The U.S. Department of Housing and Urban Development (HUD) recently announced the â€œBack to Work â€“ Extenuating Circumstancesâ€ program, aimed to help people who have lost their home through foreclosure, short sale or bankruptcy. HUD has reduced the previously required minimum of 36 months to 12 months before they may be able to finance another home, given that they meet HUDâ€™s minimum eligibility requirements.
CFS Mortgage assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
Lee Newcomb, Realtor
Long and Foster Real Estate
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 must have
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 borrower'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.
Bankruptcy (Chapter 7 or Chapter 11) A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action. 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 follows:
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.
804-972-9927 Cell Direct