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Wednesday, January 2, 2013

Wait Times for BK and Short Sale Sellers re-entering the Market

 
"Wait Times" for Bankruptcy and Short Sale Sellers re-entering the Market


 Many buyers have been sitting on the sidelines while thier credit scores (and their careers) recovered.
There are specific nuances that apply in each situations.
In the case of these borrowers...it is imperative the borrowers begin the loan application process at least 60 days before writing offers on property in order to avoid any last minute surprises.
Here's a GENERAL breakdown of wait times
FHA:
Chapter 7: 2 yrs.
Chapter 13: 2 yrs.
Foreclosure: 3 yrs.
Short Sale: 3 yrs.* Unless borrower was not late prior to short sale (on ANY obligation) and was not trying to take advantage of the market. For specifics click here.
VA:
Chapter 7: 2 yrs.
Chapter 13: 2 yrs.
Foreclosure: 3yrs.
Short Sale: 3 yrs.
VA High Balance:
Chapter 7: 7 yrs.
Chapter 13: 7 yrs.
Foreclosure: 7 yrs.
Short Sale: 7 yrs.
Conventional:
Chapter 7: 4 yrs.*
Chapter 13: 2 yrs. from discharge date or 4 yrs. from dismissal date*
Foreclosure: 7 yrs.*
Deed in Lieu: 2 yrs. if subject loan is 80% ltv or less
4 yrs. if subject loan is 90% ltv or less
7 yrs. if subject loan is over 90%ltv
Short Sale: 2 yrs. if subject loan is 80% ltv or less
4 yrs. if subject loan is 90% ltv or less
7 yrs. if subject loan is over 90% ltv
BK Chapter 7: a four year waiting period is required measured from the discharge date or dismissal date of the BK. A 2 yr. waiting period is permitted if extenuating circumstances can be documented.
BK Chapter 13: a four year waiting period is required for a Chapter 13 dismissal. A 2yr. waiting period will be permitted with extenuating circumstances.
Multiple BK filings: for a borrower with more than one BK filing in the last 7 years, a 5 yr. waiting period is required.
Foreclosure: A 7 year waiting period is required, and is measured from the completion date of the foreclosure sale date.
A 3 yr. waiting period is permitted if extenuating circumstances can be documented and the ltv rules are applied, MUST to be a purchase of a principle residence or a limited cash out refi on an owner occupied, second home or non-owner.
*What are extenuating circumstances: they are non-recurring 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.

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