TIP OF THE DAY- DEROGATORY WAITING PERIODS UPDATED

TIP OF THE DAY- DEROGATORY CREDIT WAITING PERIODS

 

Fannie Mae

The following table summarizes the waiting period requirements for all significant derogatory credit events.

Derogatory Event

Waiting Period Requirements

Waiting Period with Extenuating Circumstances

Bankruptcy — Chapter 7 or 11

4 years

2 years

Bankruptcy — Chapter 13

·         2 years from discharge date

·         4 years from dismissal date

·         2 years from discharge date

·         2 years from dismissal date

Multiple Bankruptcy Filings

5 years if more than one filing within the past 7 years

3 years from the most recent discharge or dismissal date

Foreclosure1

7 years

3 years

Additional requirements after 3 years up to 7 years:

·         90% maximum LTV ratios2

·         Purchase, principal residence

·         Limited cash-out refinance, all occupancy types

Deed-in-Lieu of Foreclosure, Preforeclosure Sale, or Charge-Off of Mortgage Account

4 years

2 years

FREDDIE MAC

Significant Derogatory Event

Recovery Time Periods for Reestablishment of Credit with Financial Mismanagement

Additional Requirements

Foreclosure

84 months from the completion date as reported on the credit report

N/A

Deed-in-lieu of foreclosure

48 months from the execution date

Whenever a Borrower has had a previous deed-in-lieu of foreclosure or a short sale within the last seven years, the Mortgage must either be:

o    A purchase transaction Mortgage secured by a Primary Residence with a maximum LTV/TLTV/HTLTV ratio of the lesser of 90%, or the maximum LTV/TLTV/HTLTV ratio for the transaction, or

o    A "no cash-out" refinance Mortgage that meets the requirements of Chapter 4301


Additionally, the Mortgage file must contain evidence of the completion of the foreclosure, deed-in-lieu of foreclosure or short sale.

Short sale

48 months from the completion date

Bankruptcy (other than a Chapter 13 bankruptcy)

48 months from the discharge or dismissal date

Whenever a Borrower has had a bankruptcy within the last seven years, the Mortgage file must also contain:

o    Copies of the bankruptcy petition, schedule of debts and discharge or dismissal

o    Evidence to indicate that all debts not satisfied by the bankruptcy have been paid or are being paid

o    Any other evidence necessary to support the Seller's determination that the Borrower has reestablished and maintained an acceptable credit reputation

Chapter 13 bankruptcy

24 months after the discharge date

48 months from the dismissal date

Multiple bankruptcy filings in the past seven years

60 months from the most recent discharge or dismissal date

Other significant adverse or derogatory credit information

48 months from the most recent significant adverse or derogatory credit information

N/A

 

FHA

 

Chapter 7 – Waiting period 2years from discharge date.

 

Chapter 13- Standard: Chapter 13 A Chapter 13 bankruptcy does not disqualify a Borrower from obtaining an FHA-insured Mortgage, if at the time of case number assignment at least 12 months of the pay-out period under the bankruptcy has elapsed. The Mortgagee must determine that during this time, the Borrower’s payment performance has been satisfactory and all required payments have been made on time; and the Borrower has received written permission from bankruptcy court to enter into the mortgage transaction.  If the bankruptcy has been discharged then there is a 2 year waiting period from date of discharge.,

 

Foreclosure and Deed in Lieu of Foreclosure-

Standard A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.

 

 

Short Sale - Standard A Borrower is generally not eligible for a new FHA-insured Mortgage if they relinquished a Property through a Short Sale within three years from the date of case number assignment. This three-year period begins on the date of transfer of title by Short Sale.

(a) Exception for Borrower Current at the Time of Short Sale A Borrower is considered eligible for a new FHA-insured Mortgage if, from the date of case number assignment for the new Mortgage:

·         all Mortgage Payments on the prior Mortgage were made within the month due for the 12-month period preceding the Short Sale; and

·         installment debt payments for the same time period were also made within the month due.

justin brown