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Had a Foreclosure, Short Sale, Deed-in-Lieu or a Bankruptcy? Well, It’s Time To Buy Again!

January 19, 2015

mortgage application

Don’t feel bad about the past. Everyone has misfortune at one time or another.  Now it is time to bounce back.  Rates are low, home values are shooting back up,  it is time for you to get your tax credit, this time around you are much more experienced and now you know how to protect yourself.

Here are the waiting periods that are required:

Federal Housing Administration (FHA) Insured Loan

FHA Extenuating Circumstances: “Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation does not qualify as an acceptable extenuating circumstance.”

  • Minimum Waiting Period Under The New FHA Back To Work Program – Under the new FHA “Back to Work – Extenuating Circumstances” Program, if you have had a foreclosure, short sale, deed-in-lieu of foreclosure, or have filed bankruptcy you may qualify for a new home loan if you are back to work and can document the extenuating circumstances. You must have a 12 month record of on-time rental housing payments with no delinquencies and not have been 30 days late on more than one non-housing loan payment. If there are still any open collection or judgment accounts, then those will have to factored into your debt calculations for the new loan.
  • Foreclosure – 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – 3 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
  • Bankruptcy (Chapter 7) – 2 years from date of bankruptcy discharge with re-established credit paid as agreed or no new credit obligations incurred.   Less than 2 years, but not less than 12 months from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances” AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.
  • Bankruptcy (Chapter 13) – 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.

Veterans Administration (VA) Guaranteed Loan

VA Extenuating Circumstances: “Unemployment, prolonged strikes medical bills not covered by insurance, etc. Divorce is not viewed as beyond the control of the borrower and/or spouse.”

  • Foreclosure – 2 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible if credit re-established and paid as agreed and with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – 2 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
  • Bankruptcy (Chapter 7) – 2 years from date of bankruptcy discharge.   Less than 2 years, but not less than 12 months from the date of bankruptcy discharge may be possible if credit re-established and paid as agreed and with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time.

United States Department of Agriculture (USDA) Rural Housing Loan

USDA Extenuating Circumstances: “Loss of job; delay or reduction in government benefits or other loss of income; increased expenses due to illness, death, etc. Circumstances surrounding the adverse information must have been temporary in nature,  and beyond the applicant’s control, and have been removed so their re-occurrence is unlikely or the adverse action or delinquency was the result of a refusal to make full payment because of defective goods or services or as a result of some other justifiable dispute relating to the goods or services purchased or contracted for.”

  • Foreclosure – 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 3 years from the date foreclosure completed and property transferred back to the bank may be possible with acceptable “extenuating circumstances”.
  • Deed-in Lieu – Same as Foreclosure.
  • Short Sale – Same as Foreclosure.
  • Bankruptcy (Chapter 7 or 11) – 3 years from date of bankruptcy discharge.   Less than 3 years from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 1 year from date repayment was completed and bankruptcy discharge.   Less than 1 year from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.

Conventional Conforming Mortgage Loan (meets Fannie Mae (FNMA) and Freddie Mac (FHLMC) Loan Purchasing Guidelines)

Conventional Extenuating Circumstances: “Nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.”

  • Foreclosure – 7 years from the date foreclosure completed and property transferred back to the bank if there are no acceptable “extenuating circumstances”.  3 years from the date foreclosure completed and property transferred back to the bank with acceptable “extenuating circumstances” AND at least 10% Down Payment.  Primary home purchase and rate/term refinance only (non-owner occupied and second homes not allowed).
  • Deed-in Lieu – NEW = 2 years from completion of a DIL. OLD = 7 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with less than 10% Down Payment.  4 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 20% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment and acceptable “extenuating circumstances”.
  • Short Sale – NEW = 2 years from completion of a short sale.
  • Bankruptcy (Chapter 7 or 11) – NEW = 2 years from date of bankruptcy discharge. OLD = 4 years from date of bankruptcy discharge.   2 years from the date of bankruptcy discharge may be possible with acceptable “extenuating circumstances”.
  • Bankruptcy (Chapter 13) – 2 years from date of bankruptcy discharge.  4 years from date of bankruptcy dismissal.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.com – PMC Can Help!

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2 Comments leave one →
  1. January 21, 2016 6:21 am

    Reblogged this on Kentucky First Time Home Buyer Programs for 2016 FHA, VA, KHC, USDA, RHS, Fannie Mae Loans in Kentucky and commented:
    : kentucky rhs loan, kentucky rural development loan, Kentucky USDA, Louisville Kentucky, Mortgage loan, rhs, Rural housing, United States Department of Agriculture, USDA Rural Development, zero down kentucky home loan | Categories: 100% Financing Zero Down, 2015 kentucky usda changes, 2015 ky rural housing changes, 502 Guaranteed Loan, Direct Loan USDA, DIRECT LOANS, Guaranteed Section 502 Loans, Homes for Sale (Foreclosures owned by USDA/RHS KY, Homes for Sale in Kentucky by USDA, Uncategorized, USDA, USDA /Rural Housing Loan Offices in Ky, USDA RURAL DEVELOPMENT DIRECT HOUSING LOANS

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  1. Had a Foreclosure, Short Sale, Deed-in-Lieu or a Bankruptcy? Well, It’s Time To Buy Again! | Louisville Kentucky Mortgage Loans

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