The Economic Collapse of 2008 wreaked havoc on everyone's lives.  Many people lost everything financially.  Here's a guide to assist those whom experienced difficult times during this crisis by facing either a Foreclosure, Deed in Lieu of Foreclosure, Bankruptcy and/or Short Sale.  For a downloadable version, then click here.


FHA Loans*:

Foreclosure, Deed in lieu of Foreclosure

Foreclosure: Home was given back to the lender — No owner participation, done with legal proceeding.

Deed in Lieu: Home returned to lender in exchange for canceling loan.

3 years from foreclosed date or deed-in-lieu of foreclosure.

Under 3 years from foreclosed date if foreclosure was a result of extenuating circumstances.  Divorce does not qualify.

Short Sale

Lender agreed to accept payoff for less than owed.

3 years from date sale closed and transferred to new owner.


Bankruptcy Chapter 7

Debts are discharged through BK, client does not pay any debts owing.

2 years from date of discharge with re-established credit with no derogatory ratings; in lieu of re-established credit and chosen not to incur new credit obligations.

1 - 2 years from date of discharge with extenuating circumstances and has exhibited a documented ability to manage financial affairs. Divorce does not qualify. Additional conditions may apply.

NOTE: If borrower surrenders property in a bankruptcy, it is construed as a deed-in-lieu and 3 years are required before purchasing.


Bankruptcy Chapter 13 or Consumer Credit Counseling
Debts are paid back on a monthly scheduled payment plan by client.

• Eligible with 1 year payout period under Chapter 13 bankruptcy or consumer credit
counseling has elapsed, payment performance has been satisfactory and all required payments have been made and has received written permission from bankruptcy court to enter into a new mortgage transaction.

• Total Scorecard Accept/Approve Recommendation for Chapter 13 bankruptcy- After 2
years if the Chapter 13 bankruptcy has not been discharged the loan must be downgraded to a Refer and evaluated by a DE underwriter.


*On August 15, 2013, FHA announced a new program called, "Back To Work".  This program allows borrowers whom have been out of work for a long period of time or had a reduction in their income reduced by 20% or greater to become eligible with FHA loans in less time.  Here's a copy of the Mortgagee Letter 2013-26 -click here.  Stay tuned, we'll have another page devoted to this new program.