Financing in Crystal Lake>Question Details

Lynda & Lind…, Real Estate Pro in Vacaville, CA

Can I qualify for an FHA loan with this scenario?

Asked by Lynda & Lindsey Hart, Vacaville, CA Sat Oct 20, 2012

I was discharged from a Ch 7 bankruptcy more than 3 years ago. I had three properties in my name that were included in the bankruptcy and were discharged with a zero balance and subsequently sold in short sales. I have been told by two lenders that although the bankruptcy law removed my personal liability for those loans, FHA will not lend to me because I had short sales within two years of my application for an FHA loan. This seems to be in violation of the bankruptcy law. Can anyone clarify?

Help the community by answering this question:


Bankruptcy law doesn't trump underwriting guidelines. So unless the short sales/bankruptcy was due to extenuating circumstances, you would not be eligible for FHA financing until 3 years after the most recent short sale.

Conforming financing (Fannie/Freddie) would require 4 years from a Ch 7 BK discharge, but just 2 years from a short sale. However 2 years from the Ch 7 BK discharge can be acceptable if the BK was due to extenuating circumstances (such as unemployment, prolonged strikes, medical bills not covered by insurance, etc).

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes Thank Flag Link Sat Oct 20, 2012
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