The Lund Team Real Estate Blog

We have updated rules for those who want to buy a home, but have recently been through a bankruptcy or foreclosure.

Previous Mortgage Foreclosure

A borrower whose previous residence or other real property was foreclosed on or has given a deed-in-lieu of foreclosure within the previous three years is generally not eligible for an insured mortgage.

However, if the foreclosure of the borrower’s principal residence was the result of extenuating circumstances beyond the borrower’s control and the borrower has since established good credit, an exception may be granted. Extenuating circumstances do not include the inability to sell a house when transferring from one area to another.

Bankruptcy

A bankruptcy (Chapter 7 liquidation) will not disqualify the borrower if :

·         At least two years have passed since the bankruptcy was discharged, and

·         The borrower has re-established good credit (or has chosen not to incur new credit obligations), and

·         The borrower has demonstrated an ability to manage financial affairs