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What date for waiting period for a new FHA loan?

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Contributor

What date for waiting period for a new FHA loan?

So here's the cliffnote version.  BF divorced wife, filed chapter 7 in early 2018 to clean up some old medical bills and other stuff connected to the divorce and a health crisis he had a few years ago.  As part of the divorce settlement he quit claimed the deed to the house to the ex-wife and included the mortgage in his bankruptcy.  Ex-wife was supposed to refinance the  house in solely her name, but never did and now the house is going to foreclosure, he has been served with foreclosure papers as he is still an owner of record because she never recorded the quit claim deed either.  So will his waiting period for a new FHA loan begin at discharge of the Chapter 7 bankruptcy when he was relieved of the debt or at the conclusion of foreclosure proceedings?   

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Established Contributor

Re: What date for waiting period for a new FHA loan?

As per court order and marital settlement agreement, he was ordered to have deed off the title. He signed a Quit Claim Deed but neglected to record it himself. Not good. Deeding off the property gives Public Notice that he is no longer an owner. It also give notice down line that he complied with the court order by showing good faith. A Quit Claim Deed only requires the Grantor's signature, so he can walk right into the county clerk's office and record it.

 

FHA allows that if the court, through divorce decree, one spouse has been granted sole ownership and financial responsibility, we as a lender can overlook the fact there may be subsequent late payments or eventual default or foreclosure and hold them harmless as long as the borrower complied with the order. As far as what is the waiting period after a Chapter 7, FHA requires a 2 year waiting period or as short as 1 year if "Extenuating Circumstances" can be documented due to death in the family or serious illness.

 

I hope this helps you. Best wishes!

 

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
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Valued Contributor

Re: What date for waiting period for a new FHA loan?


@BGinVA wrote:

So here's the cliffnote version.  BF divorced wife, filed chapter 7 in early 2018 to clean up some old medical bills and other stuff connected to the divorce and a health crisis he had a few years ago.  As part of the divorce settlement he quit claimed the deed to the house to the ex-wife and included the mortgage in his bankruptcy.  Ex-wife was supposed to refinance the  house in solely her name, but never did and now the house is going to foreclosure, he has been served with foreclosure papers as he is still an owner of record because she never recorded the quit claim deed either.  So will his waiting period for a new FHA loan begin at discharge of the Chapter 7 bankruptcy when he was relieved of the debt or at the conclusion of foreclosure proceedings?   


In this case, we would be able to use the discharge date of the bankruptcy instead of the foreclosure date AS LONG AS the mortgage was in good standing prior to the divorce. 

If the previous mortgage was FHA, then your BF will also need to clear CAIVRS before he'll be able to close on a new FHA mortgage.

He'll have to request a suppression based on the fact that the house was awarded to his ex in the divorce.

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
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