Re-Entry of the Real Estate Market after Hardship

Know your credit score:

 

 

Following a Chapter 13 Bankruptcy:
Typical Seasoning Requirements
(Contact your Lender of choice to confirm their specific requirements)

 

To be eligible for a:

 

Conventional Loan

· 2-years elapsed time after discharge of bankruptcy and re-established credit since discharge of bankruptcy.

· 4-years elapsed time after dismissal of bankruptcy and re-established credit since dismissal of bankruptcy.

      Extenuating circumstances: 2-years elapsed time after dismissal of bankruptcy and re-established credit after dismissal if resulted from extenuating circumstances .

 

                Borrowers with more than one bankruptcy in the past 7 years

· 5-years elapsed time after most recent dismissal or discharge of bankruptcy and re-established credit since most recent dismissal or discharge of bankruptcy.

· Extenuating circumstances: 3-years elapsed time after most recent discharge or dismissal of bankruptcy and re-established credit after most recent discharge or dismissal if resulted from extenuating circumstances .

      Note: Most recent bankruptcy must have been the result of extenuating circumstances.

 

FHA Loan

At least 12 months satisfactory plan payments and court approval obtained.

 

VA Loan                

Satisfactory completion of plan payments and borrower has resetablished credit,

OR
At least 12 months of payment plan must have been made and trustee/bankruptcy judge approval obtained.

 

 

Following a Chapter 7, 11, or 12 Bankruptcy:
Typical Seasoning Requirements
(Contact your Lender of choice to confirm their specific requirements)

 

To be eligible for a:

 

Conventional Loan:

· 4-years elapsed time after either discharge or dismissal of bankruptcy and re-established credit after discharge or dismissal of bankruptcy.

Extenuating circumstances: 2-years elapsed time after either discharge or dismissal of bankruptcy and re-established credit after either discharge or dismissal if resulted from extenuating circumstances.

 

Borrowers with more than one bankruptcy in the past 7 years

· 5-years elapsed time after most recent dismissal or discharge of bankruptcy and re-established credit since most recent dismissal or discharge of bankruptcy.

Extenuating circumstances:3-years elapsed time after most recent discharge or dismissal of bankruptcy and re-established credit after most recent discharge or dismissal if resulted from extenuating circumstances .

Note: Most recent bankruptcy must have been the result of extenuating circumstances.

 

FHA Loan

· 2-years since discharge of bankruptcy and re-established credit or borrower has chosen not to incur new credit obligations.

 

Extenuating circumstances: Not less than 12 months since discharge of bankruptcy and re-established credit or borrower has chosen not to incur new credit obligations if due to extenuating circumstances.

 

Borrower must have clear CAIVRS # regardless of bankruptcy

 

VA Loan

2-years since discharge and re-established credit.

 

Extenuating circumstances: 1 to 2-years since discharge and re-established credit with satisfactory pay history if due to extenuating circumstances.

 

Borrower must have clear CAIVRS # regardless of bankruptcy

 

NOTE: When a home loan included in the borrower's bankruptcy filing subsequently goes into foreclosure, the borrower must meet the requirements for both bankruptcy and foreclosure. Foreclosure seasoning starts with the date the foreclosure is completed, not the date of the bankruptcy discharge.

 

 

Following a Pre-Foreclosure Sale:
Typical Seasoning Requirements
(Contact your Lender of choice to confirm their specific requirements)

 

A preforeclosure sale is defined as the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by lender.

 

To be eligible for a:

 

Conventional Loan

· 4-years elapsed time after completion of preforeclosure sale and re-established credit after completion of preforeclosure sale.

· Maximum LTV/CLTV is the lesser of 90% or the maximum allowed per the LTV Matrix in the loan product description.

· Extenuating circumstances: 2-years elapsed time after completion of preforeclosure sale and re-established credit after completion of preforeclosure sale if due to extenuating circumstances.

· Maximum LTV/CLTV is the lesser of 90% or the maximum allowed per the LTV Matrix in the loan product description.

 

FHA Loan

· 3-years since completion of pre-foreclosure and re-established credit after completion of pre-foreclosure sale or borrower has choose not to incur new credit obligations.

· Extenuating circumstances: Less than 3-years acceptable if primary residence and if due to extenuating circumstances and re-established credit after completion of pre-foreclosure sale or borrower has chosen not to incur new credit obligations.

· Borrower must have clear CAIVRS # regardless of pre-foreclosure

· Borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to:

Ž Take advantage of declining market conditions, and

Ž Purchase at a reduced price a similar or superior property within a reasonable commuting distance.

· Borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage.

Ž All mortgage payments due on the prior mortgage were made within the month due for the 12 months period preceding the short sale, and

Ž All installment debt payments for the same time period were also made within the month due.

Ž Proceeds from the short sale served as payment in full on previous loan.

 

VA Loan

· The Department of Veteran's Affairs does not consider a Short Sale a preforeclosure.

 

 

Following Foreclosure:
Typical Seasoning Requirements
(Contact your Lender of choice to confirm their specific requirements)

 

To be eligible for a:

 

Conventional Loan

Purchase—Primary Residence

AND Rate/Term Refinance—Primary Residence, Second Home, Investment Property

 

· 7-years elapsed time after completion of foreclosure & re-established credit after foreclosure completion.

Extenuating circumstances: 3-years elapsed time after completion of foreclosure and re-established credit after completion if resulted from extenuating circumstances.

· After 3-years up to 7-years following completion date:

Purchase requires Maximum LTV/CLTV is the lesser of 90% or the maximum allowed per the LTV Matrix in the loan product description.

 

Purchase—Second Home, Investment Property
AND Cash Out Refinance—Primary Residence, Second Home, Investment Property

· 7-years elapsed time after completion of foreclosure and re-established credit after completion of             foreclosure. Extenuating circumstances not considered.

 

FHA Loan

· 3-years since since completion of foreclosure and re-established credit or borrower has chosen not to    incur new credit obligations.

Extenuating circumstances: Less than 3-years acceptable if primary residence and if due to extenuating circumstances and re-established credit or borrower has chosen not to incur new credit obligations.

Borrower must have clear CAIVRS # regardless of foreclosure

 

VA Loan

· 2-years since completion and re-established credit.

Extenuating circumstances: 1 to 2-years since completion and re-established credit with satisfactory pay history if due to extenuating circumstances.

Borrower must have clear CAIVRS # regardless of foreclosure

 

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Dismissal—Dismissal occurs when a borrower fails to comply with the requirements of the Bankruptcy Code or to make required payments (applies to Chapter 13).   Chapter 7 cases typically do not involve a repayment plan and are rarely dismissed.

Discharge—A Chapter 13 discharge indicates reestablishment of credit by the borrower by meeting (in whole or in part) the terms of the repayment plan. A Chapter 7 discharge permits a borrower to retain exempt assets and receive a discharge of the borrower's debts.

Elapsed Time—Elapsed time is measured by comparing the application date of the new mortgage to either the discharge or dismissal date of the bankruptcy or the completion date of the foreclosure action as reported on the credit report or other documents provided by the borrower. 


Extenuating Circumstances—Extenuating circumstances are nonrecurring events that are beyond the applicant’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.  Extenuating circumstances cannot be solely defined by the event itself; all circumstances must be taken into consideration.