Waiting Periods Required For Significant Derogatory Credit Events
CONVENTIONAL MORTGAGE
Derogatory Item | Waiting Period |
Foreclosure | Home was given back to the bank – No owner participation
|
Short SaleDeed in Lieu of Foreclosure | Short Sale:Home sold but sales price didn’t cover amount owedDeed in Lieu: Home returned to lender in exchange for canceling loan
|
Bankruptcy Chapter 7 | Debts are discharged through BK, client does not pay any debts owing
|
Bankruptcy Chapter 13 | Debts are paid back on a monthly scheduled payment plan by client
|
FHA
Derogatory Item | Waiting Periods |
ForeclosureDeed in Lieu of Foreclosure |
|
Short Sale |
|
Bankruptcy Chapter 7 |
|
Bankruptcy Chapter 13 |
|
Examples of acceptable extenuating circumstances
(circumstances must be verified and documented):
Conventional: 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.
FHA: Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation to another area does not qualify as an acceptable extenuating circumstance.