Qualify For Mortgage After Foreclosure and Bankruptcy With NON-QM Loans
In this blog, we will cover how to qualify for mortgage after foreclosure and bankruptcy with non-QM loans. Back in the late 1990s and early 2000s, real estate was the hot item ticket. Before the 2008 Great Recession, real estate values were going up year after year with no sign of a setback.
The skyrocketing surge in real estate value was nationwide. Getting approved for a mortgage was so easy.. Borrowers had many different types of loan programs available at their fingertips, such as no doc and stated income loan programs.
Borrowers did not have to provide proof of income, and almost everyone qualified for a mortgage. Regular working middle-class people had second, third, and fourth homes, and millions of folks in this country became real estate investors. Everyone was either directly or indirectly involved in real estate investments.
Who Become Real Estate Investors Before the 2008 Financial Crisis
Everyone who dreams of becoming wealthy invested in real estate before the 2008 financial crisis.
Getting a mortgage was so easy. No, doc, loans, DSCR mortgages, stated income loans, and P and L statement-only mortgages were so easy to qualify, get approved, and closed it was a total joke.
Non-QM or non-prime loans completely disappeared for years after the 2008 financial crisis but have recently returned. Real Estate investors before the 2008 financial crisis included the following:
- Contractors
- Attorneys
- Real Estate Agents
- Appraisers
- Loan Officers
- Bankers
- Teachers
- Property Managers
- Police Officers and Fire Fighters
- Students
- Retired folks with no real estate investment experience
Everyone who touched real estate made money, and then D-Day hit when the whole real estate and credit markets collapsed.
Foreclosure And Bankruptcy Historical High After 2008 Real Estate Collapse
Then came the real estate crash of 2008, where the credit and real estate market crashed. This crash led the nation into a long depression that affected millions of Americans. People lost their jobs, lost their businesses, lost their real estate investments, and lost their homes. Folks who were fortunate enough to maintain their businesses saw a major revenue drop. Those who hung onto their homes saw values plummet. Retirees were forced back into the workforce, and millions of jobs got eliminated.
Even millions of attorneys were forced into bankruptcies and foreclosures. The country lost half of its mortgage loan originators. The government reports unemployment at a record 8%, but I know those figures are wrong. These figures do not include folks who had businesses or were self-employed, and millions do not even claim unemployment. The true figures are upwards of 20% or more, and this figure is not even counting folks who are underemployed.
The FHA Bad Credit LendersI team has clients who once made $800,000 yearly before the real estate. Credit market collapse, which is now only making $100,000. These folks had to give up their vacation homes. They had to take their children out of college or transfer them from a private college to a public university or junior college.
Recovery Of Housing And Credit Markets
The government states that the recession is over, but many strongly disagree.
The Obama Administration pulled the trigger to non-stop regulations. Not just in the mortgage industry but in every other section of government.
The housing market did recover and has been steadily appreciating year after year since 2011.
economy and the housing market
First and foremost, our country did not go through a recession. Many believe our country went into a world depression. It is not just this country that suffered the real estate and financial collapse, but this economic downturn was worldwide. The global credit and real estate collapse bankrupted many nations like Greece, Italy, and others.
Everyone knows of someone who has lost their homes, businesses, and jobs everywhere in America. There is a foreclosure on every block in America’s neighborhoods. Small community banks have closed their doors or got acquired giants like J.P. Morgan Chase, Citibank, Bank of America, and Wells Fargo. Courts were overwhelmed with foreclosures and evictions. Having bad credit is now America’s norm. We all need to recover; time is the best remedy for rebuilding one’s life and credit. Many folks who have filed for bankruptcy and foreclosure can see the light at the end of the tunnel. People can now qualify to purchase homes.
The team at FHA Bad Credit Lenders specializes in helping those who have filed for bankruptcy and lost their homes via secure foreclosure mortgages to purchase a home or refinance their current homes. Many of our friends and family are also victims of the financial and real estate crash of 2008. We fully understand what a borrower is going through. Many of our loved ones and close friends lost everything they had worked so hard for, their homes and businesses. Many close to us could not afford tuition for their children. At an older age, many of us had to start our lives over again. The FHA Bad Credit Lenders team helps clients repair and reestablish their credit and secure the best home loan program available in the market.
What Are NON-QM Loans
Home buyers who have not completed the waiting period required to qualify for an FHA or Conventional Loan can qualify for NON-QM loans.
NON-QM loans do not require any waiting period after bankruptcy or foreclosure. Non-QM Loans are portfolio loans that lenders keep on their books.
Mortgage rates on non-QM loans are generally higher than on traditional mortgages. NON-QM loans are a great tool for purchasing a home now rather than later. This holds especially in a hot real estate market.
bullet points on NON-QM Mortgage Loans
No Waiting Period to Qualify For Mortgage After Foreclosure And Bankruptcy:
- 10% to 20% down payment
- No Loan Limits
- Jumbo Mortgages down to 600 Credit Scores
- Bank Statement Only mortgage programs
- No pre-payment penalty
Non-QM Loans After Foreclosure And Bankruptcy
Home buyers can now Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans with FHA Bad Credit Lenders with no waiting period. Unfortunately, there are waiting period requirements after foreclosure and bankruptcy for the following loan programs:
- FHA Loans
- VA Loans
- USDA Loans
- Conventional Loans
- Jumbo Mortgages
For home buyers who had a previous foreclosure and bankruptcy, there are mandatory waiting periods to qualify for a mortgage. However, home buyers Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM loans. There is no waiting period. These programs do require higher down payments. Their mortgage interest rates are higher than traditional mortgages. There is no private mortgage insurance required on all NON-QM Loans. NON-QM Loans are great loan programs for home buyers to use as a bridge until they meet their waiting period and can Qualify For a Mortgage After Foreclosure And Bankruptcy. They can then refinance their NON-QM Loans with an FHA or Conventional Mortgage.
Fannie Mae Guidelines To Qualify For Mortgage After Foreclosure And Bankruptcy
There are waiting period requirements for Fannie Mae and Freddie Mac to Qualify For Mortgage After Foreclosure And Bankruptcy./ Here are the Conventional waiting period requirements to Qualify For Mortgage After Foreclosure And Bankruptcy.
The four-year waiting period to Qualify For a Mortgage After a Short Sale, a Deed In Lieu, or Chapter Bankruptcy. The seven-year waiting period to Qualify For a Mortgage After Foreclosure. The two-year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharge date
If borrowers had mortgage part of Chapter 7 Bankruptcy, there is a four-year waiting period to qualify for a Conventional Loan from the discharge date of Chapter 7 Bankruptcy. The recorded date of foreclosure does not matter. However, the foreclosure needs to have been finalized and cannot just be in limbo.
HUD Guidelines To Qualify For Mortgage After Foreclosure and Bankruptcy
This section will cover the HUD Guidelines on the waiting period to Qualify For Mortgage After Foreclosure And Bankruptcy. There is a three-year waiting period to qualify for an FHA Loan after a foreclosure, deed in lieu of foreclosure, or short sale. There is a two-year waiting period to qualify for an FHA Loan after a Chapter 7 Bankruptcy discharge. Borrowers can qualify for an FHA Loan for one year in a Chapter 13 Bankruptcy repayment plan with the approval of the Trustee.
Per HUD Guidelines in qualifying for FHA Loan After Chapter 13 Bankruptcy, there is no waiting period after the discharge date of Chapter 13. However, it does need to be a manual underwrite for any waiting period with less than two years seasoning after a Chapter 13 Bankruptcy.
If borrowers had a mortgage part of Chapter 7 Bankruptcy, there is a three-year waiting period from the recorded foreclosure date with the mortgage that was part of the bankruptcy. Borrowers need to feel comfortable with their loan officer like they are comfortable with their accountant or attorney. The loan officer should always be available and help borrowers in the home loan qualifying process, no matter how long it takes.
How Do Bankruptcy And Foreclosure Impact Credit Scores?
Bankruptcy and foreclosure will drop consumer credit scores. A bankruptcy, foreclosure, short sale, or deed-in-lieu will remain on a credit report for seven years. However, consumers can easily have their good credit scores back if they start re-establishing new credit after bankruptcy and foreclosure. Here are some bullet points borrowers should take note.
As for effect on bankruptcy, foreclosure or a short sale often will plummet a person’s credit scores by 200-300 points, with the biggest drop for those whose credit was previously unblemished.
Those with a bankruptcy and foreclosure should immediately start re-establishing credit by getting three to five secured credit cards as soon as possible. Many folks have credit scores north of 700 FICO after bankruptcy and foreclosure.
Mortgages Made Easy at FHA Bad Credit Lenders
For mortgage borrowers with questions, don’t hesitate to contact us at FHA Bad Credit Lenders at www.fhabadcreditlenders.com or call us at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. FHA Bad Credit Lenders team is available seven days a week, including evenings, weekends, and holidays.
FHA Bad Credit Lenders are mortgage brokers licensed in 48 states, including Washington, DC, Puerto Rico, and the U.S. Virgin Islands. FHA Bad Credit Lenders has a national reputation of being able to do mortgage loans other lenders cannot do.
Over 80% of our borrowers are folks who could not get approved for a mortgage loan at other mortgage companies.
This BLOG On Qualify For Mortgage After Foreclosure And Bankruptcy With NON-QM Loans was updated on January 27th, 2023.
