Bankruptcy and Foreclosure Wait Times

[Bill Schrimpf]

@Brandon Turner - I just watched the recent webcast replay and you made a great point.  I should give back to BP.  I'm going to by contributing some of my hard earned knowledge.

Following is something I have learned but not seen here on BP about a very nuanced bankruptcy and foreclosure rule with Fannie Mae and desktop/automated underwriting.  If you had a BK and listed a mortgage in the BK and had it properly discharged, the wait times for a mortgage is 4 years not 7.  This was huge for me.  I had to educate my credit union underwriters and loan officers to get past automated underwriting.  Anyone dealing with BK and foreclosure fallout knows about the wait times, HTH.

https://www.fanniemae.com/content/announcement/sel1410.pdf

https://www.fanniemae.com/content/guide/selling/b3/5.3/07.html

"If a mortgage debt was discharged through a bankruptcy, the bankruptcy waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting periods must be applied."