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Note that on a Chapter 7 you may be eligible after 1 year and that there is no such 7 year waiting period on conventional loans.
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from
obtaining an FHA-insured mortgage if at least two years have elapsed since
the date of the discharge of the bankruptcy. During this time, the borrower
â€¢ re-established good credit, or
â€¢ chosen not to incur new credit obligations.
An elapsed period of less than two years, but not less than 12 months, may be
acceptable for an FHA-insured mortgage, if the borrower
â€¢ can show that the bankruptcy was caused by extenuating circumstances
beyond his/her control, and
â€¢ has since exhibited a documented ability to manage his/her financial affairs
in a responsible manner.
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an
FHA-insured mortgage, provided that the lender documents that
â€¢ one year of the pay-out period under the bankruptcy has elapsed
â€¢ the borrowerâ€™s payment performance has been satisfactory and all required
payments have been made on time, and
â€¢ the borrower has received written permission from bankruptcy court to enter
into the mortgage transaction.
TOTAL Scorecard Accept/Approve Recommendation
Lender documentation must show two years from the discharge date of a
Chapter 13 bankruptcy. If the Chapter 13 bankruptcy has not been discharged
for a minimum period of two years, the loan must be downgraded to a Refer
and evaluated by a Direct Endorsement (DE) underwriter.
Bankruptcy (Chapter 7 or Chapter 11)
A four-year waiting period is required, measured from the discharge or dismissal date of the
Exceptions for Extenuating Circumstances
A two-year waiting period is permitted if extenuating circumstances can be documented, and is
measured from the discharge or dismissal date of the bankruptcy action.
Bankruptcy (Chapter 13)
A distinction is made between Chapter 13 bankruptcies that were discharged and those that
were dismissed. The waiting period required for Chapter 13 bankruptcy actions is measured as
â€¢ two years from the discharge date, or
â€¢ four years from the dismissal date.
The shorter waiting period based on the discharge date recognizes that borrowers have already
met a portion of the waiting period within the time needed for the successful completion of a
Chapter 13 plan and subsequent discharge.
conventional loans would take up to 7 years to become eligible again after Ch. 7 BK..
Hope this helps
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