FHA
Credit requirements are covered in FHA Handbook 4155.1, Chapter 4,
Section C
Chapter 7: Borrowers are eligible 2 years from discharge with no new adverse credit. Less than 2 years but not less than 12 months from discharge may be allowed when:
extenuating circumstances beyond the borrower's control can be documented, and
the borrower has since demonstrated an ability to manage his/her financial affairs in a responsible manner
Chapter 13: Eligible after 12 months acceptable payments, with permission of the court
Financial mismanagement ‐ 3 years from completion date
Extenuating circumstances ‐ If the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has reestablished good credit since the foreclosure, the lender may grant an exception to the three‐year requirement. Extenuating circumstances include serious illness or death of a wage earner, but do not include the inability to sell the house because of a job transfer or relocation to another area.
Same as Foreclosure requirements
A borrower is not eligible for a new FHA‐insured mortgage if s/he pursued a short sale agreement on his or her principal residence simply to
·
Take advantage of declining market conditions, and
·
Purchase at a reduced price a similar or superior property within a reasonable commuting distance.
Borrowers Current at the time of Short Sale: A borrower is considered eligible for a new FHA‐insured mortgage if, from the date of loan application for the new mortgage
·
all mortgage payments due on the prior mortgage were made within the month due for the 12 month 10/26/10 SSB-HLD 1
Credit Requirements by Program
Guidelines are subject to change and investor‐specific overlays. So keep this in mind!
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
period preceding the short sale, and
·
All installment debt payments for the same time period were also made within the month due.
Borrowers in Default at the time of Short sale: A borrower in default on his or her mortgage at the time of the short sale (or pre‐foreclosure sale) is not eligible for a new FHA‐insured mortgage for three years from the date of the pre‐foreclosure sale.
Note: A borrower who sold his or her property under FHA's pre‐foreclosure sale program is not eligible for a new FHA mortgage from the date that FHA paid the claim associated with the pre‐foreclosure sale.
10/26/10 SSB-HLD 2
Credit Requirements by Program
Guidelines are subject to change and investor‐specific overlays. Please keep this in mind as time goes by!
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
Fannie Mae
(updated to reflect SEL-2010-08)
Credit requirements are covered in FNMA Selling Guide section
B3-5.3-07
Multiple BK's (any type) in last 7 years - 5 years from most recent dismissal or discharge date
Chapter 7
Extenuating Circumstances -
2 years from discharge
Financial Mismanagement - 4 years from discharge
Chapter 13
Extenuating Circumstances - 2 years from discharge or dismissal
Financial Mismanagement -
2 years from discharge or 4 years from dismissal
Extenuating Circumstances - 3 years from completion date.
Additional requirements apply after 3 years, up to 7 years following completion date:
The purchase price of a principal residence is permitted with a minimum 10% down payment 680 credit score
Purchase of a second home or investment property is not permitted
Limited cash‐out refinances are permitted for all occupancy types
Cash‐out refinances are not permitted for any occupancy type
F
inancial Mismanagement ‐ 5 year time period from completion date.
Extenuating Circumstances ‐2 year time period from completion date and 90% maximum LTV
Additional requirements apply after 2 years up to 7 years following the completion date:
Borrower may purchase a property secured by a principal residence second home or investment property with the greater of 10% minimum down payment or the minimum down payment required for the transaction
Limited cash out and cash out refinance transactions secured by a principal residence, second home or investment property are permitted pursuant to the eligibility
Extenuating Circumstances ‐2 year waiting period and 90% maximum LTV*
Financial Mismanagement, all occupancy types -
2 years ‐ 80% max LTV*
4 years - 90% max LTV*
7 years - LTV ratios per Eligibility Matrix are allowed.
*
or the maximum LTV per the eligibility matrix, whichever is less 10/26/10 SSB-HLD 3
Credit Requirements by Program
Guidelines are subject to change and investor‐specific overlays. Refer to http://www.allregsloanlibrary.com/ for details.
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
Additional requirements apply after 5 years up to 7 years following completion date:
Same as above but a primary residence purchase with a 10% down payment requires a 680 score.
P
re‐Foreclosure Sale - 2 year waiting time from completion date. Same for extenuating circumstances and financial mismanagement.
requirements in effect at that time.
F
inancial Mismanagement -
4 year time period from completion date (date deed‐in‐lieu was executed).
Additional requirements listed above apply after 4 years up to 7 years from the completion date.
Freddie Mac
(updated to reflect bulletin 2010-23)
Credit requirements are covered in FHLMC Selling Guide Chapter 37
Multiple BK's (any type) in last 7 years - 60 months from the most recent discharge or dismissal
Chapter 7
Extenuating Circumstances: 24 months from discharge or dismissal date
Financial Mismanagement: 4 years from discharge or dismissal date
Chapter 13
Extenuating Circumstances:
36 months from the completion date
Financial Mismanagement - 7 years (2/11) from completion date, and the transaction is limited to:
primary residence purchase, max 90% LTV (or product maximum, if lower)
E
xtenuating Circumstances - 24 months from execution date, all occupancy types
Financial Mismanagement - 48 months from execution date and the transaction is limited to:
primary residence purchase, max 90% LTV (or product maximum, if lower)
E
xtenuating Circumstances - 24 months, all occupancy types
Financial Mismanagement - 48 months and the transaction is limited to:
primary residence purchase, max 90% LTV (or product maximum, if lower)
no cash out 10/26/10 SSB-HLD 4
Credit Requirements by Program
Guidelines are subject to change and investor‐specific overlays. Refer to http://www.allregsloanlibrary.com/ for details.
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
Extenuating Circumstances: 2 years from discharge or dismissal date
Financial Mismanagement: 2 years from discharge or 48 months from dismissal date
no cash out refinance
Cash out refinances are not allowed.
no cash out refinance
Cash‐out refinances are not allowed.
refinance
Cash‐out refis are not allowed.
U
SDA
Credit requirements are covered in RHS Policies and Procedures Part 1980-D, subpart 1980.302
All types of BK: 36 months from discharge
Extenuating circumstances - considered case‐by‐case with waiver by USDA.
36 months from the completion date
Extenuating circumstances - considered case‐by‐case with waiver by USDA.
Pre‐foreclosure sale - 12 months seasoning at application
Same as Foreclosure requirements
May be eligible after 3 years. Waiver required from USDA.
VA
Credit requirements are covered in the VA Lender's Handbook,
Chapter 4
Chapter 7: 2 years from discharge is required.
Exceptions: If the bankruptcy was discharged within the last 1 to 2 years, we can consider case‐by‐case provided that:
·
the applicant or spouse has obtained consumer items on credit subsequent to the
2 years from the completion date
·
Develop complete information on the facts and circumstances of the foreclosure.
·
Apply the guidelines provided for bankruptcies filed
Same as Foreclosure requirements
Short sale or refi - not VA property: If the veteran's credit was good before the short sale or short refi, the VA will not hold it against the veteran. If there were credit issues in the 12 months before the short sale or short refi, scenarios must be considered case‐by‐case. VA has not received clear 10/26/10 SSB-HLD 5
Credit Requirements by Program
Guidelines are subject to change and investor‐specific overlays. referr to your bank or loan officer for details.
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
bankruptcy and has satisfactorily made the payments over a continued period, and
·
The bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified. Divorce is not generally viewed as beyond the control of the borrower and/or spouse.
If the bankruptcy was caused by failure of the business of a self‐employed applicant, it may be possible to determine that the applicant is a satisfactory credit risk if
-
the applicant obtained a permanent position after the business failed,
-
there is no derogatory credit information prior to self‐employment,
under the straight liquidation (chapter 7) and discharge provisions of the bankruptcy law.
If the foreclosure was on a VA loan, the applicant may not have full entitlement available for the new loan. Ensure that the applicant's Certificate of Eligibility reflects sufficient entitlement to meet any secondary marketing requirements of the lender.
From: VA Lender's Handbook Chapter 4, 7‐f
direction on this yet.
Short sale or refi - VA property: In addition to above, check the VA Certificate of Eligibility for any restrictions or adjustments. 10/26/10 SSB-HLD 6
Credit Requirements by Program can change so check with your lender for updates!
10/26/10 SSB-HLD 7
Bankruptcy Foreclosure Deed-in-Lieu Short Sale or Short Refi
-
there is no derogatory credit information subsequent to the bankruptcy, and
-
Failure of the business was not due to the applicant's misconduct.
Chapter 13: Allowed after 12 months of satisfactory payments with the permission of the Trustee or the Bankruptcy Judge
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