Kelly L. Zitlow

Buying a house after Foreclosure, Short Sale & Bankruptcy

The overwhelming amount of homeowners in our Arizona market affected by the bursting of the "housing bubble" has been significant and as a result many people have had to short sale, foreclose and or file bankruptcy. Believe it or not we're already seeing buyers who have met the waiting period time frame or are getting close to meeting it and are in a position to buy again! I know many of you have past or current clients going through one of these unfortunate events. Many people in Arizona think they will have to wait 7-10 years before they can obtain a mortgage in Arizona and buy a home again! Knowing that the waiting periods range from 2-7 years depending on the event can be liberating for someone who thinks they may never get to buy a home again. The waiting period time frame starts based on the completion date of the event. See below for a summary of waiting periods by event and loan type.

Foreclosure:

• 7 years to obtain a Fannie Mae or Freddie Mac Conventional loan
• 3 years to obtain an FHA loan
• 2 years to obtain a VA loan
• 3 years to obtain a USDA Rural loan
• 5-7 years to obtain a jumbo loan (varies by lender)

Short Sale / Deed in Lieu:

• Fannie Mae Conventional Loan: 2 years with 20% down, 4 years with 10% down, 7 years at additional LTV's
• 4 years to obtain a Freddie Mac Conventional loan
• 3 years to obtain an FHA loan (Per FHA ML 09-52, FHA financing can be obtained in less than 3 years under certain conditions).
• 2 years to obtain a VA loan (If no mortgage lates in the 12 months leading up to the short sale, a VA loan may be obtained in less than 2 years. Deed in Lieu is a 2 year waiting period).
• 3 years to obtain a USDA Rural loan
• 2-7 years to obtain a jumbo loan

Chapter 7 Bankruptcy:

• 4 years to obtain a Fannie Mae or Freddie Mac Conventional loan
• 2 years to obtain an FHA loan
• 2 years to obtain a VA loan
• 3 years to obtain a USDA Rural loan
• 4-7 years to obtain a jumbo loan

Note if a mortgage was included in the bankruptcy and the client still owns the home and is preparing to foreclose the waiting period time frame is based on the later event. In this scenario the foreclosure will be the later event and therefore the foreclosure waiting periods will apply.

Chapter 13 Bankruptcy:

• Fannie Mae Conventional Loan: 2 years from discharge, 4 years from dismissal
• 2 years to obtain a Freddie Mac Conventional loan
• 1 Year of the payout must elapse & payment performance must be satisfactory; buyer must receive permission from the court to enter into a mortgage to obtain an FHA, VA or USDA Rural loan
• 4-7 years to obtain a jumbo loan

I have a handy chart on my website, Waiting Period Chart, which outlines everything noted above in a succinct format; it's great to have on hand to give to buyers or just answer a quick question. Because our Arizona market has been dramatically affected by the downturn in the economy and we talk with so many people who have questions about buying a home again, I've launched a website, www.buyingahouseafter.com, which sole purpose is to provide current information on Buying A House After a short sale, foreclosure or bankruptcy. The site includes detailed information by event and how to prepare themselves and their credit to buy again.

Don't hesitate to contact me should you have any questions pertaining to waiting periods, I'm here to assist and look forward to talking with you. Together we can educate our real estate and mortgage communities on this topic and give them hope that they CAN buy a home again!

Football is in full force in the Zitlow house. My two boys, Jack and Nick, will be battling it out in our lovely fall (105 degrees) tomorrow then we'll be heading out to the ASU/USC game tomorrow night. Go Sun DevilsJ

~ Kelly

Quote of the week:  Let go of the past and go for the future.  Go confidently in the direction of your dreams.  Live the life you imagined. ~ Henry David Thoreau

Earn 3 hours CE of Contract Law at the Residential Financing in Today's Market class I'm teaching on October 11^th.  See www.southwesternschool.com for details

First Posted 9/23/2011