Getting Approved For a Mortgage After Foreclosure

This guide covers qualifying for a mortgage after foreclosure. Millions of homeowners went through foreclosure due to the economic collapse of 2008. A foreclosure happens when a homeowner no longer can afford their monthly mortgage payments and defaults on their note. The lender forecloses on the homeowner if the borrower does not honor the mortgage note terms. Lenders are not in the business of foreclosing homes. Mortgage lenders want the terms of the note, which is timely payments. Lenders will work with borrowers on a payment plan or agreement:

There are alternatives to foreclosures, such as a deed-in-lieu of foreclosure, short sale, loan modification, or a mortgage workout.

Homeowners can qualify for a mortgage after foreclosure with no waiting period with non-QM loans. There are dozens of states that have some of the highest home prices in the nation, and demand always exceeds inventory of homes. The United States will always have a housing shortage because of the state’s tough environment and red tape for home developers. In the following paragraphs, we will cover qualifying for a mortgage after foreclosure.

Can I Qualify for a Mortgage After a Housing Event?

A housing event is when a homeowner goes through a foreclosure, a deed-in-lieu of foreclosure, or a short sale. In the following sections of this guide, we will cover the following topics:

• The foreclosure process
• Qualifying for a traditional mortgage after a housing event
• Benefits of government versus conventional loans
• Qualifying for a home loan with a prior mortgage included in bankruptcy
• Non-QM loans one day after a housing event
• Qualifying for a mortgage with a lender that is an expert on non-QM and traditional loans

Understanding the Foreclosure Process

For homeowners going through a foreclosure or who have recently gone through a foreclosure, there are things they need to know about the foreclosure process. What are the rights of homeowners if borrowers default on the terms of their mortgage note? What is the mandatory waiting period after a foreclosure is finalized before they can qualify for a government or conventional loan?

Each mortgage agency has its own waiting period requirement after a housing event.

What are the steps of the foreclosure process, and why can a housing event become a long process? Rules and regulations concerning foreclosures can be tricky as well. A foreclosure will not stop you from buying a house again. We will discuss qualifying for a mortgage after a housing event.

Waiting Period Requirements on Government and Conventional Loans

Millions of homeowners were forced into foreclosure due to the Great Recession of 2008 and mortgage meltdown. Homebuyers can qualify for a mortgage after foreclosure but need to meet waiting period requirements on government and conventional loans:

To qualify for a mortgage after a housing event, there are mandatory waiting periods after foreclosure to qualify for government and conventional loans.

Conventional mortgage loan programs have a 7-year waiting period after the recorded foreclosure date. There is a four-year waiting period after a short sale or deed-in-lieu of foreclosure. The waiting period start date is from the date of the sheriff’s sale or the date the homeowner’s name has been transferred from their name into the lender’s name. For FHA loans, the waiting period is much shorter.

Waiting Period Guidelines For Mortgage After Foreclosure

Having a foreclosure is not the end of the world. Mortgage Lenders After Bad Credit are mortgage brokers licensed in 48 states, including Washington, DC, Puerto Rico, and the U.S. Virgin Islands. We are lenders with no overlays on government and conventional loans.

Mortgage Lenders For Bad Credit are correspondent lenders and brokers on government, conventional, and non-QM loans. Mortgage Lenders for Bad Credit has a national reputation for being a one-stop mortgage lending shop.

Mortgage Lenders for Bad Credit has dozens of wholesale lending relationships with non-QM lenders. The minimum credit score to qualify for NON-QM loans is 500 FICO. However, if the bankruptcy or foreclosure has not been seasoned, a 30% down payment is required.

Non-Qualified Mortgage After Foreclosure

There are no waiting period requirements on non-QM loans after foreclosure, deed-in-lieu of foreclosure, or short sale. Non-qualified mortgages, commonly known as non-QM loans, are non-agency loans. Non-QM loans are portfolio loans that do not have uniform lending guidelines like government and conventional loans.

Each portfolio lender sets its own lending guidelines on non-QM loans.

There is no waiting period after the Chapter 7 bankruptcy discharge date. 680 credit scores require a 10% down payment. 660 credit scores require a 15% down payment—a 20% down payment on credit scores of 640. The minimum credit score to qualify for NON-QM loans is 500 FICO. However, if the bankruptcy or foreclosure has not been seasoned, a 30% down payment is required.

FHA Mortgage After Foreclosure

HUD requires three years from the date of the sheriff’s sale of the foreclosed property or the date the deed of the home was transferred out of the homeowner’s name into the name of the lender on FHA loans. The three-year recorded date is extremely important.

Most people realize the waiting period start date is when they surrendered the keys. Most homeowners are under the impression that the foreclosure start date is when they turn in their keys. This is not often the case.

The waiting time clock starts when the homeowner’s name is completely out of the deed of the home and recorded into the mortgage lender’s name. This date must be recorded in the county’s recorder of deeds office.

What if the deed is not out of my name?

If the deed is still in the homeowner’s name and not in the lender’s name, the waiting period after a foreclosure did not even start yet. Thousands of folks thought they got foreclosed many years ago and discovered that the deed is still in their names. The waiting period time clock did not even begin yet. I get weekly calls from homebuyers who thought they had passed the three-year waiting period. Many years ago. I found out that the waiting period after the foreclosure time clock did not even begin yet to qualify for FHA loans.

What Is The Foreclosure Process By Mortgage Lenders

Lenders who foreclose on homes are in no major hurry to transfer the deed in their names. Lenders realize this hurts the potential home buyer but do not care. Ensure the paperwork has been recorded in the county’s recorder of deeds office. It might seem simple, but many do not realize that the waiting period clock did not start. However, it is so crucially important.

Mortgage Part of Bankruptcy To Qualify For Home Loans

What if my mortgage was included in the bankruptcy? Many folks had their foreclosure included in the bankruptcy, which wiped out the mortgage loan. However, because a mortgage is included in the bankruptcy, the waiting period does not start until the deed has been transferred out of the name into the mortgage lender with government loans (FHA, VA, USDA).

Homeowners with a mortgage included as part of the bankruptcy no longer owe the mortgage balance—the mortgage discharges with bankruptcy.

Homeowners with a mortgage included in the bankruptcy are no longer liable for the mortgage note. They now own the home without a mortgage. The house is still in their name with no mortgage. The four-year period to qualify for a conventional loan starts on the discharge date of the bankruptcy.

HUD Waiting Period Guidelines on Mortgage Included in Bankruptcy

On FHA loans, borrowers need to get that home out of their name and into the mortgage lender’s name. The date the deed is transferred out of the homeowner’s name is the date the waiting period is in effect. The bankruptcy discharge date does not matter on FHA loans.

I get so many phone calls from potential home buyers who had filed for bankruptcy and had mortgage part of the bankruptcy, but the deed is still in their names.

Even though the bankruptcy might be three or more years old and the mortgage was part of the bankruptcy, if the deed is still in their name, the waiting period after foreclosure had not started with FHA loans.

Fannie Mae Guidelines on Conventional Loans on Mortgage Included in Bankruptcy

Homeowners with foreclosure and the deed still in their name can have issues. The waiting period starts once the deed is transferred from the homeowner’s name. The only exception is when borrowers have a mortgage included in bankruptcy.

With conventional loans, there is a four-year period after the discharge date of Chapter 7 Bankruptcy if the mortgage was part of Chapter 7.

Conventional loans have different lending guidelines with the mortgage included in the bankruptcy. The recorded foreclosure date or short sale date on conventional loans does not matter. The housing event is effective after the discharge date of the bankruptcy. Borrowers will not reaffirm the mortgage after bankruptcy.

Waiting Period Requirements After Bankruptcy & Housing Event

The bankruptcy waiting period to qualify for a mortgage loan is two years, which has already passed, but the foreclosure waiting period has not even started yet. If this is the case, make sure to notify the lender. If the mortgage lender does not cooperate, send them a certified letter telling them if they do not get the deed out of the homeowner’s name and into their name, record it in five business days that you will sell the property and keep the proceeds. Technically, homeowners can do that. However, the lender does have the first lien position. Bankruptcy discharges home mortgages.

Qualifying for a Mortgage After Foreclosure With Experts in Traditional and Non-QM loans

Home buyers seeking a home loan with bad credit with a direct lender with no mortgage overlays on government and conventional loans, please contact us at Mortgage Lenders for Bad Credit at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We specialize in helping borrowers and home buyers obtain a mortgage after foreclosure and in dozens of other states with no lender overlays.