I waited 2 Years after Bankruptcy Discharge to apply for financing. DO I HAVE TO WAIT LONGERr?

I have applied at several financial institution and no preapprovals are going through.  I have reestablished credit, but one loan officer recommended waiting for several months more so the system can pick up the discharge.  Is there any bank that will use another process to determine credit worthiness and may be able to get me preapproved.
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September 17 2012 - US
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Best Answer
FHA rules are as follows:

CHAPTER 7 BANKRUPTCY

At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.

CHAPTER 13 BANKRUPTCY

FHA will consider appoving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee's written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.


Lenders do NOT charge exorbitant interest rates due to the BK. Rates on a conforming loan are based on several factors, one being credit scores. FHA does not have the same pricing policies. As long as the borrower meets the lenders minimum credit score requirements, and fulfilled the above requirements.

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September 18 2012
Just a note - if you foreclosed on a home at the same time you declared bankruptcy you may need to wait three years from the sheriff's sales of your property if you are going FHA.

Good luck!
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September 19 2012
Profile picture for user575892

I also, am attempting to refinance after a chapter 7.  Trust me....no one will look at you under 3 years of discharge.  If you are going FHA, then green light.  Otherwise, I've done the work, trust me...3 years min.  Last year, was different story...

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September 18 2012

The confusion between 2-years and 3-years waiting period is based on FHA guidelines which differentiate between actual bankruptcy discharges and delinquencies to the federal government.

So, Chapter 7 for example, under 4155.1 4.C.2.g (of HUD guidelines), a minimum of 2 years waiting needed (amongst other requirements). The banks can tack on whatever they want on top of it to see creditworthiness. Note: Chapter 13 rules are different.

But if there has been a delinquency on a federal loan (like a previous FHA loan), then under 4155.1 4.A.2.g, there is a three-year waiting period.

As a general matter, even if after two years of Chp 7 discharge, the creditworthiness cannot be established, lender can require additional time to see if you are good on your current payments.

Hope this helps.

Raheel Shahzad, Attorney, CPA, Real Estate Agent
Chicago, IL
*above is not legal advice but general information; your facts and jurisdiction may be different*

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September 18 2012
The standard waiting period after a BK is 3 years for FHA financing 
======================
wrong.

so the system can pick up the discharge. 
=========================
The system?  You have your discharge order, it'll have the date. If you don't have it, it is public record, just go to the PACER web site and get a copy.
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September 18 2012
Good Afternoon,

The standard waiting period after a BK is 3 years for FHA financing (3.50% down) and 2 years if you are VA eligible (no down payment required).

Feel free to reach out to me should you have any other questions.
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September 17 2012
Profile picture for B Mike West
The standard loan application form 1003 asks applicants if they have undergone an BK or foreclosure in the past SEVEN years.
If that is your situation your credit report will reflect that BK or foreclosure.  Your attorney should have explained this to you when you were deciding to file.

Any lender who would approve a loan for you within that period would most likely be charging you an exorbitant interest rate because they know that you can't file BK again for some time.

While you are waiting to become eligible for a loan make every effort to maintain a spotless credit record.  Pay EVERY bill on time and don't build up large balances in your credit accounts.

Good luck to you.
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September 17 2012
 
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