Fannie Mae Guidelines on Mortgage Included in Bankruptcy

In this article, we will cover Fannie Mae guidelines on mortgage included in Bankruptcy. We will discuss what having a prior mortgage included in bankruptcy means for the waiting period requirements to qualify for a conventional loan. What is the waiting period start date? Is it the date of the housing event or the discharge date of the bankruptcy? Freddie Mac and Fannie Mae guidelines on mortgage included in bankruptcy are different on conventional loans than it is on FHA, VA, and USDA loans.

Is The Waiting Period Guidelines on Mortgage Included in Bankruptcy Different for Other Loan Programs?

Fannie Mae and Freddie Mac have much looser mortgage lending guidelines when it comes to the recorded date of the foreclosure when it comes to the mortgage included in bankruptcy. Qualifying for a new conventional mortgage loan after the mandatory waiting period with a prior mortgage included in bankruptcy is easier than other loan programs. With all mortgage loan programs, homebuyers can qualify for a home loan after bankruptcy and foreclosure.

FHA vs Conventional Loan Waiting Period on Mortgage Included in Bankruptcy

There are mandatory waiting periods after bankruptcy and foreclosure to qualify for a mortgage loan. In this article, we will be discussing Fannie Mae guidelines on mortgage included in Bankruptcy. We will discuss and cover qualifying for both conventional and FHA loans and the mandatory waiting periods for borrowers with a prior mortgage included as part of the bankruptcy.

Conventional Loan Requirements On Mortgage Included In Bankruptcy

Fannie Mae and Freddie Mac are the two entities that govern and set standards for conforming mortgage loans, also known as conventional loans. Conventional Loans are also referred to as conforming loans because they need to conform to Fannie Mae and/or Freddie Mac Standards.

Conforming Guidelines On Mortgage Included In Bankruptcy are as follows:

• For borrowers who had a mortgage and/or mortgages included in Chapter 7 Bankruptcy, the waiting period to qualify for a conventional loan is four years from the discharge date of Chapter 7 Bankruptcy
• As long as the mortgage and/or mortgages, if there were more than one property in the Chapter 7 Bankruptcy, were part of the Chapter 7 Bankruptcy, the four-year waiting period time clock begins from the discharge date of the Chapter 7 Bankruptcy
• The mortgage cannot be reaffirmed
• The borrower cannot have to have the housing event finalized as long as the mortgage was not reaffirmed and included as part of the bankruptcy

The foreclosure, deed in lieu of foreclosure, or short can be recorded at a later date. It does not matter with conventional loans. Click here to apply for a conventional loan in 13 bankruptcy

FHA Guidelines On Mortgage Part Of Bankruptcy

For borrowers with a mortgage and/or mortgages included in the Chapter 7 Bankruptcy, the mandatory waiting period to qualify for an FHA loan is three years from the date of the recorded date of the foreclosure, deed in lieu of foreclosure, and/or short sale date on the mortgage that was part of Chapter 7 Bankruptcy. Even though the mortgage was included in the Chapter 7 Bankruptcy, the discharge date of the bankruptcy does not count.

When Does The Waiting Period Start on  FHA Loans if You Had a Prior Mortgage Included in Bankruptcy?

The waiting period clock does not start until the mortgage and/or mortgages that were included as part of your Chapter 7 Bankruptcy were transferred out of the homeowner’s name and into the name of the mortgage lender and/or the date of the sheriff’s sale. Those who have a mortgage and/or mortgages as part of their Chapter 7 Bankruptcy should be diligent after the bankruptcy discharge date to make sure that the lender gets their name out of the deed to the home.

Qualifying For Mortgage After Bankruptcy And Foreclosure

Home Buyers can now qualify for home loans after bankruptcy and foreclosure. Lenders understand that consumers can go through periods of extenuating circumstances such as the following:

• Bad credit due to unemployment
• Business loss
• Divorce
• Medical issues

Bankruptcies and Foreclosures happen to the best of all of us due to extenuating circumstances. Homeownership is possible after bankruptcy and/or foreclosure. However, most mortgage lenders do not want to see any late payments after someone has gone through bankruptcy and/or foreclosure, and/or short sale. Lenders want to see re-established credit after bankruptcy and foreclosure and timely payments. One or two late payments after bankruptcy are not always a DOA. The team at Gustan Cho Associates are experts in helping borrowers with bad credit and credit issues.

Agency Guidelines on Mortgage Included In Bankruptcy Versus Lender Overlays

Home Buyers who had a mortgage included in bankruptcy. But the foreclosure was not recorded until a much later date after the discharge date of their Chapter 7 discharged date can now qualify for a conventional loan four years from the discharged date of their Chapter 7 Bankruptcy.

Unfortunately, most lenders will tell borrowers that they will still go off the recorded date of the deed of the mortgage note. Or the date of the sheriff’s sale and that they need to wait 7 years from the recorded date of the foreclosure. This often happens when even though the borrower may meet all of Fannie Mae and/or Freddie Mac Lending Guidelines.

Do Lenders Have Different Requirements for the Same Mortgage Program?

Due to the mortgage lender overlays, borrowers may not qualify with all lenders. Lenders do not need to just go off Fannie Mae and Freddie Mac lending guidelines. They can have additional lending requirements (Overlays) on top of the minimum guidelines set by Fannie Mae and Freddie Mac which are conforming mortgage overlays. Get qualify for mortgage loans with us

Frequently Asked Questions (FAQs)

1. What are Fannie Mae’s Guidelines on Mortgages Included in Bankruptcy?
   Fannie Mae guidelines outline procedures for handling mortgages included in bankruptcy filings, including eligibility criteria and documentation requirements.
2. Is it possible to meet Fannie Mae’s mortgage eligibility criteria after including a prior mortgage in bankruptcy?
   Yes, Fannie Mae allows borrowers to qualify for a new mortgage after including a previous mortgage in bankruptcy, subject to certain waiting periods and documentation requirements.
3. What waiting periods apply for obtaining a new mortgage after including a previous one in bankruptcy?
   Fannie Mae typically requires a waiting period of two to four years after the discharge date of a Chapter 7 bankruptcy and two years after the discharge date of a Chapter 13 bankruptcy, depending on specific circumstances and documentation provided.
4. What documentation is needed to apply for a new mortgage after bankruptcy?
   Documentation requirements may include proof of bankruptcy discharge, evidence of reestablished credit, stable income, and other financial documentation as required by Fannie Mae guidelines and the lender.
5. Can I qualify for a mortgage if I reaffirmed the mortgage debt during bankruptcy?
   Yes, borrowers who reaffirmed mortgage debt during bankruptcy may be eligible for a new mortgage, provided they meet Fannie Mae’s guidelines and demonstrate the ability to repay the loan.
6. Are there any exceptions or additional considerations for qualifying for a mortgage after bankruptcy?
   Fannie Mae may consider extenuating circumstances that led to bankruptcy, as well as factors such as credit history, employment stability, and debt-to-income ratio when evaluating mortgage applications post-bankruptcy.
7. Should I consult with a financial advisor or mortgage professional for guidance on Fannie Mae’s guidelines regarding mortgages included in bankruptcy?
   Yes, seeking advice from a financial advisor or mortgage professional can help navigate Fannie Mae’s guidelines and determine the best course of action for obtaining a mortgage after bankruptcy.

Borrowers who were told that they do not qualify for a conventional loan after four years from the discharge date of Chapter 7 Bankruptcy with mortgage part of bankruptcy by the lender, look no further. Contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

Gustan Cho Associates are mortgage brokers licensed in 48 states with no mortgage lender overlays on government and conventional loans. Gustan Cho Associates has no mortgage lender overlays on FHA loans. Our team of loan officers at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Click here to talk to our expert

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