1. Derogatory Waiting Periods
Home Purchases After Bankruptcy,
Foreclosure or Short Sale
Have you been impacted by bankruptcy, foreclosure or short sale
and think homeownership is not in your future? It is important to
know that each individual’s situation is unique and it is important
to discuss your options with a Mortgage Professional.
STANDARD CONVENTIONAL: DETERMINED BY APPLICATION DATE
Derogatory Item Extenuating Circumstances Financial Mismanagement
Chapter 7 2 years or greater from either the discharge or dismissal 4 years or greater from either the discharge or dismissal
date date
Chapter 13 2 years or greater from either the discharge or dismissal 2 years from discharge date or
date 4 years from dismissal
3 years or greater from either the discharge or dismissal
date
5 years or greater from either the discharge or dismissal
Multiple Bankruptcies The most recent bankruptcy must have been the result of
date
extenuating circumstances or the borrower must meet the
5 year waiting period.
From date sale closed and transferred to new owner:
From date sale closed and transferred to new owner:
2 years: 80% LTV
2 years: 80% LTV (not allowed on J600)
Short Sale 2 years: 90% LTV with mortgage insurance
4 years: 90% LTV
Primary Residence Only
7 years: 97% with Mortgage Insurance
7 years: 97% with Mortgage Insurance
From the date transferred back to the bank: From the date transferred back to the bank:
Deed in Lieu 4 years: Owner Occupied, Purchase or Rate-term max 90% 4 years: Owner Occupied, Purchase or Rate-term max 90%
of Foreclosure with borrowers own funds (due to MI restriction) with borrowers own funds (due to MI restriction)
7 years: Cash-out, 2nd homes and Investment properties 7 years: Cash-out, 2nd homes and Investment properties
From the date foreclosure completed and transferred back From the date foreclosure completed and transferred back
to the bank: to the bank:
Foreclosure 3 years: 80% LTV, Rate-Term (all occupancy) 7 years: Time elapsed must be 7 years or greater if the
4 years: to 90% (MI) SFR, OO, Purchase (no gift) property is a 2nd home or investment purchase or cash-
(Cash-out not allowed) out transaction
Extenuating Circumstances Explained: Extenuating circumstances are 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.
• The borrower must present a letter that supports the claims of the extenuating circumstance; confirm the nature of the event that led to the
related action and illustrate that the borrower had no reasonable options other than to default on their financial obligations.
• The borrower’s claim must be evidenced by third documentation to confirm the event. Examples include: medical reports or bills, notice of job
layoff, job severance papers, ect.
• Credit Report documenting date of discharge or copy of the discharge paper, if applicable
This document is not intended as an offer to extend credit nor a commitment to lend. The information contained in this document is intended to be used for
informational purposes only and to provide a general overview of the topics described herein.
Please call me today if you would like additional information!
Mike Bon
MLO-119781
Mortgage Advisor
Cell: 253-495-2095
MAGloans.com Direct: 425-224-8347
mbon@MAGloans.net
Mill Creek Office • CL-36212 • 15117 Main Street, Ste B106 • Mill Creek, WA 98012
Phone: 425.224.8300 • Toll Free: 888.618.8007 • Fax: 425.224.8303
BELLE V U E • EDMON DS • E V ER E T T • M A RYS V I LLE • M A RYS V I LLE , K W • M I LL C R EEK • W EN ATC H EE • WOODI N V I LLE • A RIZON A • IDA HO
Global Advisory Group, Inc. dba Mortgage Advisory Group Rev. 12/13/2011
Equal Housing Opportunity

2. FHA: DETERMINED BY CREDIT APPROVAL
Derogatory Item Extenuating Circumstances Financial Mismanagement (J600 requires 680 FICO)
1 year since date of discharge with evidence of re-estab- 2 years since date of discharge with re-established credit
Chapter 7
lished credit
Allowed after 12 months of the payout period provided Allowed after 12 months of the payout period
Chapter 13 performance has been satisfactory and borrower receives provided performance has been satisfactory and
court approval —follow 4155.1 borrower receives court approval —follow 4155.1
3 years since completion or transfer date. 3 years since completion or transfer date
Short Sale Exception: 1 year for isolated cases if borrower was not in
default at time of transfer
Foreclosure/ 3 years since completion or transfer date 3 years since completion or transfer date
Deed in Lieu
Additional Notes from HUD: FHA considers extenuating circumstances to be beyond the borrowers control such as:
Serious illness or death of a wage earner. The borrower must have re-established credit since the event. Divorce, inability to sell property due to
loss of job or relocation do not qualify.
Note: Borrowers are not eligible for a new FHA insured loan if they pursued a short sale to take advantage of a declining market or purchase at
a reduced price or superior property within a reasonable commuting distance. Mortgage included in bankruptcies are considered foreclosure and
require 3 year from transfer date.
VA: DETERMINED BY CREDIT APPROVAL
Derogatory Item Extenuating Circumstances Financial Mismanagement (J600 requires 680 FICO)
2 years from either the discharge or dismissal date 2 years from either the discharge or dismissal date
Chapter 7 12-24 months - exceptions allowed with re- established
credit and extenuating circumstances
Allowed after 12 months of the payout period provided Allowed after 12 months of the payout period
Chapter 13 performance has been satisfactory and borrower receives provided performance has been satisfactory and
court approval —follow 4155.1 borrower receives court approval —follow 4155.1
Short Sale 2 years since completion or transfer date 2 years since completion or transfer date
Foreclosure/
Deed in Lieu
Additional Notes from VA: Follow the Conventional explanation above examples include:
• Unemployment or prolonged strikes • Medical bills not covered by Insurance • Divorce is NOT viewed as extenuating as it is not viewed as
“beyond the borrower’s control”
USDA: DETERMINED BY CREDIT APPROVAL
Derogatory Item Extenuating Circumstances Financial Mismanagement (J600 requires 680 FICO)
3 years since date of discharge 3 years since date of discharge
Chapter 7
1 year since date of discharge or completed payment plan 1 year since date of discharge or completed payment
Chapter 13
plan
Short Sale From date sale closed and transferred to new owner or From date sale closed and transferred to new -owner or
Foreclosure/ bank: 3 years bank: 3 years
Deed in Lieu
USDA Exceptions Exceptions may be made to the waiting periods listed USDA considers the following as compensating factors:
above with: • Length of Employment
• 640 FICO and GUS Approval • Low DTI
• Extenuating circumstances documented with LOE • Assets/Retirement
• Subject to Underwriter Approval • Limit use of credit
Additional Notes from USDA: Circumstances surrounding the adverse information must have been temporary in nature, and beyond the
borrower’s control, and have been removed so their reoccurrence is unlikely to recur.
• Job Loss • Delay in Government Benefits • Other loss in income • Increased expenses due to illness, death, etc.
• Borrower letter of explanation is required
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