Credit Re-Establishment Periods for Mortgages

Bill LewisMortgage Basics, Mortgage Guidelines

Short Sales

Required Credit Re-Establishment Periods for Mortgages after derogatory credit:

Short Sales (Deed in Lieu of Foreclosure)

Loan Type Waiting Period
Conventional (Fannie Mae, Freddie Mac) 4 years
FHA 3 Yrs from Sale
Exception: No Wait – If No Lates Prior to Short Sale & no lates on installment debts for prior 12 months
VA 2 years from sale if borrower not delinquent at time of transfer
3 years from sale if borrower was delinquent at time of transfer
USDA 3 years from sale

Foreclosures

Loan Type Waiting Period
Conventional (Fannie Mae, Freddie Mac) 7 years from recorded date (if discharged thru BK – 4 Yrs.)
FHA 3 Yrs from Trustee’s Deed (if no sales price or date, use recording date)
VA 3 years from recorded date
7 years for High Balance Loans
USDA 3 years from recorded date

Loan Modifications

Loan Type Waiting Period
Conventional (Fannie Mae, Freddie Mac) 2 years if no principal reduction and have met the modification terms
FHA No wait with DU/LP approval if no principal reduction and have met the modification terms
VA No wait with DU/LP approval and 12 month as agreed payment history
USDA 3 years from sale

Chapter 7 Bankruptcy

Loan Type Waiting Period
Conventional (Fannie Mae, Freddie Mac) 4 years from discharge date
5 years if more than BK one filing within the past 7 years
FHA 2 years from discharge date
VA 2 years from discharge date
7 years for High Balance loans
USDA 2 years from discharge date

Chapter 13 Bankruptcy

Loan Type Waiting Period
Conventional (Fannie Mae, Freddie Mac) 2 years from discharge date
4 years from dismissal date
5 years if more than one BK filing within the past 7 years
FHA 2 years from discharge date
2 years from dismissal date
Exception: 1 year w/ BK Court & Payment History Approval
VA 2 years from discharge date
2 years from dismissal date
Exception: 1 year w/ BK Court & Payment History Approval
USDA 3 years from discharge date
3 years from dismissal date