Home Loan Included In Chapter 7 Bankruptcy Guidelines

This guide covers qualifying and getting approved for a mortgage with a prior home loan included in Chapter 7 bankruptcy conforming guidelines. Fannie Mae has announced that there will be new rules for homeowners qualifying for conforming loans with home loan included in Chapter 7 bankruptcy. If someone has a home loan included in Chapter 7 bankruptcy, the waiting period does not start until the housing event has been finalized. A housing event is a foreclosure, deed-in-lieu of foreclosure, or short sale.

The waiting period start date is the date when the deed has been transferred into the name of the mortgage lender or the date of the sheriff’s sale.

Homeowners with a prior home loan included in Chapter 7 bankruptcy and the mortgage discharged are no longer liable for the mortgage. The waiting period does not start until names have been transferred off the title. The title needs to be transferred into the name of the lender. It must also be recorded in the recorder’s office of deeds and reflected in public records. This article will discuss qualifying for conventional loans with a prior mortgage included in bankruptcy.

Home Loan Included In Chapter 7 Bankruptcy Waiting Period After Foreclosure

I get many calls weekly where previous homeowners have a home loan included in Chapter 7 bankruptcy. Many find their waiting period did not start because the mortgage lender has not transferred the foreclosed property into the lender’s name and out of the homeowner’s name. Some lenders seem to do this on purpose. This is because this devastates the chances of a home buyer’s ability to qualify for a new home loan.

We are in luck. Fannie Mae now will waive the standard rules on a prior mortgage included in Chapter 7 Bankruptcy.

The new guidelines allow homeowners with a prior mortgage included in Chapter 7 bankruptcy to purchase a home in 4 years. As long as the prior mortgage is included in Chapter 7 bankruptcy and the housing event has been finalized, home buyers can qualify for conforming loans after four years from the Chapter 7 discharge date. The four-year waiting clock starts from the Chapter 7 bankruptcy discharge date.

Qualify for home loan included in chapter 7, click here

Excellent News For Those With Prior Foreclosure

Homebuyers could not qualify for a conventional loan after foreclosure until after a 7-year waiting period. Now, homebuyers can qualify for a conventional mortgage loan with a 5% down payment in just four years after a home loan is included in Chapter 7 bankruptcy. Borrowers need to have the housing event finalized. Borrowers cannot have re-affirmed the mortgage.

New Fannie Mae Guidelines on Conventional Loan after Short Sale or Deed-in-Lieu of Foreclosure

Those with a deed-in-lieu of foreclosure or short sale used to qualify for a conventional loan after a short sale or deed-in-lieu with a 20% down payment after two years of the deed-in-lieu of foreclosure or short sale. Fannie Mae terminated the two-year waiting period after a short sale or deed-in-lieu on August 16, 2014.

There are hundreds of different types of non-QM mortgage loans. Non-QM loans stand for non-qualified mortgages.

The new Fannie Mae mortgage lending guidelines for qualifying for a conventional loan after a short sale or deed in lieu will be four years. Buyers cannot qualify for a conventional loan after a short sale or deed-in-lieu of foreclosure after two years with a 20% down payment. The 20% down payment requirement is gone altogether.

Waiting Period To Qualify For Home Loan Included In Chapter 7 Bankruptcy 

Homebuyers can qualify for a conventional loan after a short sale or deed-in-lieu of foreclosure in 4 years with only a 5% down payment. Before this new Fannie Mae guideline, homebuyers could qualify four years after a short sale or deed-in-lieu of foreclosure with a mandatory 10% down payment. Now, that is not the case. The homebuyer only needs a 5% down payment.

Qualify for home loan included in chapter 7 bankruptcy, click here

No Waiting Period After Housing Event With Non-QM Loans

There is no waiting period after a housing event with our non-QM loans. Non-QM loans require a 10% to 20% down payment on a home purchase. The percentage of down payment requirements depends on borrowers’ credit scores. There are no maximum loan limits with non-QM loans. The minimum credit score required is 620. There are no private mortgage insurance requirements on non-QM loans.

Gustan Cho Associates has zero lender overlays on FHA loans, VA loans, USDA mortgages, and conventional loans. We are also correspondent lenders on non-QM loans and bank statement loans for self-employed borrowers.

Borrowers often tell us they were told they do not qualify for an FHA loan after loan modification by other lenders. No worries. Over 80% of our borrowers could not qualify at other mortgage companies. 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 have no mortgage lender overlays on FHA loans after loan modification. Gustan Cho Associates has zero lender overlays on FHA loans, VA loans, USDA mortgages, and conventional loans. This blog on FHA guidelines on mortgage after loan modification was updated on January 6th, 2024.