hi Scott,

    I have a question.  I have a discharged ch. 13 discharge 6/2015 that will be off my credit report 1/2017, a DIL from 9,2009 that is not on my credit report and a foreclosure from 9/2009 (not sure of purchase date) that is off my credit file.  Do I really have to wait until 6/2017 for conventional if my reports will be clear in 1/2017?

  • Mimami76

    Thanks so much!!

  • Mimami76

    Perfect, thank you this gives us hope and gives him a break from overtime! I live in Utah, Salt Lake County (West Jordan)

  • Mimami76 FHA is definitely a good option.  The rates are actually quite a bit lower on FHA than Conventional, and of course you would be stuck with the mortgage insurance until you hit the 2 year mark from the Ch13.
    If your husband is the only one on the mortgage, and on title at this point, I think FHA 1 year from the Ch13 discharge is your best bet.  I would choose this option over a portfolio loan with a higher rate, even though a portfolio loan would still drop your rate, and payment significantly.
    What State are you in?

  • Mimami76

    Hi there Scott is like to finally get an honest and correct answer, so thank you in advance for your time.
    I had a chapter 7 bankruptcy discharge in 2008 which removed me from our home loan (pending divorce etc). Didn’t end up getting divorced, but my husband then had to file a chapter 13 in 2010. His case discharged in June 2015, and the 10 year interest only mortgage amortized shortly thereafter along with a second mortgage that didn’t get stripped from the loan in our bankruptcy as originally thought, causing a huge payment increase.
    We’ve been told that our conventional mortgage cannot be refinanced until 2 years after his discharge, but this payment is killing us. Remarkably, were sitting well with equity and we’re both employed full time. Our 1st mortgage is at 5.75 fixed with a 197000 balance and and the 2nd at 6.75 with a 40000 balance. The property is currently worth approx 375000. Can we possibly refi to an Fha loan to avoid the 2 year waiting period that conventional requires after discharge? Would it be worth it with the higher rate and pmi? Would we need to obtain a new loan or can we refi to add me back on to the loan?

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  • CortzMendal
  • CatherineM68 Thank you Jason Gonzalez !  I apologize for missing this.  Catherine, I would absolutely use FHA financing to buy now.  Keep your money in your bank.  Rates are so low on FHA right now, and in the price range you’re buying in, that mortgage insurance payment is a small price to pay to stay “liquid”, and have access to that money if you needed it.
    With a 10% down payment on FHA, the mortgage insurance premium goes down slightly, then you have plenty of money left over for moving, and improving your new home.
    Hope that helps?

  • smrobinson12345

    And what about waiting until after foreclose as I think it is in process.

  • smrobinson12345 If you have not made payments on the mortgage, then you would have to have your name removed from the deed.  I would suggest that you contact the lender regarding a deed in lieu of foreclosure as a 1st option, then a short sale as a second option.  We already know what to expect if you wait for the lender to foreclose.
    Let’s talk about what happens once your name is removed from title.  If you use conventional financing, you would be eligible to buy immediately after your name is removed from title (4 years from the discharge of the BK).  If you are using FHA, or VA financing, a new waiting period will begin form the date your name is cleared from title.
    Hope this helps?

  • Jason Gonzalez

    CatherineM68 Hi Catherine, I am not licensed in OR but read your post and didn’t want it to go unanswered.  First off, I am sorry to hear of your troubles.  The good news is that there ARE alternative lending products besides FHA availalble through mortgage brokers that do not require as much seasoning (length of time since the event) after a BK.  Please reach out specifically to a mortgage BROKER in your local area and explain your situation; I can assure you they’d be happy to assist.

  • smrobinson12345

    My chapter 7 bankruptcy included my mortgage which I did not reaffirm. This was discharged in 2011. My house has been vacant since and the bank has yet to foreclose. I’ve rebuilt my credit score. My credit profile says my mortgage was included in BK and I owe $0. Would I be able to get a mortgage loan now or do I still have to wait for the bank to foreclose and take my name off the Deed?
    Thank you for your time.

  • JJohn11

    Scott, you are the best!!  I will definitely get back in touch with you when the dust
    settles!!
    Thanks again, I know your expertise and knowledge is invaluable
    to people that end up in these types of situations and I especially appreciate
    it!

    John

  • JJohn11  The full time jobs actually will help.  Check back in with me once you see light, and let’s see what we can do to get you working with a lender that has the experience and skills to get this done for you.
    Good luck John!

  • JJohn11

    Scott, 
    Thanks so much for all your help.  I just wanted to add we
    both maintained full time jobs outside of running the business so we were never
    self-employed if that makes any difference.  The business is closed and
    this is definitely not going to happen again, we are happy just working our
    regular jobs and having piece of mind!  
    We are suing the attorney because of his numerous errors this
    would have never happened we would have had more leverage to negotiate a manageable
    figure with the SBA loan bank if they remained on the back end of the property
    liens with a better lawyer who knew what he was doing.   Our attorney did
    not advised us correctly and did not do his due diligence on our case which
    caused this situation.
    The mortgage was included in the BK originally but we refinanced
    and this made us responsible for the loan again therefore, doesn’t the clock
    start on the foreclosure close date?
    We are in Pennsylvania. 
    Thanks, again, 
    John

  • JJohn11 I’m definitely not saying no to the extenuating circumstances, but it’s a really gray area with fannie mae, and near impossible with FHA.  FHA requires permanent disability, or death of a wage earner, Fannie Mae is a little more lenient and will consider job loss, divorce, and forced relocation. 
    The process for pursuing that exception is incredibly intrusive, and would require a lot of documentation, and explanation as to why the hardship was outside your control (difficult to prove when self employed), and that it was a one time event, unlikely to happen again.
    If the mortgage was included in the BK, then yes, fannie mae conventional would allow financing in 4 years from the discharge date.
    What State are you trying to buy in?

  • JJohn11

    Scott, 

    No the SBA lender will not be able to attach any lien once any foreclosure is
    done as per my new attorney has stated. We have literally talked to about 15 attorneys who were completely stumped on what direction to take and we have about 4 working on it as we speak.   It is a very messy and unprecedented
    situation we have a lawsuit against the attorney to recoup as much as possible
    for the credit union.  
    So this situation would not be something that could be consider
    extenuating?  So we are looking at 2 -4 years after foreclosure? 

    Thanks, 

    John

  • JJohn11 Hi John, oh boy…I really empathize with the plight of the entrepreneur, I’ve been there myself although not quite to this extent. Extenuating circumstances are very difficult to prove, and would be impossible if the liens continue to exist.
    Once the liens are removed, then it might be worth looking into it.  But until then, I think your options would be limited to private money with a large down payment, and then I still don’t know if a private money lender would be willing to do it.
    Once the home forecloses, do you know if the SBA has the ability to attach that lien to any new property?  If so, you’re going to have a tough time finding a lender that will be ok with that.
    Hopefully SBA will give you a break and help work through this so you can get back to a normal life.

  • JJohn11

    Scott,
    Our business went south in 2011 we had a million dollar SBA loan
    that we secured with our house and the business property.  
    Our home is worth about $450,000 tops we owe $400,000 to our
    credit union because we took as much equity out as we could for the business.
    We tried to negotiate the SBA loan with the bank for over a year
    but they left us no choice but to file for bankruptcy.  Which we did and
    it was finalized in 2/13 
    Attorney did not reaffirm mortgage as we expected thru the
    courts because this was a really business bankruptcy and we were not delinquent
    in any of our personal loans.  So we asked the credit union to do a loan
    modification but they stated they don’t do loan modifications but they offered
    to refinance instead.
    We refinance with the credit union in 5/13 at that time a
    question of mortgage liens from our business loans came up on our property but
    my attorney sent the bank the lien avoidances and they accepted them as the
    liens were going to be removed when the county gets to doing the
    recording. 
    Went to refinance again with our credit union for better rate in
    11/15 and the question of the liens came up again, but this time it became
    clear that the liens he avoided were Judgment liens not mortgage liens.
    The bank that loaned us money for the business placed a million dollar mortgage
    lien as well as sued us for a million dollars.
    Now the problem is the credit union did not subordinate the
    liens when we refinanced in 5/13 they recorded a loan satisfaction and then a
    new mortgage lien behind the one million dollar SBA business loan liens.
    Now my house that is worth $450,000 has a mortgage liens of $1
    million plus another one from our bank for $400,000 in that order.  
    We are most likely going to have to foreclose because the SBA
    loan bank is not willing to negotiate anything but full payment to get the lien
    released.  We are not rich people we just put everything we had into a
    business that didn’t survive.
    Over the past 3 years we built our credit scores back up to over
    700 and we kept our full time jobs that we have been at for 10 + years and we
    make a substantial income. 
    So my
    question is…..  Do you think with your knowledge that this would be
    considered an extenuating circumstance to qualify for a loan sooner than later?
    I am really hoping you can give us some information because now
    we are looking at losing our home and I need to have my parents who are both in
    their 80’ come live with us!  Wherever that
    may be.
    Thanks,
    John

  • lesmall40 under fannie mae guidelines, once the short sale is complete, you would be eligible to buy a home using conventional financing in 4 years from the discharge of your bankruptcy.
    The timing might be a little challenging, so you may have to rent (on a month to month lease) until you can get qualified, and find a new home.  Actually, let me be more clear, as long as you meet all other conventional financing qualifications, you would not be prevented from buying due to the short sale.
    One of the biggest challenges is going to be finding a lender that understands this guideline.  What State are you buying in?  I might be able to recommend someone that can help.

  • lesmall40

    My bankruptcy was discharged  back March 2012 and right now going through  a short sale 2/19/2016 and I was only behind there payments. Next thing I know I am severed with court documents in September.  I really do not know what to do
    .

  • mts1470 ScottSchang There must be something else that I’m missing here.  All lenders will use the middle score of the lowest scoring borrower.
    Even if the 2nd lien holder filed a deficiency judgement in 2015, it would not be considered a foreclosure, because their lien would have been extinguished, AND they would have had to agree to remove the lien as part of the short sale in August 2011.
    Shoot me an email to [email protected], I might be able to recommend someone that can help.

  • mts1470

    ScottSchang mts1470 Actually,
    the current FICO scores are 713 & 729 from Experian.If lawsuit is not the issue in rejection,
    then is it possible to find a lender in Indiana that relies ONLY from Experian?

  • daveinct10

    Thank you Sir. More insight in 5 minutes than 5 weeks of searching the web. I guess my next move will be to seek out a lender that deals with Fannie.

  • daveinct10 unfortunately I do not know any lenders in CT that I can recommend.  Yes, Fannie Mae approval is a conventional loan.  The transfer of title would have occurred as a result of the bank taking the home through the foreclosure process.

  • daveinct10

    So, is a Fannie Mae backed loan considered conventional? Thanks!

  • daveinct10

    Connecticut

  • daveinct10 Hi Dave, if you were able to get an extenuating circumstances exception from FHA, then your chances are also pretty good for getting it for conventional.  The conventional waiting period would be 2 years from the BK discharge, as long as the foreclosure has occurred.  What State are you trying to buy in?

  • daveinct10

    Hi Scott, desperate for some advice. Love the conversatin by the way. Here’s the situation:
    October 2012 Chapter 7 discharge which included house/mortage.
    March 2014 court papers show tote transfer on home.
    Have a documented extenuating circumstance leading to 2012 bankruptcy.
    Credit scores near 700, no debt, no lates.
    Question is would we be able to do any conventional financing i.e. Fannie Mae with 5% down? Looking at an REO home that doesn’t allow FHA. We already qualified for Back to Work program…we think…will have pre-approval next week to confirm.
    Thanks a million,
    Dave

  • mts1470 It sounds to me like the challenge is the judgement on your credit report, and not the waiting period for the short sale.  If that is indeed the case, then it’s simply an issue your credit score recuperating.  The fact that the judgement occurred, would not cause a waiting period.  It sounds like it’s just a matter of your scores exceeding 620.
    The down payment requirement for conventional financing is 5%

  • mts1470

    Hello Scott,

    Need your guidance for re-financing conventional loan in
    Indiana. 

    Here’s the background timeline:

    1.Did a short sale in August 2011 for a house in
    Michigan.

      2.2nd mortgage lender of same property filed
    a lawsuit for deficiency loan amount in March 2015. The settled judgement amount was fully paid
    in November 2015.

      3.  Thereafter, applied for a conventional loan in
    December 2015 but was denied due to 2nd mortgage lawsuit record in March 2015.

    Please advise how long should I wait to secure a conventional
    loan with >20% down payment.

    Thanks!

  • LDnewlife

    One last thing…I have a “forgiveness” letter from attorney regarding short sale.

  • LDnewlife

    PS – not sure if this matters…short sale was in MA and looking to purchase in NH.  Thanks

  • LDnewlife

    Hi Scott,

    I went through a short sale in August 2013 on our family home.  I trusted my then husband and he handled all the financials.  He wanted the marriage over and failed to pay the mortgage and thus we had to do a short sale.  I shortly divorced him after.  My 2 children and I have been renting since.  I was told I had to wait 3 years unless there was extenuating circumstances before I could apply for a loan.  Since I have worked extremely hard getting my credit back up.  It will be 3 years this coming August since the short sale.  I went to a lender looking to obtain a pre-approval and was told because there was a short sale the waiting period is 4 years and not 3.  I am so confused because I was previously told 3.  Please advise.  I live in Massachusetts…not sure if state matters.  Thanks!

  • MrDataGuy

    I live in CA
    I had a Ch7 BK discharge on my non-owner occupied (NOO#1) home in 2013. 
    It had been my primary residence but due to financial reasons it became NOO#1 at the BK time-frame. 
    NOO#1 Home had a 1st and 2nd, both not being paid for 1.5 yrs & so the NOO#1 home went to the auction process by the 1st Note lender. 
    In 2014 I was able to find a buyer and completed a short-sale shortly before the auction. 
    The sale paid off the 1st Note lender completely (incl all the atty fees, interest, penalties, et. al.) but shorted (by agreement) the 2nd Note lender.  

    Question #1 With the BK discharge and the short-sale dates separated by ~1yr, which timeline delay to apply for a new loan (refi) applies (see below)?

    Also, I had my primary home (purchased a couple of years prior to the BK w/conventional loan & 20% down).
    Primary home was excluded in the BK and w/the attorney recommendation, I did NOT reaffirm the note
    I have been paying on the note since I purchased the home in Aug ’10, with ~10 late payments (4 of which I was told by the lender was required in order to get them to even talk to me and consider a loan modification (which they then decided to decline).
    I subsequently got married, and we bought a new home together in 2015, making that now my primary residence, and my previous home turned into another NOO#2 (wife qualified w/her FICA & income)
    I want to refi NOO#2 to get out from under that lender and lower my interest rate and maybe return some of my equity (property value & my 20% down)

    Question #2 How does the BK, short-sale, non-reaffirmed loan, and NOO#2 affect me getting the refi?
    Question #3 In the interim, how do I protect my equity in NOO#2, since I still remain the single unmarried man on the NOO#2 deed of trust in the event of my “untimely” death?
    Question #4 How long does the executor of my estate have before the lender takes over the property via the foreclosure process?
    Question #5 If the lender does acquire the property w/foreclosure, what happens to the equity over and above their remaining principle, atty fees, interest, penalties, et. al.?

    Sorry for the length & complexity of the background to get to all 5 questions. If too much effort is req’d to answer, I understand it may be necessary to take it to an attorney, but I was hoping to get a sense of any options I have prior to paying $375/hr for the attorney so as to keep him/her focused on what I want answers about w/o breaking the bank.

  • brc2016 Using conventional financing, as long as your loan documents are dated past the 4 years, you will be ok.  Fannie Mae clarified this timeline/date last year.  The guideline specifically states that the loan cannot be consummated (documents signed) until after the waiting period.
    The only other concern might be if there were any other mortgages included in the BK, and what happened to those liens/homes
    Hope that helps?  
    By the way – what State are you buying in?  If you have trouble finding a lender that understand these guidelines, I may be able to recommend someone.

  • brc2016

    Scott,

    We have a BK that will be discharged four years ago this coming June.. We bought a home about two years ago with 20% down financed at a local bank..

    we have a buyer for our current home.

    we’d like to purchase another home that is substantially priced lower than it’s current value.

    Sale price is $393,000

    home should appraise out at $480,000 as-is and $600,000 after rehab

    we want to put 10% down which allows us to use other savings for updates and repairs

    joint income of $200K with 16 years at same employer

    credit scores of 690 for both my wife and myself..

    Is this feasible? Or, would it require a larger down payment?  Keep in mind, we’d set the closing date to fall after the 4 year mark of discharge of the BK..

    Thank you in advance for your time!

    -BRC

  • MBH56 I don’t agree with what you are being told about the wait.  The waiting period for FHA is actually only 3 years from the short sale date, and the short sale would have extinguished the lien for the HELOC.  What happened here is that the HELOC converted to unsecured debt, and you made payment arrangements on unsecured debt.
    I believe you are eligible to buy now.  If you do not have a lender that you trust, shoot me an email to [email protected] and I will make an introduction for you.

  • JJohn11

    Scott, I had a post from Sunday that was skipped over? Is there any reason for that?

  • MBH56

    Hi Scott,
    We had two short sales one in July 2011 in Arizona and the second in December 2011, both a result of job transfers.  The July 2011 short sale had a second mortgage HELOC, and that bank retained the right to pursue us. We negotiated the balance and finished paying off the negotiated amount in January 2016.  Although we have over 20% for a down payment and credit scores above the minimum required (680), we were told the final payment on the compromised HELOC reset the four year waiting period on an FHA loan.  Any advice would be appreciated on how to secure a mortgage on new home purchase.

  • joedebi Joe, you would qualify for FHA financing in August.  You may also qualify for extenuating circumstances if the DIL was the result of an act of god.  An 80-10-10 might be a challenge because the lenders that offer 2nd position loans tend to be very strict about past challenges.
    I have a friend in NJ that might be a good resource for you.  If you can shoot me your contact information to [email protected], I can make an introduction

  • CatherineM68

    Hi Scott,
    My ex and I had our bankruptcy discharged in August 2014. He failed to inform me, and kept it hiding for over a year, that he would be receiving an inheritance of $200,000; I wouldn’t have agreed to the BK which led to our divorce ( too bad this doesn’t qualify for extenuating circumstances!) He’s already bought a home with the cash in CA. I moved to OR to stay with family and have managed to save $50,000 for a downpayment. I have an auto loan that is current for over a year, a store credit card that I pay the balance off when it has one and I just received a capital one cc. I have $10,000 saved in a credit union as well and my lowest credit score is 680. From what I’ve researched It appears the only loan I qualify for is an FHA loan due to the BK. The homes I’m looking at are between $160,000- $200,000 so I have more than a 20% down payment. It bothers me to pay the mortgage insurance on an FHA loan, so my question is ” Is it feasible to apply for an FHA loan, wait two years and then try to refinance?” That would be 4 years from the discharge date. My kids have gone through so much this past year and I would like us to have a home again (ex refused to let us stay in the family home w/ a payment I could afford, hence the move out of state and living with family). Thank you in advance for your reply.
    Catherine

  • joedebi

    Scott,
    My wife and I live in NJ.  August of 2013 we finally did a DIL due to hurricane Sandy demolishing our house.  We are trying to get a loan now with 10% down and having a difficult time.  Combined we make 245,000 and both our scores are 700+.  Is there anyway to get a 80-10-10 loan so we don’t pay pmi?  And will waiting until August of this year (3 years) really make a difference in being able to get a better/easier loan?
    Thank you for your help.

    Joe

  • 1winbest My resources are looking for 35% down 1 day out of foreclosure.  You may be able to find a lender that will work with you with less, but 15% down payment is probably going to be tough.

  • Jeb3779 6% is not bad at all for a portfolio loan.  I know everyone thinks that if it’s not 3% it’s too high, but that’s just not realistic.  Interest rates should be in the 5% to 6% range now, the only reason they are not is because of outside manipulation of the markets.  Not too long ago, you were lucky to get a portfolio loan under double digits.
    I still really like the 1st/2nd piggyback option.  You can take advantage of low rates and conventional terms on the majority of your loan balance, and put a portion onto a higher rate 2nd mortgage to bridge the gap.

  • JJohn11

    Scott, I have a situation, went thru chapter 7 bankruptcy in 2/13 because of our business. We never missed or were late on our home mortgage & always wanted to keep our home. Our attorney never reaffirmed as we wanted, so after we closed we wanted to refinance our current mortgage of $400,000 with our credit union. But the question of liens on our home from our SBA loan 1.6M came up. Our attorney assured us and the credit union the liens were removed thru the courts so they not only refinced in 2013 but gave us a home equity in 2014. In November 2015 we want to refinance again and again the liens came up but this time the credit union said we needed to get the liens removed before refinancing again. Again I contact our attorney and he again assured me the liens were taken care of. Unfortunately, all along he was referring to judgement liens that we had on top of mortgage lien. The bank that we had our SBA loans from had mortgage liens of 1.6M on our home and also place judgment liens on us for 1.6M. So here is the problem. So when the credit union refinced and gave us a home equity the never subordinated the loans and recorded both loans after the 1.6M loans on a home worth $500,000! Another twist is the bank that holds the 1.6M loans is not aware they are now in first place on our mortgage as of right now. So now we are looking at a possible malpractice suit against our attorney and a foreclosure because, if the the bank that has the liens of 1.6M finds out their placement they will probably foreclose and get $500,000 leaving the credit union $0! We have 4 attorneys all working together to try to resolve this without foreclosure and the credit union losing everything but the SBA is not budging on a settlement because they want as much as they can get! So all this back story was needed for my question about getting a mortgage after this type of crazy situation that we are sick over. We make good money have restored our credit but if we have go to foreclosure because we won’t stay in home that we can never possibly pay off. What is the possibility of getting a loan months after a foreclosure? We should have 15 to 20% down make almost $200,000, credit score in 700 and would need a mortgage of at least 400 to 500 thousand for the homes in our area. Is this considered a circumstance a bank consider extenuating? I know this sounds crazy but believe me if I wasn’t living it I wouldn’t believe it either!! I would appreciate any info you could provide! Thanks, JJ

  • Jeb3779

    Thanks for the response – we are in NY. I found someone that can do it but the rates are Around 6% and def require 20%. We are fine waiting til next spring but that still puts us shy of the 4 year mark by about 3 months.

  • Jeb3779 Sorry about the delay on answering this,  Jumbo lenders do not necessarily follow fannie mae guidelines, so their policy on extenuating circumstances will vary from lender to lender.  There are definitely portfolio lenders that will lend 2 – 3 years from a short sale.  Another option would be an FHA first mortgage at the 3 year mark, with a portfolio second mortgage to cover the gap between FHA loan limits and your down payment.
    What State are you in? I might be able to recommend someone that can help.

  • JasonFLL

    ScottSchang JasonFLL   Thoughtful response-  thanks Scott               No BK, I’m in Florida, and I will send you an email now-

  • JasonFLL Thank you for the well laid out question Jason.  The answer is yes, with 25% to 30% down, there are portfolio loans available with your DTI and credit scores.
    There wasn’t a BK prior to the short sale by any chance?
    The longest you would have to wait would be 3 years from the short sale for FHA, 4 years for conventional.
    What State are you trying to buy in?  If you can shoot me an email to [email protected], I can try to recommend someone than can help

  • JasonFLL

    Well written / organized Scott-

    Any advice for me?      Fiance and I want to buy a  home and a number of key attributes we have covered  (except for one challenging one)-

    My circumstance:
    -Income relatively high:  mine $220k,  Hers $80k
    -very little debt for either of us-    income to debt ration rock solid
    -Credit scores: mine 660,   hers  810
    -Downpayment:  we are in a position to put down a significant down payment if need be   as much as ~25-35%
    -Challenge:    I have a short sale from last July       –   it is literally the only blemish on my considerable credit history over past 25 years

    I understand there are minimum waiting periods before traditionally backed loans will even consider a new mortgage to someone with a short sale as recent as mine-     so my question is:

    Is there any non traditional / atypical path we can explore that might allow us to secure a mortgage now instead of waiting 2,3,4 years?

    Thanks for the advise and consideration Scott-          Best,   Jason

  • Jeb3779

    Short sale in June 2013 bc of a job relocation. Anyway this could be an extenuating circumstance to get a jumbo loan? Want to buy a house before the 4 year mark
    Thanks!

  • Hillbilly0611

    Awesome i will be contacting you..thank you so much for the help.

  • Hillbilly0611 USDA requires no down payment.  Better yet, if the appraisal comes in higher than the sales price, you can finance the closing costs up to 103% as well.  Keep your money in your 401k if you can.

  • Hillbilly0611

    Ok i have been looking at usda areas. .those are normally no money down right..3.5% is a no issue for me as i can take that from my 401k

  • Hillbilly0611 FHA considers the BK, and the deed in lieu as 2 separate events.  FHA has a 2 year wait for BK, and a 3 year wait from the DIL.  Conventional will allow as low as 3% down, 5% at the most.  If you have USDA eligible areas near you, they follow similar guidelines as conventional, which is 3 years from the discharge of the BK.

  • Hillbilly0611

    Thank you for ur reply how about a fha

  • Hillbilly0611

    I live in nj and just whent though the same thing mortgage was in my bk discharge in 2012 nevet reaffirm and did a dil last week how long should i wait to look..

  • gouldmarston With just over 2 years from short sale (I assume your name was on the sales contract?) there are portfolio loans that you would not be embarrassed to admit you have.  Some of these programs have decent rates (single digit) and are usually short term ARMs, sometimes even interest only.  

    You should be eligible for the best rates and fees on a traditional Jumbo loan 4 years from a short sale.  I say should because some investors today will  follow fannie mae guidelines, but there’s no requirement that they do.  

    Jumbo lenders can make their own rules, so it’s a good idea to keep your eyes open, and keep scanning the web for someone that says they can do it. I would actually start by asking a Realtor or 4 in an area where home values are high enough that a Jumbo loan is required.

    One other option, maybe not a great option, but an option just the same, would be if your wife could qualify without your income.  I’m sure you’ve thought of that, and just in case someone that read this hasn’t thought of it, I wanted to put it out there.

    Hope that helps?

  • gouldmarston

    Hi Scott,

    I’m trying to understand what my waiting period is based on my particular circumstances.
    I had a short sale that closed in Oct 2013 due to a divorce. 
    Prior to our divorce, I was giving my ex-wife the mortgage to send in, however rather than pay the mortgage, she just pocked the cash.

    Since that time, I have remarried. My wife owns a townhouse with a good amount of equity.
    We both have strong credit ratings. Mine is 755 hers is 800. 
    We live in Seattle / King County where I believe, when we are past whatever waiting period is necessary, there is a higher non-jumbo loan available.
    That being said, we’re looking at properties that would probably require a mortgage of $600k.
    We have no debt, total assets now of around $800k and a total income over $250k

    Thoughts?

  • renee225 I think you would qualify for extenuating circumstances based on the passing of your father.  The definition of extenuating circumstances is a one time event, completely outside your control.  The examples that fannie mae, and FHA give for extenuating circumstances is death of a primary wage earner.  It sounds to me like this would qualify.
    You are trying to buy in Nashville?  If you send me an email to [email protected], I can introduce you to someone that can help.

  • hopefulca It does not matter how you addressed the property during the petition stage of your BK, as long you can prove that it was discharged.  There is a document that you should be able to get from your BK attorney, it’s the mailing list that the court uses to notify your creditors that their debt has been discharged . This is where the guideline gets tricky as well.  Fannie Mae guidelines only specifically address foreclosure, not deed in lieu that happens post discharge.
    You are eligible for conventional financing now.
    What State are you in?  I have a pretty good network of lenders across the Country that are familiar with the guidelines, and have experience with these types of scenarios.

  • Mia Bella

    I’m in California. What is a portfolio loan? I’m actually not far from you in north county san diego. I wouldn’t mind talking to you. Let me know and I will contact you.

  • nonavalley

    HI Scott,

    My husband and I had filed for Chapter 13 bankruptcy when my employer decreased my hours from 40hr/week to 15hrs/week in 2010, and the bankruptcy was then discharged in Nov 2014. We had included our condo in the bankruptcy, and due to the automatic stay – it was not foreclosed until August 2015. My husband and I now have a combined income of $230,000 and our credit score is slowly starting to rise again, which is currently at 650.

    We have been renting for the past 4 years, and with our current income are wondering if it is possible for us to quality for a home loan. We are looking at the 550K-600K price range and can put about 40K-50K down. Do you think we can qualify for a home loan this year? Since our condo was included in the Chapter 13 bankruptcy, I am not too clear on when the waiting period starts/end and whether we follow the bankruptcy waiting period or the foreclosure waiting period.

  • chris330r

    ScottSchang chris330r I see. My current loan was made in 2012 before the change, so my MIP would end in 2021 if I stayed here. But as tempting as that is, I really cannot take any more FL summers and would rather just cough up the MIP on the new loan up north! Thanks so much…Your advice was a big help and much appreciated!

  • chris330r ScottSchang Yes, you can absolutely put 20% down, and the mortgage insurance premium is a little less than if you put less than 10% down.  Unfortunately, the mortgage insurance on FHA is required for the term of the loan.

  • chris330r

    ScottSchang chris330r Oh thanks for that info. I didn’t know FHA requires mortgage insurance even if you put down 20%. (CAN you still put 20% down on an FHA?) And is that for the term of the loan or just partial?
    Either way, it’s not too big a deal. I’ll just have to adjust my monthly budget estimate to reflect about 50/more monthly to accommodate the MIP.

  • chris330r ScottSchang Yes, your plan is possible for next year, but you will have to use FHA financing, and you will still have mortgage insurance, because it’s FHA.  Conventional financing requires a 4 year wait after the discharge of a BK.
    I would get into the home now with FHA mortgage, and refinance it in 2 years when you’re eligible for Conventional

  • chris330r

    ScottSchang chris330r Thanks so much for the helpful information Scott. I was wondering why my post was being skipped over lol. No worries! 
    I prefer putting that 20% down to avoid the mortgage insurance and also keep my monthly PITI at $650 or less based on an $80k small home in the Buffalo, NY area, Thanks again! I’m relieved to know that my plan is possible for next year!

  • chris330r I’m so sorry Chris!  I don’t know how I missed this – Your timelines are accurate – FHA requires a 2 year wait from the discharge of the BK.  As long as you are current on the mortgage now, and moving forward, you can buy using FHA with as little as 3.5% down.  Making a larger down payment on an FHA loan will only lower your payment because of the lower loan amount, it does not impact your ability to qualify.
    Based on your current credit scores, you are ok, and should have no challenges qualifying.

  • chris330r

    Was my query too difficult for you to answer?!

  • Mia Bella The conventional guideline of 4 years from a short sale is pretty solid, there is not way around it unless you can show extenuating circumstances (which most people cannot).  With that credit score, and 20% down payment, I would seriously consider a portfolio loan.  The rates and fees might be a little higher, but it would get you into the property now, and you can refinance it in a year.
    What State are you located in?

  • hopefulca

    Hi Scott, 

    Sorry to be redundant since you have already answered this questions for the most part..However I have a twist..BK discharge 2010, did NOT mark the paperwork surrendered, but never reaffirmed. After a long battle with unemployment and the bank, ended up doing a deed in Lieu in March 2012.  Given the rule that the BK 4 years takes first, does it matter that the BK paperwork says Retained?  Or does that change the ability to purchase? 

    My credit report states discharged in BK and also notes that the loan will be off my record 2/2016? Do I have any immediate options for conventional as FHA maximums are not high enough for my location.

    Thank you

  • renee225

    I have a question/dilemma. I was the co borrower of my father’s house. My father was the borrower. I was not the overseer of his finances. In 2013 my father’s health began to fail and he had a stroke. I thought his mortgage payments were being automatic deducted from his account monthly only to find out after his death (11/2013) that his payments were several months behind. I tried to sell the house to prevent a foreclosure. Nashville is such a popping city. Everyone I reached out to help sell the home really dragged their feet because they wanted to flip the house and resell. I lost that battle. Now I’m faced with a foreclosure on my credit repost that has nearly ruined my life. Since the foreclosure I have gotten my credit score up to nearly 700. I would love to buy instead of RENT. I cant see myself paying the ridiculous price of a apartment when I can I purchase a home with lower payments. The rent here is outrageous. With everyone moving here from different locations the price has double even triple in price. It’s much better for to buy a home instead My question is I was told that I may be allow to apply for a loan due to extenuating circumstances of my father’s death. Is this possible? The house was sold the end of 2014.

  • Mia Bella

    We had a short sale 3 years ago. I’m  currently  the executor of my mother’s  estate  and would  like to purchase  her condo as an investment  property . My siblings  and I  have  agreed  on a price. Neither  of  them  is in the  position  to  buy the property . Mother  had a heloc on the property  that I  have been paying through  the  estate. Would  I  be  able  to  obtain  a conventional  mortgage  on the property ? My portion of the property  would  cover the 20% down. Or I  could  get  that 20% down  from my own he loc. My income  is over 100k and fico is 740. The short sale  was from a second  property  we bought  at the height  of  the  market ,  we have never  missed  a  payment  on our primary  residence  of 28 years. This  condo would  be  a  very good  opportunity  for us. Or I  could  sell it and  just pocket  the cash. But there is some sentiment  attached  to the  condo, and I   may want  to  live  in  it some  day and rent out the larger home  I’m  in. Or do I  have to delay purchasing  this property  until  I  reach the  4 year mark? I   don’t  know  what  my  siblings  would  have  to  say  about  delaying  their  inheritance  for another  year .
    Thank you .

  • Eileen Vincent

    Those are great news! Thanks a lot!!

  • Eileen Vincent Yes, it’s called a portfolio loan, or private money.  35% down should put you in the market for one of those programs.  Your credit scores should go up pretty quickly after the bk as long as you begin proactively building good credit.
    The best way to do this is start with a secure revolving credit card as soon as your bk is discharged.  Pay it off each month.
    Timing will have a lot to do with the terms of the loan.  The sooner after the bk, the higher the rates and down payment.

  • Eileen Vincent

    Thanks for the fast response, Scott. Do you meant that if I have at high downpayment (at least a 35%) and a very good collateral, I can buy a house right after bankruptcy?

  • Eileen Vincent If there’s a chance you have to file bankruptcy, you would have a waiting period before being eligible to use fannie mae conventional, FHA, VA or USDA.  There are portfolio lenders that will lend with a large down payment 1 day out of bk.

  • Eileen Vincent

    Hello Scott. I’m currently going through divorce in CA and planning to recolcate to NJ after. The house is his so I will be a first time home buyer, but there is a chance I have to file bankruptcy. What are my chances on buying a house in NJ?

  • chris330r

    Ch7 discharge July 2015. Not reaffirmed mortgage but still making timely payments monthly and up to date. Currently about 30k equity in home.
    I want to sell next spring of 2017 and use the equity from the sale to put 20% down payment on new home with FHA loan. Will I be able to qualify July 2017, and will having the 20% down payment in cash help?
    I already have 3 unsecured credit cards since discharge with total $3,000 credit limit that is never late and will continue making timely payments. Assuming my credit score stays at 650 or over, on time credit, and 20% down payment, will I be good to buy again next summer after sale of current home?

  • YoYo2day

    ScottSchang YoYo2day Great information and thank you for your quick response. Yes, I want to stay in my home. I had some setbacks after the discharge due to sudden illness and was behind three months on my mortgage. The bank offered a home modification loan in order for me to stay here. I applied and will get a response in 30 days. Apparently, they told me that they see no problem in reference to the home modification going through. (I was never behind on my mortgage before.) I am thinking that if this goes through, I would like to upgrade. Many homes in my area are in foreclosure and I know several people who are in the foreclosure process three years and more. I cannot do the “waiting game” and rather stay in the home that I placed so much investment into. I would lose rather than win if I walk away. It is good to know that there are options available for me after the matter is resolved. I am willing to wait 2 or 3 three years.

  • YoYo2day Good afternoon, ok, there are a couple of questions here – first, you would like to stay in your home permanently?  No problem, just continue to make your payments on the loan.  Discharging a mortgage in BK does not mean that the loan goes away, or that you cannot live there.  If you pay, you can stay.
    As far as constructing a new home on the property, you can do anything you like with the property, the question is “when”.  The loan you would use to do the construction will have guidelines for when you would be eligible following the discharge.
    Hope this helps?

  • YoYo2day

    I filed for Chapter 7 and this was discharged Feb. 2015. I would like to stay in my home permanently. My home was built 1910 and needs an update. Would it be possible to construct a new home on property after Chapter 7 discharge?

  • Savannah13

    We owe 28,000 and offered 2,800 they countered at $7,200 and then we both agreed to $4,200.

  • FrustratedinIL

    Hi there, I would really appreciate some help and good guidance regarding my husband and I’s situation. We live in Illinios. We filed chapter 7 bk in 2013 and included our house which was at the time in process of foreclosure, bk was discharged in May 2013 and our house went to the sheriff sale August 13,2013. Our BK lawyer had told us at the time we would have to wait 2yrs from discharge date before trying to buy another house, which would have meant that August 2015 we would have been good to purchase again. We were not ready to buy at that point but are now, but now we have been told that guidelines have changed and that we have to wait 3yrs from the SHERRIFF SALE date (8-13-13)and not the BK discharge date(5-11-13)… I am beyond frustrated and do not know who to believe or who to listen to. Am I wrong in my logic of thinking that if we waited the 2yrs from our BK discharge date that just because the guidelines have been changed to a longer wait time how and why would that apply to us? Seems unfair to make us have to wait another year longer, seems like we are being penalized due to new rules in the guidelines when we already fulfilled the 2yr wait time. I feel like the new guidelines would take effect from the date that they were put in place going forward and not apply to situations prior, if the FHA decides to make changes every year that alter the wait time or criteria that is mandatory to apply for a mortgage and makes it “applies to all” kinda scenario and not just from the date implemented going forward we might be waiting forever before we can get mortgage?!?! Please help! Thank you!!!
    Sincerely Amy S

  • househunter ScottSchang I am a lender in California – feel free to shoot me an email, or give me a call if you have any other questions or would like to discuss some of these alternative options.  My cell is 714-336-8286

  • househunter

    ScottSchang househunter 
    CA.

  • househunter ScottSchang What State are you trying to buy in?

  • househunter

    ScottSchang househunter 
    Any lenders?

  • househunter

    ScottSchang househunter 
    Great info. Thanks!

  • househunter ScottSchang Ahhh..ok, FHA loan limits would be a problem.  I know the home does not show on search, but it’s still going to come into play if you apply for a new loan.  What date was the short sale completed?  If FHA is not an option, then waiting until 12/2016 would be the only option for conventional.
    The last option, and not saying it’s a great option, is a portfolio lender.  You could get away with as low as 10% down with your credit score, but the rates are going to be much higher than conventional financing.
    As long as your name is off title to the home that was discharged through the BK, Conventional high balance would be the least expensive way to go.
    At least as of today (January 2016), there isn’t a better option than waiting out the BK waiting period.

  • househunter

    ScottSchang househunter 
    Thanks for the quick response. My area exceeds the FHA loan limits, the down is quite high. With my gross income and no debt I can afford a hefty mortgage and refinance. FHA fees are lost money. The home does not show on search as short sale or BK only Chap 13.  Discharge 24 months out in 12/2016, sounds like I should wait?  Thanks.

  • househunter Unfortunately you would have to wait the 24 months before signing loan documents on a new home loan following the discharged date of the Chapter 13.  A foreclosure or short sale would not show on your credit, however it is a matter of public record.  What date(s) did either of these events occur?  Did you include multiple properties in the BK?
    The reason I ask is that many lenders do not understand the guidelines, and will offer false approvals based on a lack of experience and education.  FHA will allow you to buy in 2 years from the discharge of the BK, and there is an additional waiting period of 3 years from the date your name was removed from title through foreclosure, short sale, or deed in lieu of foreclosure.
    If you’ve met these waiting periods, a high balance FHA would be the best option by far.  Interest rates on FHA are significantly lower than conventional rates right now.  I think you will find that FHA is not a bad option for allowing you to get back into the market before rates and/or prices increase in the future.
    Hope this helps?

  • househunter

    Hello, I filed chapter 13 2009, discharged 12/14, my mortgage was included in BK I do not have a foreclosure or short sale on my credit. I have been approved for FHA but I would like to qualify for jumbo conventional, 2 years will be up 12/2016. Do I have to wait exactly 24 months after discharge? I have 10% DP, credit score 700+

  • elismom

    We filed chapter 7 bankruptcy and were discharged in 2011. Our 1st and 2nd mortgages were not reaffirmed but we have continued to pay and are current on both. My husband is having some serious heath issues and we need to relocate closer to his doctors and treatment centers. We are getting conflicting info from every lender we talk to regarding our current home. Some say we have to sell it or qualify for both mortgages (our current home and the one we want to buy). If we choose to rent it out, we can only use 75% of the rent to offset the mortgage payment on that home. Others say we have to have 25% equity in our current home to even be able to rent it out. We live in Washington state and sure could use some good solid advice.

  • elismom

    Savannah13 We have a similar situation. We filed chapter 7 in 2011, did not reaffirm our first or second mortgages but have continued to pay on both and are current. Now wanting to settle the second for a lower amount and was wondering who your lender was on second and what a good percentage would be to offer them?  I’ve read 5% is a good starting point.

  • Jeb3779 That sounds accurate for Jumbo financing.  Most jumbo lenders will actually require a 7 year wait from a short sale, so that sounds like you’ve got a good program there.  Jumbo lenders do not necessarily follow Fannie Mae guidelines, so you will find that the waiting periods will vary from lender to lender.  
    There are certainly ways around the waiting period, you are looking for a portfolio lender.  Portfolio lenders are going to have much higher interest rates, and may require 20% down, or even more.  These are great loan options to get you into the home, and start earning equity, but you will not be bragging to any of your friends about the interest rate or closing costs.
    Hope this helps?

  • Savannah13 If the lien is removed on the 2nd TD, then you should be able to buy a new home as long as the payments are current on the first mortgage if you are trying to buy the new home using Conventional financing.  If you are trying to use FHA financing, there would be a 3 year waiting period from the date of the short payoff on the 2nd TD.  
    There is no such thing as reaffirming a mortgage after a BK, that can only happen during the petition process.  The mortgage is discharged, and can be refinanced, but reaffirmation of the original loan cannot be done.
    This will be a little sticky, and you may have challenges finding lenders that understand all of this.  If you run into challenges finding a lender, I can recommend someone that may be able to help.  Send me an email to [email protected] if you would like that introduction.
    Hope this helps?

  • Jeb3779

    Short sale finalized in June 2013. Found a house we want to buy but need a jumbo loan. I’m told we need to wait 4 years and we must put down 20%. We are in NY. Is there a way around this?

  • Savannah13

    We filed bankruptcy in 2009 and continued to pay our first mortgage and we haven’t been late. The second mortgage however, we did not pay and are currently settling with them for a low amount and they are willing to release the deed in a few weeks. We would like to purchase a new home can we do that without reaffirming our 1st mortgage?

  • figit320

    ScottSchang figit320  I sent you an email – thank you

  • hopeful105 ScottSchang Introduction made!  Say to Tony for me, and good luck.

  • hopeful105

    ScottSchang hopeful105 Thx for quick response! Email sent 🙂

  • hopeful105 I have a very good friend in NC that should be able to help.  Extenuating circumstances do typically warrant a shorter waiting period, so I would say that there is a strong possibility as long as the circumstance meets the definition of being extenuating.  
    If you shoot me an email to scott@findmywayhome.com, I will make an introduction to my lender friend.

  • hopeful105

    Hi Scott, I had a short sale on a VA loan due to extenuating circumstances. I am aware of the VA’s restrictions of my next loan due to the unpaid balance. That said, is there any expectation that my waiting period will be less than 2 years? Thank you, Sir

  • figit320 You’re so right about the short sale vs foreclosure!  What State are you trying to buy in?  I have lenders that cover most States that can help.  If you can send me an email to scott@findmywayhome.com, I will see if I have someone I can introduce you to.

  • figit320

    I had a chap 7 bankruptcy that was discharged in May 2011 with a house that was included in the BK and not re-affirmed, after 3 years of non payment to the bank and them doing nothing, I initiated a short sale that was finalized in Oct 2013.  I am trying to buy a new home and its been almost 5 years from discharge and 2 1/2 years from title change of the property, I keep getting conflicting information on when I can qualify for a loan.  Also within the time period I also had a divorce.  any insight you can give would be appreciated I am getting extremely frustrated because it seems if I just let the house go to foreclosure I would have less issues than doing the short sale

  • js510mx The waiting period to buy again using a USDA loan is 3 years from the date your name was removed from title by short sale, deed in lieu of foreclosure, or foreclosure.

  • js510mx

    Hi, I had a short sale in Michigan two years ago. When am I eligible for a rural development loan? Thanks

  • creditquestion

    ScottSchang creditquestion Thanks for the quick response! We will proceed with the link you provided to try and find a local lender. Thanks again!

  • creditquestion Unfortunately, I am unable to lend in MO, and I completely agree that your timing and though process is on the right path.  I’ve set up a referral network for lenders across the country so that you can work with someone local.  Go to secure.findmywayhome.com and put the details of your information there.  I received an inquiry from you earlier, and unfortunately that inquiry only goes to me, and not out to the network.  
    I apologize in advance for the multiple steps, I hope this helps?

  • creditquestion

    Hi Scott! We are in MO and went through Foreclosure with a sale date of June 2009. Being that we are at the 6 1/2 year waiting period, we are looking to buy and build and were wondering if we could get pre-approval to start the building process knowing that the closing date of the loan would be after the 7 year mark. Our credit is good and we will be putting down 20%. We have verified that the foreclosure has been removed from our credit reports. The building process will take at least 6 months.

  • darren1968

    Hey Scott , I am having problems finding lenders to work with me in Maryland even though my mortgage was included in my chapter 7 in 2011…any people here that can help?

  • EKCoghlan Thank you for question.  In August of 2014, Fannie Mae released a guideline that allowed lenders to ignore the waiting period for any subsequent action such as Foreclosure, and follow the BK waiting periods, as long as the debt was included, and discharged, through the bankruptcy.
    In December of 2014, USDA made the same guideline change.  Under this guideline, as long as the foreclosure has occurred, you may use the BK waiting period of 3 years, and would not have to wait an additional 3 years to buy if you are using USDA.
    Based on the dates you’ve stated, you would be eligible for both Conventional and USDA financing once the foreclosure process is complete, and your name has been removed from title.
    I have a lender friend in Oregon that may be able to help.  Shoot me an email to scott@findmywayhome.com and I can introduce you.

  • EKCoghlan

    Hi Scott.  I’m in Oregon and we filed Chapter 7 back in 2011 and included our mortgage in the bankruptcy.  It has taken them almost 5 years to foreclose on us with the auction set up for Jan 29, 2016.   Do we have to wait until Jan 29, 2019 until we are eligible to buy again?  I’m confused about the above UPDATED note under the USDA guidelines where it says “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 – http://www.rurdev.usda.gov/SupportDocuments/3555-1chapter10.pdf

  • erickouame1971 You would qualify for both Conventional financing now.  Fannie Mae will allow you to use the BK discharge date as the waiting period (4 years) and disregard the deed in lieu date.  FHA financing requires a 3 year wait from the deed in lieu, which would put you at 9/4/16.
    There are not many lenders that understand the fannie mae guideilne that allows you to use the BK date and ignore the DIL date, so finding a lender could be a challenge.
    If you shoot me an email to scott@findmywayhome.com I know someone that may be able to help

  • mdefran23

    Hello,
    I was wondering how long did ornate for your name to removed from the deed? Also what did you do for housing after you moved out of he house? Thank you

  • erickouame1971

    hello Scott, I filled for a chapter 7 and discharged 01/20/2011 , my house was in deed in lieu and sold 09/04/13 . I have $12k for a down payment and want to purchased a house . can you tell me the loan I can qualify for . ( live in Maryland , house was in Maryland)

  • ken1515

    kristenmarthabrown ken1515 

    Thank you and I most certainly will be calling, soon.

    Ken

  • kristenmarthabrown ken1515 Thank you Kristen!  Good luck 🙂

  • Beastie2us I certainly can help in Northern California 🙂

  • Beastie2us

    That’s what I was referring to, just didn’t remember the verbiage (regarding documentation before 9-13-16). Sounds good to me, in the mean time I’m continuing to save money and pay down my car loan. My credit is fine so no worries there. I’m looking to buy in Northern California (Patterson, Modesto area) , hopefully you are able to assist in those areas. I will contact you mid July to begin….
    Thanks for this website, it’s the best place to get updated accurate information!

  • Beastie2us Yes, 9-13-16 🙁  There are conventional loans available with as little as 3% down, but you have to be a first time homebuyer to qualify, which also puts you at 9-13-16.  Since FHA requires 3.5%, this might be another option for us to look at in September.
    As far as starting the paperwork goes, you can absolutely get “credit qualified”, you just would not be able to actually purchase until Sept.  If you have any concerns at all about your credit rating, or credit report, I would say let’s take a look now.  If you’re not concerned about credit qualifying, I would probably start the process in July/August.  
    One last thing I just thought of…..and may write an article about, for FHA, you cannot register your loan with FHA (get a FHA case number) until after the date of the DIL.  When you use conventional financing, you can apply, get approved, and go into contract for the purchase, you just cannot sign loan documents until after the waiting period date.

  • Beastie2us

    Ok thanks, I appreciate the info. I would love to work with you using Fha , as I only have 3% for down payment. So my date is 9-13-16 . I assume I cannot begin any paperwork until after that date.

  • Beastie2us for FHA, yes, you have to wait the 3 years.  Using conventional financing, you could qualify now (4 years from discharge).  If you are eligible for VA benefits, you would be eligible in 2 years from the deed in lieu.
    I am a lender in California, and I’m happy to dig a little deeper and see what we can do.  You can buy using conventional financing with as little as 5% down payment.  Many people believe that conventional requires 20% down, but that’s not true.
    Hope this helps?

  • Beastie2us

    Beastie2us 7 days ago
    Hi Scott, I need clarification…chapter 7 bankruptcy 2010 w/ home included in bankruptcy.
    Deed in lieu on said property in sept 2013. For FHA do I still need to wait (3) years sept 2016?
    Or can I proceed now? I’m in California and scores are 720 & up
    Thanks & Happy New Years

  • Nicolemaria1981

    Thank you!!! It wouldn’t have happened if I had not stumbled upon your site!!! Thank you again!

  • melissamacs

    ScottSchang Yes, that does help. Thank you for the quick response.

  • melissamacs the foreclosure process can be different depending on which State you’re in, but typically yes, that would be the foreclosure date.  The transfer of title out of your name is a matter of public record, so you may be able to look it up online, or go to your county recorder’s office and request a chain of title.  
    Hope this helps?

  • melissamacs

    Hello Scott – Is the Sheriff Deed date the date of the Foreclosure and is that the date 3 year seasoning starts to apply for an FHA loan? Thanks!

  • Nicolemaria1981 Thank you so much for taking the time to leave such kind words, it really means a lot!   Congratulations on your new home 🙂

  • Nicolemaria1981

    Hi Scott! I just wanted to say thank you and let you know how much I appreciate the help you provided with your website and quick responses!! I have followed for a couple of years now and asked some questions during that time! My husbands bankruptcy waiting period just ended in Nobember and we were able to build and buy a home we love! There are so many people giving out incorrect information, so finding this helped educate me and give hope!! Thank you!

  • NESD

    Hi Scott, I am planning to buy a house in CA ($1 mill) , history of 2 short sales, last May 2012, my credit score is 740 with Zero debt, would I qualify for a loan with 10% down?
    Thank you and happy new year!

  • ken1515

    Thank you. Do you know of any lenders in the Central Washington State area that understand these guidelines? Because so far they don’t see it this way. I’ve clearly quoted the guidelines and keep getting the same negative feedback. Frankly, they don’t seem to want to work on it.

  • Stacey Tibbitt

    Thank you so much Scott! You have been very helpful! If things don’t work out with our current lender I will be in touch.

  • Stacey Tibbitt She’s wrong.  It’s 7 years from foreclosure, 4 years from BK.
    Yes, you are correct, that’s the way Fannie Mae interprets the loss of the home after a discharge.  
    Now keep in mind that the DIL is not a result of the BK. If anything, it would be easier to make your mortgage payment if you have no other debt.  That’s not really important though.  Fannie Mae recognizes the BK as the initial, and primary hardship, and considers anything that happens afterwards as the same event.

  • Stacey Tibbitt

    Ok thank you. She says 7 years from BK and 4 yrs for DIL. But if I’m correct, the BK date is only what matters here not the DIL because the BK was the initial event and the mrtg was included in the BK. The DIL is a result of the BK not necessarily a single, separate event? Sorry to keep repeating myself but this is extremely important and clarification is key.

  • Stacey Tibbitt I don’t have anything in writing, but there’s more wrong here than that.  Per Fannie Mae guidelines, the waiting period after a DIL is only 4 years.  This lender simply does not have a lot of experience with helping people after hardship.
    Most lenders get caught up in the guidelines because it only specifically identifies a foreclosure included in BK, can ignore the foreclosure waiting period (normally 7 years).  I had to contact Fannie Mae for clarification about if it was a DIL, or short sale, and not a foreclosure.  But you will not find it in writing anywhere.

  • Stacey Tibbitt

    Thank you for the offer. It is much appreciated but we do currently have a lender who unfortunately is not aware of this guideline. Is there something documented that I could share with her to help our case? I have done my research and thought that was the case but am being told its 7 years. It’s sad when a borrower is more aware that the lender. But it would be nice to have something in writing to prove that we have met the waiting period requirements. Actually I believe I may have contacted you several months ago for help and you were the one who led me to my research of this exact issue because you had made me aware of the new guidelines.

  • Stacey Tibbitt for conventional, you’re using the BK date.  It is not uncommon for lenders to not know this guideline.  If you send me an email, I’ll introduce you to a lender that can do this loan – scott@findmywayhome.com

  • Stacey Tibbitt

    Ok I just want to make sure because this is where we always run into an issue. The BK is almost 7 yrs post discharge but the DIL is only 20 months post title transfer. Not sure which date we have to use.

  • Stacey Tibbitt It’s a Fannie Mae loan, so the waiting periods are the same as any normal conventional loan.  4 years from the discharge of the BK, as long as the mortgage was discharged through the BK, and the default occurred after the BK.

  • ken1515 Conventional, Fannie Mae financing, and USDA financing allow you to use the BK discharge date.  FHA and VA use the date that your name is removed from title.

  • Beastie2us

    Hi Scott, I need clarification…chapter 7 bankruptcy 2010 w/ home included in bankruptcy.
    Deed in lieu on said property in sept 2013. For FHA do I still need to wait (3) years sept 2016?
    Or can I proceed now? I’m in California and scores are 720 & up
    Thanks & Happy New Years

  • Stacey Tibbitt

    We are in Maryland. Btw what is the waiting period?

  • Stacey Tibbitt

    We are in Maryland. what is the waiting period?

  • Stacey Tibbitt Yes, Fannie Mae has a “rehab” loan that is very similar to FHA’s 203K loan.  What State are you buying in?  I have lender friends that specialize in those types of loans, and I can see if someone can help?

  • ken1515

    So who actually goes by the BK discharge date and not the foreclosed? I keep getting told that I have to wait according to the longer foreclosure date.

  • Stacey Tibbitt

    Thank you Scott for your quick reply. Is there another loan option when trying to purchase a home that is a fixer-upper?

  • Stacey Tibbitt Unfortunately that true Stacey.  It doesn’t really make sense, but that’s how FHA and VA both work.  I wish I could influence FHA to follow suit with conventional and USDA!

  • Stacey Tibbitt

    We had a BK in 2008, discharge may 2009. Unfortunately the house remained in our name until 4/2014 when a DIL was completed. We are now trying to purchase a home using FHA-203k. We are being told that FHA guidelines will only use the DIL date and not the BK date. Is there ANYTHING that we can do. I know Fannie Mae and USDA will use the BK date. Any chance FHA will get on board with that soon? And the mortgage was included in the BK. Thanks in advance for your advice.

  • Stacey Tibbitt

    we have a Bankruptcy discharged in 2009. Our mortgage was included in that bankruptcy. Unfortunately it took over 5 years for a DIL to take place. Now we want to buy a home using FHA-203k but are being told that FHA will use the DIL transfer date and not the discharge date. I know at least two of the other agencies have updated their underwriting guidelines to use the discharge date. Any idea if and when FHA will be doing the same? We have been approved for both Fannie Mae and USDA loans but want to purchase this home that needs repairs. Thank you for your input.
    Stacey

  • Coachmule That doesn’t sound right – That might be Wells Fargo and BofA guidelines – they tend to be much more conservative.

    Send me an email to scott@findmywayhome.com and let’s see if I can get you pointed in the right direction.  I have friends that can lend in NV that might be able to help.

  • ken1515

    I keep getting told the foreclosure waiting period applies, but the Fannie Mae guidelines for a mortgage that was included in bankruptcy and then foreclosure, clearly state the bankruptcy waiting period will only be applied if you have proof the foreclosed property was included. I do have all proof needed that it was included and discharged. Even the credit reports state the mortgage account was discharged in Ch13 BK.

  • Coachmule

    I’m just trying to refinance after a divorce and get a better rate. I live in Nevada, I’m sitting on 250k equity. Help so frustrated

  • Coachmule

    Scott, thanks I’m getting bad advice from Wells Fargo and Bank of America both have told me I have to wait 5 years, so frustrating, can you send me your email? Thanks

  • Coachmule Fannie Mae guidelines require a 4 year waiting period from the last short sale date.  FHA requires 3 years.  If you are trying to qualify for financing that does not fall under Fannie Mae or FHA guidelines, you may be subject to different waiting periods.
    My next questions are what State are you buying in, and what loan amount?  If you are trying to qualify for Jumbo financing, I could see where some investors might require a 5 year waiting period, but I assure you that’s not normal.
    You may email me directly with details about your situation, and I’m happy to try to point you in the right direction

  • Coachmule

    Hi, I’m 4 years removed from two short sales, I have a 790 credit score, but keep getting told that I don’t qualify I need 5 years removed. Help? I’m confused.

  • navygirl1994

    I filed for chapter 13 bankruptcy in June 2008. My home was included in the bankruptcy. It was a conventional loan that is not back by any government programs. My bankruptcy was discharged in September 2013 and I am no longer legally liable on the promissory note, but the foreclosure proceeding just started in Oct 2015. Since I’ve already served my bankruptcy 2 years seasoning period, when can I apply for a VA loan? Will I have to serve an additional seasoning period?

  • ken1515

    Hi Scott, I’m a little confused on waiting periods. I had a BK Ch. 13 discharged in June 2013. So the 2 year waiting period has passed. However my home ended up in foreclosure and was sold in February 2014. For a conventional loan, since the home loan was included in the BK, will the foreclosure waiting period be waived or is it 4 years? The guidelines listed above kind of mislead me, in one case it appears the Foreclosure waiting period is completely ignored, and in another it looks like 4 years.

    Thanks

  • melitaf

    Hi,
    I went through a short sale in December of 2013. Although I did file a chpt 7 Bankruptcy in April of 2013, the house was not included in it. 
    My credit score has recovered to the low 700″s. Will I be able to get a mortgage in Dec. Of 2016??

  • ryan100

    ScottSchang ryan100 ,
    Big help.
    I’ll be speaking to an advisor soon, I think I’ll just have to wait it out and continue paying too much rent for a while.
    Thanks for the clarification!

  • ryan100 The changes that previously allowed you to buy 2 years from a short sale with conventional financing (w/ 10% down) was changed in August 2014.  There is no “grandfather” exception because the guidelines measure from the origination date, not the date the short sale occurred.
    Was there a Bankruptcy?  If so, conventional will allow you to use the BK discharge date, and not the short sale date.  FHA has never changed, it’s always been 3 years from the short sale date.
    Hope this helps?

  • ryan100

    Hello, 
    Our shortsale closed in late 2014, and we hoped to buy again in 2 years, however the guidelines changed in 2015 that say we need to wait at least 3 years for FHA and 4 for conventional loans.

    My question is whether or not we can be “grandfathered” since our closing was before the law changed.

    Thank you!

  • slimjane

    ScottSchang slimjane  Thank-you Scott.  Great information!!!

  • slimjane ScottSchang as long as your 2nd was paid off more than 12 months ago, and you’ve been on-time with your payments for the last 12 months, yes, you can buy non-owner.  Your mortgage payment on the 1st will be calculated in your total debt to income ratio when calculating your qualifying debt to income ratio.

  • slimjane

    ScottSchang slimjane  HI Scott, I appreciate your quick response.  I was wanting to buy an investment property in Texas or Florida.  Would a conventional loan for a non-owner be okay as well in my situation?

  • slimjane If you are trying to qualify for a refinance of this home, and your payments have been on time on the first mortgage for at least 12 months, you would be eligible for conventional financing now.  The waiting period for conventional financing is 4 years.

  • slimjane

    HI Scott,
    I filed for bankruptcy chapter 7 December of 2010.  Included in the BK were my two houses.  I let one foreclose, but I kept the other and I still live in it.  In June of 2013, I settled the 2nd mortgage that I owned on the house I still live in.  I had owed $100,000 on the 2nd mortgage and didn’t pay on it from Jan. 2011 to June of 2013.  The bank accepted $23,000 and took off the 2nd in June of 2013.  Since then, I have been current on my 1st mortgage.  When could I qualify for a Conventional loan?

  • VPAMHOA

    Scott, I filed bankruptcy chap 7 over two years ago; however I did not reaffirm my loan and I did not let the home foreclose for the past 2+ years I have made every payment, on time to date. I am eligible for an FHA Loan but the lender keeps using the current mortgage which is legally not my debt anymore, exclaiming that I must sale the house I live in, or reaffirm the bankrupt mortgage to move forward. What does the law say about bankrupt mortgages Not foreclosed on to borrow again?

  • cnmcguire421 Good morning, you would be eligible for FHA financing in 3 years form the short sale, April 2016. Conventional would April 2017, that’s correct. If the mortgage was discharged through a BK, you may be able to use the BK discharge date and disregard the short sale date.  The waiting period from the BK discharge date is 4 years.

  • cnmcguire421

    Hi Scott,
    I had a short sale in April 2013 for a secondary home. I’m trying to purchase now. I’d like to get a conventional loan, but if I have to go the FHA route, can I refinance in 2017 to a conventional loan?

  • ArtCoder I do have thoughts, you will never get this loan from a depository bank.  Depository banks are dinosaurs of lending.  They have a small little ultra conservative underwriting box, and if you don’t fit into it, you don’t get a loan.  Chase is not following fannie mae guidelines.  Shoot me an email to scott@findmywayhome.com – I’ll introduce you to someone that can help.

  • ArtCoder

    Hi Scott,
    About 50 months ago I had a deed in lieu in Ohio, when I took a job in TX and couldn’t sell the Ohio home. In TX I took a private loan from a family member and have been paying the loan off with 5% interest (no late or missed payments). Our current mortgage on the TX home is 227k. The house was recently appraised for 500k. I make well over 200k annually, and have reestablished a credit score of around 700. Chase underwriters refused to do a refinance, as they view it as a home equity line, with a wait period of 7 years.  I’d even be willing to put down an additional 50k (so it’s a 177k loan on a 500k property). I understand rules are rules and Fannie Mae/Freddie Mac may not buy the loan, but it seems ridiculous as there is essentially 0 risk for the bank. Any thoughts? Thank you very much for your time.

  • SharonRiddle

    Thank you! I will try to contact Mia.

  • SharonRiddle contact Mia Schultz –  – she has helped many people from this site that have been told inaccurate information by their lender.

  • SharonRiddle

    Pennsylvania

  • SharonRiddle You just need another lender.  What you’re being told is not accurate, based on what you’ve told me.  Either this lender does not know what they are doing, or they are not communicating the real issue.  Medical collections are not required to be paid by Fannie Mae.  There are several “red flags” here.  What State are you buying in?  I might be able to recommend another lender that can give you a second opinion.

  • SharonRiddle

    Yes but my score is 708. And i paid off the debt immediately. Now more waiting. More beaurecratic bullshit.

  • SharonRiddle Oh, ok – there is no 2 year rule, it’s simply 4 years from the discharge of the BK.  So the medical collection made your score drop?  Has it been less than 3 years from the foreclosure?

  • SharonRiddle

    I qualified for Fannie because any foreclosure that was included in the bankruptcy Fannie Mae uses the bankruptcy discharge date and if it was more than two years ago then you’re in the clear. My bankruptcy was 2010

  • SharonRiddle Hi Sharon, something doesn’t make sense.  Which 2 year waiting period are you referring to?  I am not familiar with that.  This sounds like maybe the lender made a mistake by telling you that you qualified in the first place.  Fannie used to have a 2 year waiting period with 10% down after a short sale, but that’s been discontinued since August 2014.
    What State are you trying to buy in?

  • SharonRiddle

    I tried using FNM which only requires the 2 yr waiting period. All was a go until my credit was hit with a medical bill. I paid it but now I’m being told I have to wait another 6 months??? Come on!! How long do we have to suffer? Especially when we have cold hard cash to put down??

  • Nicolemaria1981 In my experience, Jumbo lenders tend to use the most strict definition of the waiting periods, which is 4 years for BK, 7 years for foreclosure.

  • Nicolemaria1981

    Hi Scott!! I know the waiting period is four years from a bankruptcy discharge date (which included a foreclosure) for conventional loans… Does it work the same for Jumbo loans??

  • Chynas17 There is a waiting period based on the credit event, not the type of property.  If you’re now trying to refinance the primary home with on time payments, the waiting period for the foreclosure on the cabin would still affect you.

  • Chynas17

    Scott,
    If you had two houses and foreclosed on the secondary home (cabin) is the same true? Knowing that the main home payments are always on time and credit score was affected by the foreclosure only?

  • vleconte

    Hi,

    I had experienced a significant loss of income within a 4 year window that put me in a bad position to short sale a condo in NJ in May of 2014.  I had a secondary property in NY that was used for investment purposes prior to short sale and moved into.  I have a great offer to sell my current house in NY and half away with $300,000  after relator fee since the market has picked up in NY and found another property in NJ to buy that requires construction.  plus we have about $80,000 in savings.  Although my credit took a hit over the past few years it is now in the mid 600’s and my fiancé credit is high 600’s. The current house in NY mortgage has been in good standing never late for 2 years.   If i put a 25%-30% down payment towards a new purchase of $580,000. Our income will still be strong and have liquid cash from savings of almost $200,000 after down payment, Are there any banks or programs that will allow us to purchase without having to wait the 3 years window through FHA?

  • mavericks10

    Hello,
    We foreclosed on our home in Feb 2013.  It will be 3 years in Feb. are are looking forward to buying again.  Is FHA loan our only option?  What can we do in the meantime to get ready to buy in the meantime?  Can we start actively looking for houses?

  • ch5520

    ScottSchang ch5520 Our current loan is an FHA from 2010, is it correct that I can at least get rid of the mortgage insurance on my current loan once it is paid down to 78% of the purchase price?

  • ch5520 Yes, unfortunately the mortgage insurance premium is required for any FHA mortgage, regardless of the Loan to Value.

  • ch5520

    Looking to refinance our current house, which we currently have over 20% equity in. We had a short sale in March 2013 on another house, if we were to refinance after the 3 yr waiting period with a FHA mortgage would we have pay the mortgage insurance even though we have over 20% equity? I read somewhere that mortgage insurance was for the life of the loan now with FHA.

  • SharonRiddle

    It is my understanding from this article that any foreclosure from a judgment that was INCLUDED in a Bankruptcy does not have to wait the 3 year waiting period.  Is that correct?  I keep having loan officers tell me I have to wait the three years, instead of just two.  Does anyone know of a lender who actually knows the lending laws???

  • crollerqueen

    Thank you for the quick reply. I will email you right away. Nobody here that I have found understands the rules it seems.
    Thanks again!
    Chris

  • crollerqueen Hi Chris, yes, these guidelines apply to anyone using Conventional, FHA, VA or USDA.  There are no state specific restrictions.  Based on Conventional guidelines, you would be eligible in 4 years from the discharge date of the BK, and would not have to consider the foreclosure date.
    That said, you would be eligible for Conventional financing as early as October 2017.  FHA and VA are going to use the Foreclosure date as the starting point for your waiting period.  If you are buying in a USDA eligible area, the guidelines are very similar to Conventional as they will allow you to use the BK discharge date, and could buy in as early as 3 years from that date.
    I do have a lender friend that can lend in Minnesota, and understands these guidelines very well.  Shoot me an email, and I will forward their information to you.

  • crollerqueen

    Hi Scott,
    Are the rules for conventional mortgage the same in all states?  My bankruptcy was Oct of 2013 which included my mortgage which was then foreclosed on with the sheriff sale being April of 2015. Do you have someone here in Minnesota? Preferably the northern suburbs? Whom I could get in contact with? Say Anoka, Coon Rapids, Brooklyn Park, Champlin area? I know I will need to wait but would like to see where I am at and what I need to do to prepare. Thank you so much.
    Chris

  • mdefran23

    ScottSchang mdefran23 Thank you

  • mdefran23 ScottSchang that depends on what type of financing you’re using to buy.  If you use FHA financing, then Yes, it does start over.  If you use conventional financing, then you can go by the BK discharge date, as long as the mortgages are current, or you’ve no longer own the home.

  • mdefran23

    ScottSchang mdefran23 Does the wait period start over at foreclosure and shortsale? If so what is wait period?

  • mdefran23 ScottSchang You have 5 options – 

    1. You can stop making payments and let the lender(s) foreclose, 
    2. You can short sale the property (assuming you owe more than it’s worth), 
    3. Do a standard sale (if there is equity)
    4. Approach the 1st lien holder to do a Deed in lieu of foreclosure
    5. Bring both loans current and pay on-time for a minimum 12 months (requires qualifying for both this home and new home)

  • mdefran23

    ScottSchang mdefran23 So what options do I have?

  • mdefran23 ScottSchang Even though the debt was discharged, you are now left with a defaulted (discharged) mortgage with a lien attached to your property.  I know it doesn’t seem like it makes sense, but you have to think of BK and the removal of the liens as 2 completely separate issues.  Unfortunately, unless that lien is removed, you are not going to be able to qualify for another loan, and maybe not even start the “waiting period” before you can buy again.

  • mdefran23

    ScottSchang mdefran23 Thank you for the quick response.  The second mortgage on my property was discharged in chapter 7 and I have not made any payments on the second mortgage.  I cannot afford to make both payments due to a divorce, that is the reason why I filed a bankruptcy.

  • mdefran23 Hello, at a minimum, you have a waiting period from the discharge of the Ch7 – and that will vary depending on the type of loan you’re trying to qualify for.  What did you do with the 2nd mortgage?  Using FHA financing, you could buy 2 years from the discharge as long as you are current on both loans for your current home, and you can qualify for both payments.  Yes,  I do have someone that can help you in NJ, email me at scott@findmywayhome.com and I can make an introduction.

  • mdefran23

    Hello Scott,
    Here’s my situation.  I live in NJ.  I filed a chapter 7 and it was discharged in August 2014. Both mortgages on the house were included in the discharge.  I received a modification on the first mortgage, and we have been making payments on that for about 11 months.  I did not reaffirm the loan and it is not being reported on my credit.  Both mortgages are showing a zero balance on my credit report.  I realize my name is still on the title.  When can I get a mortgage to purchase a new home?   Do I need to continue making payment s on this mortgage that I modified?  Will I have to qualify to be able to afford two mortgages on two different properties? Do you have someone in New jersey that I can talk to about my situation?  Thank you for your time.

  • PKHayes ScottSchang It’s very complicated I agree.  And I imagine it makes even less sense as a consumer going through it.  Just be careful, there are hundreds of stories on this website from buyers that the lender said they could do a loan for them, only to tell them at the last minute that they could not.  Good luck, I hope you can get this figured out.

  • PKHayes

    ScottSchang PKHayes
    Such conflicting information.  Yes, Divorce is an extenuating circumstance as well.  We found a lender/loan.  Thanks

  • PKHayes ScottSchang Ok, thank you for the clarification.  I am not aware of any traditional program that would allow you to buy again under these circumstances.  Extenuating circumstances would possible allow a shortened waiting period (of 2 years), but Divorce is not considered an extenuating circumstance as it is not out of the control of the borrower.  You may be able to find a portfolio lender, or credit union that would take this loan, but it does not meet Fannie Mae or FHA lending guidelines.

  • PKHayes

    ScottSchang PKHayes
    Again, Not VA eligible.  No bankruptcy.  Here is the info again….
    My new husband and I would like to sell the home I currently own and purchase another.  My credit score is around 800.
    He had a short sale 18 months ago due to a lengthy separation and subsequent divorce (extenuating circumstance) .  The outstanding balance was forgiven and the former mortgage shows a zero balance.  On the advise of his attorney and realtor he (they) stopped making mortgage payments in order to bring the lender to the short sale table.  This short sale is the only blemish on his credit and his score is around 710.
    Is there any mortgage program  which we might qualify for with a 20% down payment  under 2 years of a short sale? The loan was forgiven by the lender and is listed as paid in full to credit bureaus.  Name is off the title and house was sold under lender approved short sale.
    NO BK.

  • PKHayes ScottSchang Was the mortgage included in a Bankruptcy by any chance?  Your National lender does not know the guidelines and is simply trying to tell you that they don’t have time to talk to you.  Conventional and USDA loans can go by the BK date if the mortgage was discharged, FHA will go by the short sale date.  If you have served in the Military, VA financing allows in as little as 2 years, and I’ve seen shorter times.
    Also, it’s important to understand that your loans were not “forgiven” necessarily.  BK only protects you from taxation, or a deficiency judgement in the event that you default, or short sale.  While you cannot be penalized for not making payments, or selling the home for less than what it’s worth, you are the owner of the property until your name is off title.  BK and removal of the lien are 2 totally separate events in the eyes of the lenders. 
    What was the discharge date of the BK?  Let’s get you some accurate timelines for using traditional financing.

  • PKHayes

    ScottSchang PKHayes
    North Carolina.  We met with a national lender locally and they advised no govt loan (FHA, USDA, etc) or conventional loans would be available until 3 years had passed.  We were looking to borrow $300k with $60k down.
    Thanks!

  • samuel8701 ScottSchang iaskmia Samuel, I have not hear that fannie mae reduced their waiting period.  As a matter of fact, it used to be 2 years with 10% down after a short sale or deed in lieu, and they changed it to 4 years in August of 2014.

  • samuel8701

    ScottSchang samuel8701 iaskmia

    Hello Scott,

    Thanks for your response! I just recently read that Fannie Mae recently reduced the waiting period from 4 years to 2 years and also they use the bankruptcy discharge date. They no longer use the waiting periods for foreclosure , short sale or deed in leiu. is this true and will that help me in my situation?

  • chrispyw1111

    Hi Scott, 
    Our bk was discharged in Dec 2013. The mortgage was discharged as well, but we have been living in the home and making payments. We are now behind and foreclosure is set for Nov 2015. When would we be able to qualify for a new loan? Our credit scores are about 680 and we have 2 open lines of credit with little to no balance. We have no other debts at all. We live in  Georgia. Any advice is appreciated, thanks!

  • angulob

    Hi,
    My bk was discharged in 2011 did not reaffirm the debt, but the bank would change my name off so I did a short sale on 10/13…can I buy a house? And if I can who can help me in Las Vegas nv

  • TXFTHB That doesn’t sound accurate, I think there’s more to the story.  It does make sense that collections that occur after a BK are a pretty bad thing.  Maybe get a second opinion?  I cannot lend in Texas, so I would be unable to help.

  • TXFTHB

    Hi Scott,
    I filed Ch. 7 bankruptcy in 2009.  Since then I’ve had a few collections on my credit.  I am now trying to purchase a house, but being told that regardless of credit score, I cannot qualify for a mortgage unless I get all collections deleted from my account.  Is there any way around this?  Also if not, what is the quickest way to go about doing this?

  • PKHayes Good morning, yes, there are portfolio programs that will allow you to buy now.  The interest rates and fees are a bit higher than, but when you consider the long term benefit of owning real estate, I still believe that it is a good investment.
    What State are you buying in?

  • PKHayes

    Good morning Scott;
    My new husband and I would like to sell the home I currently own and purchase another.  My credit score is around 800.
    He had a short sale 18 months ago due to a lengthy separation and subsequent divorce.  The outstanding balance was forgiven and the former mortgage shows a zero balance.  On the advise of his attorney and realtor he (they) stopped making mortgage payments in order to bring the lender to the short sale table.  This short sale is the only blemish on his credit and his score is around 710.
    Is there any program other than VA which we might qualify for with a 20% down payment?
    Many thanks.

  • samuel8701 Hi Samuel, it would not be possible to get the home out of our name without starting the waiting period over if using a FHA mortgage to buy your next home.  Using conventional financing, you can buy 4 years from the discharge date of your BK as long as the mortgage is included discharged in the bankruptcy, and you can document it.  It can be tricky with loan modifications because it can be considered a reaffirmation of debt if it is a new loan.  Deed in lieu or short sale are both viable options for getting your name off title.
    I cannot do loans in TN, but iaskmia  can, and she is very familiar with these guidelines.

  • samuel8701

    Hi Scott,

    I discharged from Ch 7 BK in March 2014 and I was thinking I would be eligible in March 2016 to buy through FHA.  My house in MI was included in the BK and I didn’t affirm the debt.  I did do a modification afterwards so I could keep my renters in the house, I am making about 400 per month.  When I talk to my mortgage company I still talk to the BK dept because they need to tell me the are not trying to collect a debt.  So I can give the house back with a Deed in Leiu, or I can do a short sale. because the house is worth about what I owe and there will be fees associated with it so I would fall short.  Can I do a land contract? I wouldn’t drag a foreclosure out. I make the payments every month.  I live in TN and I want to buy a house with my family now, I have like 680 credit and good credit lines.  How can I get the house out my name without starting my timetable over?  Also can you do loans in TN?

  • CHRISSELLS Yes, you would be eligible based on the “spirit” of the guideline.  The challenge may very well be finding a lender that understands the guidelines.  Because the guideline only specifically cites foreclosure, you need a lender that has experience with this type of transaction.  We have great resources here, what State are you trying to buy in?

  • CHRISSELLS

    Hi Scott,

    I had a Bankruptcy over four years ago. My old home was included so I thought everything was done and I was no longer the owner since I surrendered it in the BK. Last year I find out I still own the home and had to wait till the bank foreclosed. To speed things up I did a short sale to get the property out of my name. From reading your article I see to get a new conventional loan effective 7-29-14 waiting period for subsequent foreclosure that was included in BK is waived if mortgage was included. Does this mean I’m good since I have now been out of BK for over four years and the house / loan were included in my BK??

  • sierlinc  Hi Sierlinc,  another thing to think about…it is likely that your ARM reset is going to be in your favor.  Of course to refi now would be great to take advantage of the low rates, but your reset could actually make waiting that final year not such a bad idea.

  • fernando suco

    ScottSchang fernando suco  Thank you for your response. No my accountant filed with the IRS, as you may know they resold the “land Trust” for over $48,000 and I never had any use or “profit”, in fact I took a large loss. Marriott took their sweet time and filed the Quit Claim Deed in 11/2014 so I still have over 12 to 36 months.

  • sierlinc Depending on the type of loan you are eligible for, there are definitely options.  If FHA limits in your County/State go as high as $474,700, you would be eligible to refinance using an FHA loan.  Conventional is going to requires a 4 year wait from the short sale.
    If $474,700 is above both FHA and Conventional loan limits for your County/State, then you’re looking at Jumbo financing.  Most Jumbo lenders tend to follow conventional/fannie mae waiting periods in my experience, however, there might be a portfolio lender in your area that is willing to offer a reasonable option based on the relatively low level of risk.
    I would also try a local credit union.  You can often go before the boards of directors and make your case for why your loan is low risk, and explain the circumstances around the short sale.  Showing that it was a one time event, and that it is likely not to repeat, would be the strength of your plea.
    Last option, if you have ever served in the military and are eligible for VA housing benefits, that wait is only 2 years form the short sale date.
    Hope this helps?

  • fernando suco Hi Fernando, there are certainly portfolio lenders out there that will led you money to buy a new home with 25% down.  Did you file BK on that 1099, or did you pay the income taxes?  Also, what are the dates/timelines that all of this occurred? The timing could have a lot to do with what your options might be.

  • sierlinc

    Hey Scott,
    I did a short sale on an investment property 3 yrs ago.  Before that short sale I purchased a new house to live in.  I made this purchase for $675,000, this house is now worth about a million bucks.  Here’s the problem…I would like to refinance this house.because I have an ARM,  My credit score is 745.  I’m looking to refinance $474,700.  Tell me what you think.  I’m in Phila., Pa. I have a six figure income.

  • fernando suco

    We live in Florida and we bought Marriott Vacation points 2 years ago after a hard sell by the salesperson in California. The 6,000 points cost $48,000 we put $8000 down and financed the rest thru Marriott. After 6 months and never using anything from them we had a family situation where we were not able to continue paying the $556 per month. We called Marriott to cancel or return the points. Marriott advised that we were given a deed to a “land trust” and it was a mortgage They further advised that they did not have a resale program at the time and we could not get out of the “points”. After several conversations we were told that Marriott also had the right of first refusal so we could not sell the “trust” to anyone at less than what the rate was that Marriott was currently selling at their sales center. We were then told by a Marriott Representative that the only way was to stop paying and after 120 days they would foreclose. We took that option even though our joint credit was over 790. Marriott called and asked if we wanted to quit claim the “land trust” in lieu of foreclosure which we did. Marriott then sold the points or “land trust” at even more money because their price had gone up. We were sent a 1099 for $40,000,and reported to one Credit Bureau. Which still states that we owe over $40,120. We own several rental properties and have been trying to obtain a mortgage on a new home. The lenders keep pointing to the Equifax Report even though we have a 696 score on that report. What can we do? Down payments on any house we are buying is 25% or more. Thank you,

  • RJLDenny

    I had a short sale on my house on 1-6 -2013 When can i get any type of loan on a new house(not Va)?No extenuating circumstances apply for me . Thank you.

  • Garry27 The date that the lender is looking for is the date that you ceased to become the owner of the property.  There is a “chain of title” that shows transfer of the deed of trust from one party to another.  I am not familiar with the foreclosure laws in Pennsylvania, however, I believe you should be able to easily tell when your name was removed from title.  In most cases, the property goes back to the bank, which is then sold as a foreclosed property.  What happens to the property once you name is removed is not relevant to the timeline that you’re looking for.
    Hope that helps?

  • Garry27

    I have a foreclosure which started in September 2011.  The home was in Pennsylvania.  I am currently living in Texas and in the process of purchasing a home with a VA Loan.  We are scheduled to close in a few days.  However, the title company has indicated the credit report isn’t clear as to when the foreclosure exactly happened and when it was filed.  They have explained the only way to make this work is if we can get a document which confirms it has been 2 years or greater.  We received a document from the Sheriff’s office which shows a Date Filed of 9/20/2011, a Execution Date of 04/03/2012 and a Disposed Date of 01/09/2014.  My question is which date will the Title Company use to establish the Two Year Date requirement?

  • jaygee571

    I hve a house that I purchases before returning to Active duty and it is protected by the Soldiers and Sailors Act I have PCS’ed multiple times and I am now looking into a Deed In Lieu because I can not afford to keep the property and continue to maintian a lifestlye for me and my family. How long will I have to wait until I can buy another house and are there any provision that can help me due to the situation.

  • Azsabby

    Hi,
    BK discharged August 2009 and home included and not reaffirmed. Received a modification in 2011. Rate is changing and payment increasing and we are still under water. If we short sale or FC now will have to wait to buy again or do we fall under FNMA’s new guideline of 4 years after discharge? Or would it go off of name removal on title?

  • homebuyer2015 Yes, you can refinance your FHA loan anytime without penalty.

  • homebuyer2015

    After a short sale in Oct 2012 I am ready to buy again. My lender has told me that insurance on an FHA insured loan now lasts for the lifetime of the loan. Is this correct? If I buy now can I refinance into a conventional loan once eligable in Oct 2016 without penalty? Thanks.

  • mbyrne1985

    I have a question, I live in VA and I am in the process of doing a short sale, my home is upside down. I am current and plan on staying current until the property sells. How long is my waiting time to purchase another home? Credit is about a 770. Thanks MDB

  • Gn0mE Yes, I agree with Mia – as long as you are not doing a short sale, or deed in lieu, and there are not late payments, you would be ok to sell, then buy again using FHA, VA, or USDA.  Conventional financing would require a 4 year waiting period from the discharge of the BK.

  • Gn0mE  Hi, if you are selling the home traditionally with no short sale or foreclosure then the “name off of title” does not apply to you.  You will not have to wait an additional 3 years and will be eligible this November 2015 for an FHA loan.  Be sure to keep making the payments on time until you sell.

  • mortgagehelp1 When you start looking at Jumbo loans, all of these guidelines go out the window.  Most Jumbo lenders require a minimum 7 year wait after a foreclosure, regardless of the situation.  What you are probably looking for is a portfolio loan.  
    These loans typically require a larger down payment, have higher fees and rates.  The loan is also usually adjustable, with a fixed period for 3,5, or 7 years.
    They are a good option to use as a “bridge” to get you out far enough from the hardship where you can refinance into a different loan with better terms.
    Good FICO, low debt to income, 20%+ down payment will all contribute to your ability to get the best terms available for that product.  I have found that the down payment is the biggest factor in getting a more reasonable rate.  When I say reasonable, I mean under 6%.
    Hope this helps?

  • mortgagehelp1

    Hi Scott – I had a property foreclosed in 2012.  I am looking to get a new property that will probably fall under a Jumbo loan.  My credit score ranges from 785 to 795 depending on the bureau.  I have 20% to put down.  The foreclosure was in Illinois and the new property is in Texas.  Since the foreclosure I have also gotten married and fiel jointly.  She has great credit, just a low W2.
    Do you think I will be able to get approved or have any insight into what type of programs I may qualify for?

  • SBTX I apologize for not seeing this sooner!  If you only sold the home in February of this year, you would not qualify as a first time homebuyer.  The definition of a first time homebuyer is usually someone who has not owned a home in the past 3 years.  What is the reason for your asking?  If you are trying to buy in the State of California, and looking for downpayment assistance, most programs do not have a first time buyer requirements.
    Hope this helps?

  • Gn0mE

    Does the name off title rule wait time apply if the house was never foreclosed on?

    Chapter 7 bankruptcy discharge was November 6, 2012 and the mortgage was listed in the bankruptcy. I’m currently living in the house with on time mortgage payments (the house was never in foreclosure status, payments on time for 13 years).

    If I sell the house, can I apply for a mortgage or do I still have to wait 3 years?

  • rbasiliere63

    Hi Scott, Due to my husband being told his company of 27 yrs. would be closing CA plant back in 2008 within 6/8 mos. and that all would be laid off or take a transfer job offer in TX if available. He decided to take the job transfer with hopes of getting a job back in CA to be back with his family. 3 yrs. of going back and forth just didn’t work. Our credit and mortgages all up to date until this happened. We could not afford to pay for our home and his very small more than modest apartment. Our Bank would work with us  just kept us on a 2 year possible loan modification process roller coaster. We were burned by 1 False Loan modifier and 1 Attorney both took our money and ran. We filed BK with mortgage and short sale agreement. BK Discharged 01/07/2011 Short sale completed 05/2011.( I waited until sale was completed. We remodeled are home ourselves completely over the 7 years we had it. The new buyers and realtors, attorneys couldn’t believe how beautifully kept our home we were loosing was still kept up when all others were mostly being stripped.) 10/2010 my husbands job again announced they would now be Closing the Texas plant starting around June 2011, so he decided to retire so we could move on with me moving to Texas, cheaper than CA and then we could use his retirement to buy our home out right.

    My questions is, we bought our home 227,000, no loans on it. now worth 299,00-327,000 comps just sold this month in our immediate area. Ours was a model home. Lots of upgrades. We waited the 4 years we were told. My  husbands credit score is about 700. We took some hits trying to find a lender that would work with us. Credit history restored, with car loan an a couple of credit cards with no late payments at all. Because of the foreclosure this lender is now telling us we have to wait 7 years not four. He said our credit score or debt is not the issue it’s the foreclosure. I think he is using Fannie Mae. I asked about FHA and he snapped back that, if I want a ” Hard Loan” we could qualify for that at about 7 or more percent. I keep looking at all sites and I see and I keep seeing that once you cleared 4 years and your credit and credit history are now good you can apply for a loan. we would like about 70-80,000 tops,( he said at least 100,000 or they won’t approve loan as easily) for a patio, pipe fence (1.3 acres) back yard grass, irrigation, gazebo, some trees for shading, finish our huge patio we pored last year with a cover, pay off our Taxes to IRS for taking retirement 18,000 left over 1/2 way done and pay one car loan off to reduce debt. Then we would have just 1 car loan and mortgage to pay and would have a write off hopefully. I had to resign from my job I loved due to illness last month. They said Alan could qualify on his own and he has a great job 3 yrs. strong and going..

    Any thoughts or suggestions for Texas? I don’t want his credit to get hit again.

    Thanks, Robin

  • latkin46

    ScottSchang latkin46 Thank you Scott, yes I believe he’s more than willing. I just never knew what needed to happen. Thanks again!

  • latkin46 If you are a co-applicant on a mortgage, and the other person on the mortgage is cooperative, you can simply do a quit claim deed to be removed from title.

  • latkin46

    Hello, I live in Orlando Fl. CH 7 discharged in March 2010, including co-applicant mortgage. Can you please let me know how to go about having my name removed from the deed?  I do not wish to purchase a new home, just want my name removed from the property deed.

  • JenM2015

    Hi Scott, Your page is so great and full of lots of information to help us all. My question for you is can we potentially buy a new home in 2 years and get a mortgage? We filed Ch 13 on 9/2013 but that was changed. In early 2014, our attorney thought it would be better if we switched to a Ch 7 because we are decided to do a Short Sale on our home. We did the Short Sale and our mortgage was discharged 9/2014 and included in the Ch7 Bankruptcy. My husband is a Veteran also. I am reading all sorts of things here. We are in Massachusetts. The person who helped us do the Short Sale, said 2 years pending we have great credit from here on out. etc etc. We are saving and our goal is to put down a large downpayment. We never did that on our 1st home and we got stuck with those terrible mortgage products that were home equities and interest only!!! That is why we short saled because our loans increased after the 10 yr mark. Any advice would be greatly appreciated.  Thank you! Jen

  • Shep4leighann

    Hi,
    Can you provide any links or tell me where I could find the rule changes which state the conventional loan waiting period is only held to the 4 year Ch.7 discharge date instead of the subsequent foreclosure date?
    Basically, I had a Ch.7 discharge in Sept. 2011 which included a mortgage. My foreclosure date/deed transfer date wasn’t until March, 2015. My wife and I are attempting to obtain a construction loan (which converts to permanent upon comedian of construction) to build a house on the lot we already own. Two lenders have told us the waiting period of 3 years minimum begins on the date of foreclosure (March 2015). I don’t know if possibly they aren’t aware of this so-called change or what. I would really like to provide them with some documentation regarding the change if it exists.
    Thanks!
    John

  • Stencraft ScottSchang It’s definitely not a necessity that they sell direct.  You can just ask them when you speak to them.  Good news though, sounds like they’re willing to fight for you!  Good luck 🙂

  • Stencraft

    ScottSchang Stencraft 
    Thank you Scott, I am already working with another lender who thinks I have a better chance with their UW team.  How can I find out if a lender sells direct to GinnyMae?  Is this information readily available or would I have to find out from the lender direct.  Thank you again for your helpful advise

  • Stencraft I think you’re going to have challenges finding any lender that has experience with this, but I think you should try, what can it hurt?  I completely understand the “grey area part, they leave the decision up to lender discretion.  If you’re looking for lender alternatives, find a direct lender that sells to GinnieMae.  Ginnie is the Government National Mortgage Association, and in short, securitizes government loans as mortgage backed securities.  This lender would have more of a direct line possibly for answering getting answers to these types of questions.  This is considered an “out of the box” deal, and you just need to find someone that will fight for you.
    Hope this helps?

  • Stencraft

    Hi Scott,
    I have posted before with my circumstances and I think I am correct in my assumptions.  Has a Chapter 7 discharged in August of 2012, subsequent short sale on May of 2014.  Mortgage was included in BK and not reaffirmed.  I am trying to get a USDA loan this year (August) since the 3 year waiting period for BK will be over.  I was pre-approved for 250K in lenders GUS but they are not giving final approval as they are saying there is grey area as to whether they can go with BK date or they have to go with short-sale date.  I read the guideline posted on your website and even though it can be interpreted as grey area, it seems like the section dealing with BK would override the section dealing with short sales towards the end of the guideline.  It would seem to me that the section dealing with short sales is geared to people who just did short sales without prior bankruptcy issues.  It looks like the vendor is not getting much help from USDA either as they are not providing concrete answers.  I feel like I should be able to get the loan based on the interpretation of the rule. Let me know what you think and if I should just try a different lender. I live in PA.  Thank you in advance.

  • SBTX

    Hi! It’s been 6 years since our home was included in our bankruptcy. We have continued to live in it and make payments on it until finally selling it this past February. We’re looking to purchase again in the next 6-12 months. Would we qualify as first time buyers?

  • dancincoop85 The waiting period depends on what type of loan you are trying to qualify for – in this case, if you are trying to qualify for a VA loan, the waiting period is only 2 years for BK, short sale, or deed in lieu.  Unfortunately, these are considered separate events, with separate waiting periods.
    If you do a short sale, or deed in lieu on your current home, you would have a waiting period of 2 years that would start from the date your name was removed from title.
    Conventional financing allows you to buy in 4 years from the discharge of a BK7 (2 years from a BK 13), and you can ignore any foreclosure, short sale, or deed in lieu that happened after the fact, as long as your name is removed from title.
    Hope this helps?

  • dancincoop85

    Our mortgage loan was included in our bankruptcy that was finally completed in November of 2013.  We DID NOT reaffirm the loan but have still been iiving in the residence and paying the mortgage.  We have a COE for a VA loan…if we did a short sale on the home or a deed in lieu would be able to get a mortgage in November of 2015 or would it be another two years from that date? I am so confused and would love to be out of this nightmare!  Thanks for any advice offered….

  • knurbina

    We filed for Ch 7 bankruptcy and was discharged May 2012 which it included our 1 st and 2nd mortgages. We are currently off the title so the house is not in our name any more which happened Sept 2013 due to our HOA foreclosing on it and auctioning it off. Our credit report shows our mortgage companies as accts closed due to bankruptcy. Our credit scores are about 700 and we make about $130,000 a year. We would like to purchase a home this fall with a VA loan since my husband is a disabled Vet. We live in Las Vegas. Do you see any problems for us to qualify? The only loan we have is an auto loan for $32,000 which we took out about a year ago. Any advice would be great.

  • CRoxy12 Hi Cheryl, thank you for your question. There are many factors that go into qualifying for a loan.  Based on the information you’ve provided, you could be eligible for FHA financing 2 years from the discharge of a BK.
    The real question that will give you the biggest challenge is, what happened to the VA loan that you were on?  I assume the mortgage was discharged in the BK, what happened with the mortgage?  Was there a short sale, deed in lieu, or foreclosure?  Or, do you still own the home?
    Unfortunately, I cannot lend in Georgia myself.  I do have several friends that are lenders that I would feel comfortable sharing their contact information.

  • CRoxy12

    Hi Scott, My name  is Cheryl. I was on a VA loan and divorce. Consequently I filed a chapter 7 bankruptcy that was discharge Feb 2013. I had medical bills and sickness and loss of income over 65%. I have recovered  and have paid credit cards on time, auto vehicle payments on time. My credit score is 720 as on 5/2015. Can I buy a home by myself. My income is 45,000. no dependents and all major credit cards are paid in full. I live in Georgia. If so what kind of loan am I able to get by myself. Ive never bought a home by myself. Thanks Cheryl

  • tpagan78

    That’s my exact situation I hope he has good news for us.

  • Stencraft

    ScottSchang Stencraft daveko 
    Thanks for quick response Scott. My Chapter 7 was discharged in August of 2012 and my short sale was completed in May of 2014.  Mortgage was included in bankruptcy.  Would this make me eligible for conventional now?  Credit score of 700+ and no late payments or derogatory items for the last 3 years.

  • Stencraft ScottSchang daveko Thank you for the question, and allowing me to clarify – If the mortgage was included in the BK, then we have the option of looking into conventional financing that may allow us to use the BK discharged date, and ignore the subsequent DIL.
    FHA requires separate waiting periods for BK and DIL.  Getting an extenuating circumstances exception on FHA is very, very challenging.  I’ve pretty much only seen death, or permanent disability of primary wage earner accepted as an acceptable circumstance.

  • Stencraft

    ScottSchang daveko 
    Hi Scott,
    Just a qui