Special Circumstance Programs

Foreclosures, bankruptcies and short sales can add a layer of complication to your home loan. Whether you want to buy a home in the wake of financial distress or invest in a foreclosed property, we can help you navigate your special circumstances.

Obtaining Financing after a Bankruptcy, Foreclosure or Short Sale

In the unfortunate event of a short sale, foreclosure or bankruptcy, you could qualify for mortgage financing again. Key factors to consider when looking to buy:

Waiting period before obtaining new financing

Note that timing can vary depending on the circumstances of past derogatory credit.

Type Short Sale Foreclosure Bankruptcy
Type Conventional Short Sale 2-4 years Foreclosure 7 years Bankruptcy 2-4 years
Type FHA Short Sale 3 years Foreclosure 3 years Bankruptcy 2 years
TypeVA Short Sale2 years Interest Rate2 years Bankruptcy2 years
TypeUSDA Short Sale3 years Interest Rate3 years Bankruptcy3 years

Re-establishing credit: What you need to know

  • The minimum credit score required is as low as 640, depending on the investor.
  • Pricing is based on credit score. The lower the credit score, the higher the pricing is likely to be.
  • Reducing LTV (loan to value) with down payment funds may allow for a shorter wait period depending on investment.
  • Automated underwriting is required on all programs so items such as recent late payments, unstable employment or lack of reserves will affect underwriting decisions.

Certain restrictions apply. Subject to credit approval.

Buying a Foreclosed Property

Review these guidelines and policies when considering a foreclosed property:

  • Foreclosed properties are typically sold “As Is.”
  • Ask the real estate agent when the home was last sold to identify if the loan was a flipped property. Flipped properties can require that additional conditions be resolved, such as waiting period, second appraisal, documentation of repairs, etc.
  • If you back out of the sale after the inspection period, you have the potential to lose your earnest money.
  • Repairs may be required at the borrower’s expense and prior to closing; you must have the funds to cover the costs. There can be issues with the seller allowing access to the property.
  • Water and electric must be turned on prior to the appraiser inspecting the property. This may be an issue with the selling entity.
  • Health hazard items (e.g., mold, bad septic systems and bare wires) require a health or safety inspection. The listing agent for the foreclosing entity will be required to let the inspector(s) into the property and may require repairs prior to closing. We won't close on a loan with a health hazard risk on the property.
  • Receiving acceptance of your offer may take time. Plan on anywhere from 14 to 85 days.
  • You'll be required to use the seller’s title company for closing.

There are additional considerations during the mortgage lending process for a foreclosed property. Please talk to a mortgage loan officer for more information.