In today's market, the number of potential clients who have had a short sale or foreclosure are exponentially increasing, but that doesn't mean they can't ever buy again. So how long before they can buy again?
Foreclosure/Pre-Foreclosure/Short Sale: 3 year waiting period
Foreclosure/Pre-Foreclosure/Short Sale: 2 year waiting period
Foreclosure: 7 year waiting period from date of completion
Deed-In-Lieu/Pre-Foreclosure (Short Sale):
- 2 year waiting period - 80% Max LTV
- 4 year waiting period - 90% Max LTV
- 7 year waiting period - No Restrictions on LTV
How about other significant events?
CONVENTIONAL LOANS
- Chapter 7 BK - 4 year waiting period from discharge/dismissal date
- Chapter 13 BK - 2 year waiting period from discharge date or 4 years from dismissal date
- Multiple BK's - More than one BK within 5 years, the waiting period is 5 years from the most recent discharge/dismissal date
FHA/VA
- Chapter 7 BK - 2 year waiting period from discharge/dismissal
- Chapter 13 BK - 1 year of the payout must have elapsed and must be paid as agreed. Must be able to document that the current situation is not likely to recur. Court must also grant permission to the borrower to enter in to a mortgage transaction
ADDITIONAL NOTES OF INTEREST:
Q: Can a spouse obtain financing where the non-purchasing spouse experienced a foreclosure or short sale?
A: The general rule of thumb is that if the borrower benefited from the non-purchasing spouse's property (through a tax deduction reflected on the tax returns or by living in the property) & the property went into foreclosure or was a short-sale, they will not be eligible until the applicable waiting period has passed.
Q: What if the foreclosed (short sold) property & mortgage were awarded to the ex-spouse per recorded divorce decree signed by the judge and we can document the mortgage was current prior to the decree date?
A: In this scenario, we would not consider the adverse credit against the buyer
Q: What if the buyer was a cosignor on a loan in which the primary borrower experienced a short sale or foreclosure?
A: The applicable waiting periods would apply even if they did not claim any interest deductions
Q: If the buyer had a loan modification, will this count against them?
A: If a borrower had a modification with forgiveness of debt (the lender reduced the balance the borrower will owe) we consider this a significant adverse event; applicable foreclosurewait periods apply.
More Frequently Asked Questions at www.brianwesthomeloans.com
*reposted for public view
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