What Happens After Foreclosure? How Long Before You Can Qualify For Mortgage?

Can You Say Tricky Question?

With so many people struggling to find work and therefore, keeping their mortgages current. Foreclosure and Short Sales are at an all time high for our country. The question posed above is not really tricky, but has many variables. The New York Times notes that a past foreclosure will result in the longest wait before you can buy again. Fannie Mae and Freddie Mac properties have a 3 year waiting period after filing foreclosure and 2 year waiting period following a short sale, deed in lieu of foreclosure & discharge or dismissal of bankruptcy. However, there may be certain circumstances, job loss or transfer from job, that may reduce the wait period to qualify for mortgage.

FHA loans also have 3 year waiting period for foreclosure / short sale and 2 years for bankruptcy as well, but note there are plenty of exceptions. Based on New York Time article and example would be, if a borrower was current on payments for year prior to short sale there may be not waiting period and might even qualify for FHA loan immediately.

In conclusion, none of these rules are steadfast or set in stone. With such a large number of people struggling and facing loss of their homes(at the time of this post there are over approximately 1,000,000 properties foreclosed or in the process), poor credit ratings and lack of jobs, lenders will need to take into account circumstances that may have lead to default. I firmly believe these standards will change in years to come. Fannie Mae spokesman says, ” The key is to avoid foreclosure”  and “That is what will help you be eligible for the shorter period.”

“Until Next Time”



Source: “The Post-Foreclosure Wait,” The New York Times (June 23, 2011)