Conventional Loan Waiting Period After Housing Event And Bankruptcy

This article is about Conventional Loan Waiting Period After Housing Event And Bankruptcy
Conventional Loan Waiting Period Explained

There are Conventional Loan Waiting Period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.

Fannie Mae and Freddie Mac are the two mortgage giants that make up the conventional mortgage lending guidelines
Fannie Mae And Freddie Mac sets the conventional loan waiting period
The conventional waiting period after a Chapter 7 Bankruptcy is 4 years from the discharge date of the Chapter 7 Bankruptcy
The conventional waiting period after Chapter 13 Bankruptcy is two years from the discharged date of the Chapter 13 Bankruptcy
There is a four year waiting period after Chapter 13 discharged date

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Conventional Loan Waiting Period After Housing Event

Conventional waiting period after a deed in lieu of foreclosure and short sale is four years from the recorded date of the deed in lieu of foreclosure:

There is a four year waiting period after the date of the short sale to qualify for conforming loans
The Conventional Waiting Period after foreclosure to qualify for a conventional loan is seven years

The waiting period start date is the date of the sheriff’s sale and/or the date the deed of the property was transferred out of the borrower’s name into the name of the lender and recorded on public records.

Other Factors Besides Waiting Period After Bankruptcy And Foreclosure

Besides passing the mandatory waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale borrowers need to meet Fannie Mae and/or Freddie Mac lending guidelines with regards to credit scores, credit, and debt to income ratios.

The minimum credit score to qualify for a conventional loan is 620 FICO credit scores
The maximum debt to income ratios allowed on conventional loans is 50% DTI
Lenders do not want to see any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale
Most lenders will automatically deny a mortgage loan if they see any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
However, there are lenders like myself where we are more lenient on late payments after bankruptcy and/or foreclosure
Mortgage underwriter will want to see the overall picture and a good letter of explanation may do the trick

Home buyers with multiple late payments after bankruptcy and/or foreclosure and need to qualify for a conventional loan please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week including evenings, weekends, and holidays to take your phone calls or answer your emails.

Conventional Loan Waiting Period If Mortgage Part Of Bankruptcy

Many consumers have their mortgage or mortgages as part of bankruptcy the waiting period to qualify for a conventional loan is four years from the discharge date of the Chapter 7 Bankruptcy.

The foreclosure can be recorded after the discharged date of the Chapter 7 Bankruptcy
The recorded date of the foreclosure and/or short sale does not matter
However, the housing event does need to be finalized
Fannie Mae and Freddie Mac only counts the waiting period start clock from the minute the Chapter 7 Bankruptcy has been discharged
The mortgage cannot be reaffirmed after the bankruptcy

Lenders also want to see re-established credit after bankruptcy and foreclosure and timely payments on all of the monthly debt obligations.

If you had a mortgage part of Chapter 7 Bankruptcy but the foreclosure did not get recorded out of your name until years after the bankruptcy discharged date and need to qualify for a conventional loan, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates may be able to help you get a conventional mortgage loan approval.

Waiting Period After Foreclosure To Qualify For Conventional Loan

Unfortunately, unlike FHA, Fannie Mae treats a foreclosure differently than a deed in lieu of foreclosure or short sale.

Fannie Mae guidelines on qualifying for a conventional loan after a regular standard foreclosure is 7 years
The waiting period starts from the date of the recorded date of the foreclosure
This date is reflected on the public records, the county’s recorder of deeds office
With FHA loans, the waiting period after a foreclosure is the same as the waiting period of a deed in lieu of foreclosure
There is a three year waiting period from the recorded date of the foreclosure or deed in lieu of foreclosure
FHA treats deed in lieu of foreclosure the same as a standard foreclosure
The waiting period is 3 years for short sales for FHA Loans
The three year waiting period after the short sale starts from the date of the short sale which is reflected in the HUD’s Settlement Statement
FHA has a two year waiting period after Chapter 7 bankruptcy to qualify for FHA Loans
The waiting period time clock starts on the discharged date of Chapter 7 Bankruptcy

Waiting Period After Bankruptcy To Qualify For Conventional Loan

The waiting period to qualify for a conventional loan after bankruptcy is four years from the discharged date with Chapter 7.

This waiting period has not changed
Still remains at the 4 years from the discharge date of Chapter 7 bankruptcy
There is a two year waiting period after Chapter 13 Bankruptcy discharged date to qualify for conforming loans
There is a four year waiting period after Chapter 13 Bankruptcy dismissal date to qualify for conventional loans

Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

The great news for many potential home buyers is that New Fannie Mae Guidelines effective immediately will consider new waiting period guidelines with mortgage part of Chapter 7 bankruptcy.

The waiting period for housing events where the person had mortgage part of Chapter 7 bankruptcy starts from the discharge date of Chapter 7
Petitioner cannot have reaffirmed the mortgage
The housing event needs to have been finalized either by foreclosure, deed in lieu of foreclosure, short sale
Prior to this new guideline, the waiting period for a person who had a mortgage part of Chapter 7 bankruptcy did not start until the recorded date of housing event after the discharged date
There are thousands of folks who had mortgage part of Chapter 7 bankruptcy
Many were still in limbo because the waiting period time clock did not start yet because the housing event was not finalized
I know of a case where one of my potential home buyers had mortgage part of their bankruptcy four years ago
Their waiting period did not even start yet
This is because the deed is still in the homeowners’ name and has not changed out of their names

Down Payment And Credit Guidelines On Conforming Loans

The great news with Fannie Mae’s new mortgage guidelines with regards to the four year waiting period after bankruptcy, deed in lieu of foreclosure, and a short sale is that only a 5% down payment is required.

With the old waiting period of 2 years after a deed in lieu of foreclosure and/or short sale with conventional loans, a 20% down payment was required
The bad news of the elimination of the 2 year waiting period after a deed in lieu of foreclosure and short sale with 20% down payment got offset by the 5% down payment requirement and the elimination of the 20% down payment

Since the new 4 year waiting period after a deed in lieu of foreclosure, and/or short sale to qualify for a conventional loan needs to meet Fannie Mae Guidelines, credit scores will dictate the mortgage rates. The prior bankruptcy, deed in lieu of foreclosure, or short sale will have no impact on mortgage rates.

Mortgage Lender Overlays

Most conventional loans I originate and close after bankruptcy, deed in lieu, short sale are borrowers who have gone to their local banks, credit unions, and other mortgage lenders and were turned down. This is the case even though they qualify and meet Fannie Mae’s Guidelines on conventional loan after bankruptcy, deed in lieu, short sale.

Many bankers, credit unions and other lenders refer their borrowers my way because their financial institution has lender overlays
Why can I do these type of mortgage loans and others can’t?
The reason is that other banks, credit unions, and mortgage lenders have overlays on these types of conventional mortgage programs
Overlays are additional guidelines imposed by the individual lenders that surpass the minimum lending guidelines set by Fannie Mae
I only go off the minimum Fannie Mae Guidelines
We do not have any overlays
We just go off Fannie Mae’s Automated Underwriting System’s automated findings
Borrowers who get an approve/eligible per DU FINDINGS, your loan will get closed