Waiting Periods Required For Significant Derogatory Credit Events
|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
|Derogatory Item||Waiting Periods|
|ForeclosureDeed in Lieu of Foreclosure||
|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.