WAITING PERIODS REQUIRED FOR SIGNIFICANT DEROGATORY CREDIT EVENTS

Waiting periods differ depending on the type of loan you want to obtain. Consult your mortgage advisor about which loan program will be best for you. If you do not have a relationship with a local lender ask your real estate agent for some recommendations.

CONVENTIONAL

Derogatory Item
Waiting Periods
Foreclosure
Deed-in-Lieu of Foreclosure
Foreclosure: Home was given back to the bank – no owner participation.
Deed in Lieu: Home returned to lender in exchange for canceling loan.
·         3 years from date foreclosure was completed and transferred back to bank
·         12-23 months from date foreclosure was completed and transferred back to bank; if credit re-established and paid as agreed, and was caused by acceptable extenuating circumstances3
Short Sale
Short Sale: Home sold but sales price didn’t cover amount owed.
·         3 years from date sale closed and transferred to new owner
·         No waiting period if borrower has no late payments on any mortgages and consumer debts with the last 12 month period proceeding the short sale, AND they are no taking advantage of a declining market
Bankruptcy Chapter 7
Debts are discharged through BK, client does not pay any debts owing.
·         2 years from date of discharge
·         12- 23 months from date of discharge if credit re-established and paid as agreed; and was caused by acceptable extenuating circumstances³
Bankruptcy Chapter 13
Debts are paid back on a monthly scheduled payment plan by client.
·         1 year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time

FHA

Derogatory Item
Waiting Periods
Foreclosure
Deed-in-Lieu of Foreclosure
Foreclosure: Home was given back to the bank – no owner participation.
Deed in Lieu: Home returned to lender in exchange for canceling loan.
·         3 years from date foreclosure was completed and transferred back to bank
·         Less than 3 years, but not less than 12 months from date foreclosure was completed and transferred back to bank may be acceptable depending on the results of acceptable extenuating circumstances2
Short Sale
Short Sale: Home sold, but sales price didn’t cover amount owed.
·         3 years from date sale closed and transferred to new owner
·         No waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period proceeding the short sale, AND they are not taking advantage of declining market conditions
Bankruptcy Chapter 7
Debts are discharged through BK, client does not pay any debts owing.
·         2 years from date of 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 date of discharge may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances², and the borrower had since exhibited a documented ability to manage financial affairs in a responsible manner
Bankruptcy Chapter 13
Debts are paid back on a monthly scheduled payment plan by client.
·         1 year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory; and all required payments made on time

VA

Derogatory Item               
Waiting Periods
Foreclosure
Home was given back to the bank – no owner participation.
·         7 years from the date the foreclosure was completed and transferred back to bank if they had NO extenuating circumstances
·         3 years from the date the foreclosure was completed and transferred back to bank with acceptable extenuating circumstances1, AND 10% down payment. Primary home purchase and rate/term refinance only. Non-owner and second homes not allowed
Short Sale
Deed-in-Lieu of Foreclosure
Short Sale: Home sold, but sales price didn’t cover amount owed.
Deed-in-Lieu: Home returned to lender in exchange for canceling the loan.
·         7 years from date sale closed and transferred to new owner or transferred back to bank for less than 10% down payment
·         4 years from date sale closed and transferred to new owner or transferred back to bank with 10% down payment
·         2 years from date sale closed and transferred to new owner or transferred back to bank with 20% down payment
·         2 years from date sale closed and transferred to new owner or transferred back to bank may be possible with acceptable extenuating circumstances¹ and 10% down payment
Bankruptcy Chapter 7
Debts are discharged through BK, client does not pay any debts owing.
·         4 years from date of discharge
·         2 years from discharge date may be possible with acceptable circumstances
Bankruptcy Chapter 13
Debts are paid back on a monthly scheduled payment plan by client.
·         2 years from date of discharge
·         4 years from dismissal date

USDA

Derogatory Item
Waiting Periods
Foreclosure
Deed-in-Lieu of Foreclosure
Short Sale
Foreclosure: Home was given back to the bank – no owner participation.
Deed in Lieu: Home returned to lender in exchange for canceling loan.
Short Sale: Home sold by sales price didn’t cover amount owed.
·         3 years from the date the foreclosure was completed and transferred back to the bank
·         Less than 3 years from date the foreclosure was completed and transferred back to the bank may be considered with acceptable extenuating circumstances4
Bankruptcy Chapter 7
Debts are discharged through BK, client does not pay any debts owing.
·         3 years from date of discharge
·         Less than 3 years from date of discharge may be considered with acceptable extenuating circumstances
 
Bankruptcy Chapter 13
Debts are paid back on a monthly scheduled payment plan by client.
·         1 year from the date re-payment was completed and bankruptcy was discharged, or 12 months of the re-payment period has elapsed with all payments made on time with permission to enter into a mortgage transaction
·         Less than 1 year from the date of discharge may be considered with acceptable extenuating circumstances
Examples of acceptable extenuating circumstances (circumstances must be verified and documented):
1. Conventional: Non-recurring 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.
2. FHA: Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation to another area does not qualify as acceptable extenuating circumstances.
3. VA: Unemployment, prolonged strikes, medical bills not covered by insurance, etc. Divorce is not viewed as beyond the control of the borrower and/or spouse.
4. USDA: 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 borrower(s) control, and have been removed so their reoccurrence is unlikely; or the adverse action or delinquency was the result of a refusal to make full payments because of the defective goods of services or as a result of some other justifiable dispute relating to the goods or services purchased or contracted for.