Waiting Periods to Buy a Home After Foreclosure, Deed-in-Lieu, Short Sale and Bankruptcy

Waiting Periods to Buy a Home After Foreclosure, Deed-in-Lieu, Short Sale and Bankruptcy Buying a Home and Getting a Mortgage Loan After Foreclosure, Deed-in-Lieu, Short Sale and Bankruptcy
(Updated 5/2/2012) Many financially distressed homeowners who are facing foreclosure and considering a deed-in-lieu of foreclosure, short sale or even bankruptcy have asked me how long they will need to wait to buy a home after foreclosure, short sale or bankruptcy. Since the answers are found in multiple places, I decided to compile a complete list and cross reference them for accuracy. In order to accomplish that task and compile the Waiting Periods to Buy a Home After Foreclosure, Deed-in-Lieu, Short Sale and Bankruptcy below, I utilized the following sources:

• HUD 4155.1 Mortgage Credit Analysis for Mortgage Insurance
• VA CREDIT ISSUES: Credit Problems and VA Loans
• Fannie Mae DU User’s Guide for VA Loans 5-2008
• Fannie Mae Selling Guide 1-27-2011
• Freddie Mac Underwriting Reminders for Loan Prospector: Caution Risk Class Mortgages
• Effects of a Loan Modification, Short Sale, Foreclosure, Bankruptcy and Walking Away/Doing Nothing on Credit Scores
• Waiting Periods on Bankruptcy, Foreclosure and Short Sales
• Buying A Home After Foreclosure or Short Sale | Wait Time To Buy Again After Short Sale

Waiting Periods to Buy a Home After Foreclosure, Deed-in-Lieu, Short Sale and Bankruptcy Federal Housing Administration (FHA) Insured Loan FHA Extenuating Circumstances: "Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation does not qualify as an acceptable extenuating circumstance."

• Foreclosure - 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible with acceptable "extenuating circumstances".
• Deed-in Lieu - Same as Foreclosure.
• Short Sale - 3 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
• Bankruptcy (Chapter 7) - 2 years from date of bankruptcy 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 the date of bankruptcy discharge may be possible with acceptable "extenuating circumstances" AND borrower has since exhibited a documented ability to manage financial affairs in a responsible manner.
• Bankruptcy (Chapter 13) - 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower's payment performance has been satisfactory and all required payments made on time.

Veterans Administration (VA) Guaranteed Loan VA Extenuating Circumstances: "Unemployment, prolonged strikes medical bills not covered by insurance, etc. Divorce is not viewed as beyond the control of the borrower and/or spouse."

• Foreclosure - 2 years from the date foreclosure completed and property transferred back to the bank.  Less than 2 years, but not less than 12 months from the date foreclosure completed and property transferred back to the bank may be possible if credit re-established and paid as agreed and with acceptable "extenuating circumstances".
• Deed-in Lieu - Same as Foreclosure.
• Short Sale - 2 years from the date sale closed and transferred to the new owner.  No waiting period if seller/borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND seller/borrower was not taking advantage of declining market conditions.
• Bankruptcy (Chapter 7) - 2 years from date of bankruptcy discharge.   Less than 2 years, but not less than 12 months from the date of bankruptcy discharge may be possible if credit re-established and paid as agreed and with acceptable "extenuating circumstances".
• Bankruptcy (Chapter 13) - 1 year from the start date of the bankruptcy re-payment period has elapsed and the borrower's payment performance has been satisfactory and all required payments made on time.

United States Department of Agriculture (USDA) Rural Housing Loan USDA Extenuating Circumstances: "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 applicant'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 payment because of defective goods or services or as a result of some other justifiable dispute relating to the goods or services purchased or contracted for."

• Foreclosure - 3 years from the date foreclosure completed and property transferred back to the bank.  Less than 3 years from the date foreclosure completed and property transferred back to the bank may be possible with acceptable "extenuating circumstances".
• Deed-in Lieu - Same as Foreclosure.
• Short Sale - Same as Foreclosure.
• Bankruptcy (Chapter 7 or 11) - 3 years from date of bankruptcy discharge.   Less than 3 years from the date of bankruptcy discharge may be possible with acceptable "extenuating circumstances".
• Bankruptcy (Chapter 13) - 1 year from date repayment was completed and bankruptcy discharge.   Less than 1 year from the date of bankruptcy discharge may be possible with acceptable "extenuating circumstances".

Conventional Conforming Mortgage Loan (meets Fannie Mae (FNMA) and Freddie Mac (FHLMC) Loan Purchasing Guidelines) Conventional Extenuating Circumstances: "Nonrecurring 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."

• Foreclosure - 7 years from the date foreclosure completed and property transferred back to the bank if there are no acceptable "extenuating circumstances".  3 years from the date foreclosure completed and property transferred back to the bank with acceptable "extenuating circumstances" AND at least 10% Down Payment.  Primary home purchase and rate/term refinance only (non-owner occupied and second homes not allowed).
• Deed-in Lieu - 7 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with less than 10% Down Payment.  4 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 20% Down Payment.  2 years from the date sale closed and transferred to the new owner or foreclosure completed and property transferred back to the bank with 10% Down Payment and acceptable "extenuating circumstances".
• Short Sale - Same as Deed-in Lieu.
• Bankruptcy (Chapter 7 or 11) - 4 years from date of bankruptcy discharge.   2 years from the date of bankruptcy discharge may be possible with acceptable "extenuating circumstances".
• Bankruptcy (Chapter 13) - 2 years from date of bankruptcy discharge.  4 years from date of bankruptcy dismissal.

As you can see by the information above and the lesser credit damage caused by a short sale (versus a deed-in-lieu, foreclosure or bankruptcy), a short sale is generally the best option for a financially distressed homeowner who is facing foreclosure or who cannot afford to pay their mortgage. You should contact a foreclosure defense and/or bankruptcy attorney, a short sale real estate specialist like myself, or a legitimate mortgage loan counselor to evaluate all of your options. Please just do not let the bank foreclose on you without trying to prevent foreclosure. If you have a mortgage loan with Wells Fargo, Bank of America (BAC Home Loans or Countrywide Mortgage), CitiMortgage, Chase (JPMorgan Chase), America's Servicing Company (ASC), GMAC, a Fannie Mae owned loan, a Freddie Mac owned loan, an FHA insured mortgage loan, a THDA mortgage loan, or any type mortgage loan, and you have missed mortgage payments, or will miss mortgage payments and live in the Nashville Tennessee area (Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Thompson's Station, Murfreesboro, Smyrna, LaVergne, Antioch, Columbia, Mt. Juliet, Springfield, Gallatin, Hermitage and Hendersonville), please contact Nashville Tennessee Short Sales and Foreclosures Expert for a free no obligation consultation to discuss your foreclosure prevention options including a short sale or short sales (if you have multiple properties).

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Jim McCormack is a Nashville Real Estate Broker who provides Expert Real Estate Solutions for for Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Thompson’s Station, Murfreesboro, Smyrna, LaVergne (La Vergne), Antioch, Columbia, Mt. Juliet (Mount Juliet), Springfield, Gallatin, Hermitage, Hendersonville, Clarksville and Middle Tennessee (Davidson, Maury, Montgomery, Robertson, Rutherford, Sumner, Williamson and Wilson Counties) Homeowners and Real Estate Investors Facing Foreclosure and Needing to Short Sell Their Homes and/or Investment Properties. Jim Specializes in Short Sales and Foreclosures and Providing Sellers Short Sale Help and Foreclosure Help. Jim's Help is Free to Nashville TN Short Sale Sellers. Jim Helps Sellers Stop Bank and Mortgage Foreclosure with a Short Sale, or a Fast Cash Offer. Avoid Foreclosure by Working Directly with a Nashville Tennessee Real Estate Expert and Investor who is Uniquely Skilled, Honest, Compassionate, Caring and Exceptionally responsive to the needs of his clients. Jim Encourages You to See What His Clients Say About Him. For Buyers, Jim understands the Various Nashville Tennessee Housing and Investment Real Estate Markets Extremely Well and is Particularly Skilled at Assisting Buyers with Determining the Market Values of Homes and Investment Properties. Due to that Real Estate Valuation Expertise, Jim can Help Nashville Home and Investment Property Buyers Get Fantastic Deals on Their Nashville Area Real Estate Purchases.

Mortgage Banking Official Says Loan Modifications Virtually Impossible

Mortgage Banking Official Says Loan Modifications Virtually Impossible
Homeowners Facing Foreclosure Have Almost No Chance of Getting Their Payment Lowered

According to this article in The Salt Lake Tribune, Bankers: Modifying Utah mortgages unrealistic, Howard Headlee, president of the Utah Bankers Association, said "It is virtually impossible for homeowners trapped in a foreclosure process to try to renegotiate the terms of their loans." The article goes on to say that Mr. Headlee described the loan modification process for homeowners and borrowers facing foreclosure with the statement "It’s kind of like unscrambling an egg." as a result of the fact that most mortgage loans are sold several times and/or broken up into mortgage loan backed securities. As a result, in most cases there is no single loan owner who can decided on if or how to modify the loan. The unfortunate outcome of this reality is that homeowners and borrowers who can't afford their current mortgage payment, but who could pay a reasonably reduced mortgage payment will not get help and financial assistance they need. In short, they are doomed from the start. Therefore, the only truly viable options for financially distressed homeowners and borrowers are short sale, bankruptcy and foreclosure. Since foreclosure is the worst possible outcome (and really the result of taking no action), financially distressed homeowners and borrowers should pursue short sale and bankruptcy options thoroughly before considering letting the mortgage company or bank foreclose on their home.

Free* Short Sale and Foreclosure Help and Assistance for Nashville, Brentwood, Franklin, Nolensville, Spring Hill, Murfreesboro, Smyrna, La Vergne, Columbia, Mt. Juliet, Springfield, Gallatin and Middle Tennessee Financially Distressed Homeowners and Property Owners. Stop the Bank from Foreclosing with a Quick Cash Offer or Short Sale. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee or La Vergne Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact Jim to discuss a short sale (when the real estate sale proceeds are not sufficient to pay off the mortgages and liens on the property). Jim helps sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in any Middle TN County (Rutherford, Williamson, Davidson, Maury, Sumner & Robertson). If you need to short sell your house or property, or you need a quick sale to stop a foreclosure sale, you can Get Free* Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor. (*Free: In a real estate short sale, the bank or mortgage company usually approves and pays all of Jim's commissions and fees.)