Often a seller will raise a question regarding the best solution when faced with the potential loss of a home. One of the ramifications that needs to be considered is the long term impact on the seller’s credit and ability to purchase a home in the future. Recently, this data was provided to us from a mortgage underwriter. While this information is not universal across all lenders it certainly can help to establish a baseline. I hope that you’ll find it useful.
| Distress | Conventional | FHA | VA |
| Chapter 13 Bankruptcy | 2 years after discharge of bankruptcy and re-established credit. 4 years after dismissal of bankruptcy and res-established credit | ||
| Chapter 13 Bankruptcy (with extenuating circumstances) | 2 years after dismissal or discharge of bankruptcy and re-established credit | ||
| Chapter 7, 11, or 12 Bankruptcy | 4 years after either discharge or dismissal of bankruptcy and re-established credit after discharge or dismissal of bankruptcy | 2 years after dismissal or discharge of bankruptcy and re-established credit or borrower has chosen not to incure new credit obligations. | 2 years since discharge and re-establishing credit. |
| Chapter 7, 11, or 12 Bankruptcy (with extenuating circumstances) | 2 years after dismissal or discharge of bankruptcy and re-established credit after either discharge or dismissal if resulted from extenuating circumstances. | Not less than 12 months since discharge of bankruptcy and re-established credit or borrower has chosen not to incur new credit obligations. Borrower must have clear CAIVRS # regardless of bankruptcy. | 1 to 2 years since discharge and re-established credit with satisfactory pay history if due to extenuating circumstances. Borrower must have clear CAIVRS# refardless of bankruptcy. |
| Short Sale | 4 years after completion of preforeclosure same and re-established credit after completion of preforeclosure sale. | 3 years since completion of pre-foreclosure and re-established credit after completion of pre-foreclosure sale or borrower has choose not to incur new credit obligations. | The Department of Veteran’s Affairs does not consider a Short Sale a preforeclosure. |
| Short Sale (with extenuating circumstances) | 2 years after completion of prefoeclosure sale and re-established credit of preforeclosure sale if due to extenuating circumstances. | Less than 3-years acceptable if primary residence and if due to extenuating circumstances and re-established credit after completion of preforeclosure sale or borrower has chosen not to incur new credit obligations. Borrower must have clear CAIVRS# regardless of pre-foreclosure. | The Department of Veteran’s Affairs does not consider a Short Sale a preforeclosure. |
| Foreclosure | 7 years after completion of foreclosure and re-established credit after completion of foreclosure. | 3 years since completion of pre-foreclosure and re-established credit or borrower has choose not to incur new credit obligations. | 2 years since completion and re-establish credit |
| Foreclosure (with extenuating circumstances) | 3 years after completion of forclosure and re-established credit after completion if resulted from extenuating circumstances. | Less than 3-years acceptable if primary residence and if due to extenuating circumstances and re-established credit or borrower has chosen not to incur new credit obligations. Borrower must have clear CAIVRS# regardless of foreclosure. | 1 to 2 years since completion and re-established credit with satisfactory pay history if due to extenuating circumstances. Borrower must have clear CAIVRS# refardless of foreclosure. |
| Deed in Lieu of Foreclosure | 4 years after completion of foreclosure sale and re-established credit after completion of foreclosure. | 3 years since completion of foreclosure and re-established credit or borrower has chosen not to incur new credit obligations. | 2 years since completion and re-establish credit |
| Deed in Lieu of Foreclosure (with extenuating circumstances) | 2 years after completion of prefoeclosure sale and re-established credit after completion if resulted from extemuating circumstances. | Less than 3 years acceptable if primary residence and if due to extenuating circumstances and re-established credit or borrower has chosen not to incur new credit obligations. Borrower must have clear CAIVRS# regardless of foreclosure. | 1 to 2 years since completion and re-established credit with satisfactory pay history if due to extenuating circumstances. Borrower must have clear CAIVRS# refardless of foreclosure. |
