Bankruptcy
and Foreclosure
A credit report will be obtained on the borrower and any lates, collections,
judgments, foreclosures, bankruptcies, etc. must have a justifiable explanation
in writing by the borrower.
In the event of a foreclosure, the borrower has three years from the
date the claim was paid until he/she is eligible for another FHA loan,
unless the foreclosure was the result of extenuating circumstances beyond
the borrower's control and the borrower has since established good credit.
Chapter 7 bankruptcy requires the borrower to wait at least two years
from the date of discharge.
Chapter 13 bankruptcy requires the borrower to have been paying on the
bankruptcy for at least one year, performance must have been satisfactory
and the borrower must also receive court approval to enter into the mortgage
transaction.
