Post Bankruptcy/Foreclosure Waiting Periods

[DebtStinks]

I couldn't find a single place that had current info on the waiting periods for the various credit issues that we face here. So I took some time to read though the Fannie Mae and FHA underwriting guides and came up with the following. Let me know if you see any errors and I can update the tables.




Fannie Mae Extenuating Circumstances Definition:FHA Foreclosure Extenuating Circumstances:

The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure. Divorce is not considered an extenuating circumstance. However, the situation in which a borrower whose loan was current at the time of a divorce in which the ex-spouse received the property and the loan was later foreclosed qualifies as an exception.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

FHA Chapter 7 Extenuating Circumstances:New FHA Short Sale Guidelines:

A borrower is not eligible for a new FHA-insured mortgage if s/he pursued a short sale agreement on his or her principal residence simply to take advantage of declining market conditions and/or purchase at a reduced price a similar or superior property within a reasonable commuting distance.

Borrowers Current at the time of Short Sale

A borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage

1) all mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and

2) all installment debt payments for the same time period were also made within the month due.

Borrowers in Default at the time of Short SaleHere are the links to the actual documents I got the above information from:

PDF Version of Fannie Mae Selling Guide (current and prior versions)

HUD 4155.1, Mortgage Credit Analysis for Mortgage Insurance

[DebtStinks]

It seems that conventional and FHA loans are pretty much the only thing out there these days... so it's important to know how your actions will impact your ability to get a new mortgage in the future. Some of the new guidelines like the current loan/short sale with FHA can drastically reduce your wait over the other methods. Of course you also need to be aware of how the different options with impact your tax situation and legally. However, you should still be aware of the options available to you.

[Ugh07]

great summation....everyone make sure you read the whole post and not just the chart. The mortgagee letter requiring a 3 year wait after a short sale for FHA overrides the 2 year limit on the chart.

[NoMoreCards]

Nice Post! Potential Sticky?

I think this information is extremely helpful!

Thanks for posting this.

[DebtStinks]

great summation....everyone make sure you read the whole post and not just the chart. The mortgagee letter requiring a 3 year wait after a short sale for FHA overrides the 2 year limit on the chart.

Don't follow... I can update the chart if there is inaccurate info on it. Clarify if you can please and I'll update it.


Thanks

[Ugh07]

On the FHA chart under short sale(default) it says 2 years it should be 3 which is referenced in the mortgagee letter text that you have in your post.

[DebtStinks]

Oh ya... I see it now. Fixed.

Thanks for pointing that out.

[LSUTiger32]

Excellent stuff and really gives me hope that I can get an FHA refinance in November. That will be one year post discharge for me and I can certainly prove extenuating circumstances with Katrina and Gustav.

[BKchapter13]

you can find this on http://www.ehow.com/how_5230390_buy-...ankruptcy.html


How to Buy a House While in Chapter 13 Bankruptcy
Contributor
By Tameka McSpadden, eHow Contributing Writer
Article Rating: (0 Ratings)
Buying a house while you're in Chapter 13 bankruptcy is not as impossible as you might think. With a bit of hard work and some careful budgeting, home ownership can be accomplished during bankruptcy. It's usually best to wait until a bankruptcy is discharged before attempting to get a mortgage, but there are ways to get one without waiting.
Difficulty: Moderately ChallengingInstructionsThings You'll Need:
Credit report
Step 1Establish a positive repayment history with your Chapter 13 bankruptcy repayment plan. A two-year history of paying your creditors while in bankruptcy will help convince lenders to work with you and show them you are serious about repaying your debts. It's possible to get a loan with a shorter repayment history, but waiting two years will greatly increase your chances for success.

Step 2Discuss your plans with your trustee as soon as you begin to consider applying for a mortgage. If your trustee, who's responsible for overseeing the repayment of your debts, does not believe you can afford to make mortgage payments, he may prevent you from getting court permission to buy a house. Also, ask for the current payoff balances of the debts to be repaid. Paying off some debts can make your trustee more comfortable with the idea.

Step 3Get the court's permission to purchase a home. The rules for asking the court's permission to buy a home while in Chapter 13 vary by state. Consult your trustee and your bankruptcy attorney about your state's rules. If your trustee does not approve of your home ownership plans and encourages the court to deny your request, you can appeal the decision. Your bankruptcy attorney probably will be able to help you do this or she will refer you to an attorney who can.

Step 4Obtain a copy of your credit report. After you have the court's permission to apply for a mortgage, you must ensure the approval of your application. Getting a copy of your credit report will give you time to dispute any inaccuracies the report may contain.

Step 5Contact a lender that is willing to work with individuals in Chapter 13 bankruptcy. These companies will often require a minimum credit score and proof that your obligations are being repaid. Search the Internet for well-reviewed lenders that have experience working with home buyers who are in Chapter 13.

If you are on good terms with your trustee, discuss possible lenders with them. Your trustee might be able to recommend good mortgage companies that are willing to lend to people in Chapter 13. If your trustee is unable to help, ask your bankruptcy attorney for advice and referrals or even local real estate agents.

[BKchapter13]

Real Estate Home Mortgages - Home Buying in Chapter 13

--------------------------------------------------------------------------------
Expert: Jim Root - 12/4/2007

Question
Hello Jim, How are you? Well me and my husband file a chapter 13 in July of 2005. We need to know how we would go about buying a home. We have paid on time,and we would like to know what you think about it.and also my husband has a VA loan certificate. Please Help us . Thank ypo Mrs. Lewis.

Answer
Stacey & Jackie--I'm fine, thanks; how are you? You'd feel really great if you could owned your own Home, wouldn't you? And that's certainly possible! Both FHA and VA loan Programs are available to persons on a Chapter 13 Bankruptcy/Wage Earner Plan after "one year of acceptable participation" in the Plan! If you started in July 2005, and you've made all of your payments to the Trustee as directed by the Court, with the Trustee's written approval,a Lender may process a VA-Guaranteed or FHA-Insured Loan for you! With your payment history as you say, your Trustee should be willing to allow you to finance a home as long as the monthly payments don't exceed your current rent! So, it looks like you're"in the running" for a "Government-backed" Mortgage.

So...make an appointment with a Loan Officer LO), take in all of the items needed to process a loan for you (whatever the LO says to bring as evidence of your income & debts, assets & liabilities and, of course your Chapter 13 Documents & a Letter from you Trustee saying he/she authorized you to obtain a Home Loan!)The LO will take your Loan Application for a Loan in the Amount determined appropriate by the Trustee's Letter, obtain any/all Documents needed to be reviewed by Underwriter (UW). The UW will determine whether or not to grant you the Loan!

You've got over a year on "The Plan," have made your payments on time & in the proper amount! Your Trustee should be willing to provide the "Authorization Letter."
If you've kept your Credit Report "clean" since July 2005,have no collections, judgements, liens, recent slow pays, etc,and your job(s) status is secure, you should be able to get a Loan Approval! How much will depend on what amount the Trustee OK's and your Income & Debt situation!

I think you should "go for it!" Interest rates are low,
there are lots of homes on the market, & prices are reasonable. Why rent when you can own? Get a Loan "Pre-Approved" & then find that "just right" Home for you & your Family.

By-the-way,I'm a Veteran myself, and I appreciate Mr.Lewis' service to our Nation--Mrs. Lewis, if you were his Mrs.when he served, you served too! Thanks! And good luck with achieving "The American Dream--Homeownership!"--JIM

This was found on this site..http://en.allexperts.com/q/Real-Esta...Chapter-13.htm