The Bankruptcy policy is changing a bit for mortgage lenders. 

 

Understanding that more people will be declaring the big B over the next year …or two, FNMA wants to make it a little harder to get a mortgage after they come out of it. 

 

Current guidelines allow for a mortgage approval 24 months after filing.  The newer versions states the Bankruptcy must be FILED 48 months before the credit report is run for the mortgage.  Of course, the bankruptcy must be discharged and new credit must be established in order to qualify for the mortgage.

 

Highlights:

 

·        The date of record is the filing date of the Bankruptcy papers with the court (not the discharge date as most people would think)

·        A credit report cannot be dated until after that 48 months date

·        The bankruptcy must be discharged

·        At least 4 major trade lines must be established with a minimum of 24 months active and perfect payment history

·        The lender will do an analysis of whether they feel the borrower is capable of making the mortgage payments in the future

Interpretation:

 

If you need to declare Bankruptcy, so be it.  Just know that after you do so, you must make sure that your credit report reflects the date and discharge of all debt.  Go immediately and get a Visa/Mastercard and car loan-if you need a car.  Reestablish, rebuild and pay your bills on time! 

 

Dale Siegel