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Non-QM Loans After Bankruptcy With No Waiting Period
This topic on non-QM loans after bankruptcy with no waiting period requirements is mainly addressed to Michelle McCue. Michelle, it has been a while since I kept up to date on non-QM guidelines on mortgages after bankruptcy and foreclosure. Do you know the credit score, down payment, credit requirements, and waiting period on non-QM loans after bankruptcy or bankruptcy?
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This discussion was modified 1 year, 11 months ago by
Gustan Cho. Reason: Forgot to check NOTIFY ME BOX
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This discussion was modified 1 year, 11 months ago by Gustan Cho.
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This discussion was modified 1 year, 11 months ago by Gustan Cho.
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This discussion was modified 1 year, 11 months ago by
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12 Replies
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Gus,
This is a great question. We have programs with no waiting period after discharge from both a Chapter 13 or Chapter 7 bankruptcy. Scores can be as low as 550 at one of our lenders, which is amazing. It gives so many families the ability to rebuild after a housing or credit event.
Lenders will require at least one tradeline open for 24 months, or three tradelines open for 12 months. Down payment will vary based on score and debt to income ratios. We even have options that do not require a debt to income ratio or income documentation,
The options post bankruptcy are abundant if you have the right advocates.
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Down payments vary by program. We have bank testament loans that allow 10% down with a score over 740.
15% down payment is possible as low as 660
Scores down to 550 require 35-40% down, which may sound daunting, but many families are fortunate enough to have a strong equity position in their current home, or savings. We can thankfully utilize their strong position to move them forward.
We can even use our non-qm programs to work around recent mortgage lates. Alternative programs are a great tool!
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20% is feasible but a larger down payment is when it becomes an issue.
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A Chapter 13 payment history can not be use for non-qm, but it is certainly used for FHA & VA.
Many borrowers are surprised they may have a tradeline still open from before the bankruptcy. Many have an account such as an auto loan paid outside the BK plan. We have can help document that if that is the case. If not, we can work with the borrower to secure tradelines. Call us, we can walk you through the process of opening secured cards and credit building accounts and increasing your scores.
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Do petitioners apply for secured credit cards during Chapter 13 bankruptcy? I heard they cannot have credit period.
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I think securing tradelines via secured card or credit building accounts is a great way to rebuild during bankruptcy. I find Self, Applied Bank and Credit strong to be particularly easy to work with.
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Michelle, is Carrington the only wholesale Lender that does late mortgage payments in the past 22 months?
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Carrington has the most forgiving program for mortgage lates. They allow rolling 30 & 60 day lates. They will even allow 90 days. It really an incredible program that gives families a second chance.
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Michelle, many folks just sold their home and need a mortgage for another home to purchase but have had a late payment on their housing payment in the past twelve months and cannot get financing. I know Dan from :Carrington is doing late payment in the past twelve months on mortgage lates. Are there any other wholesale lenders that cater to borrowers with late mortgage payments in the past twelve months>
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As of this moment no one else is doing these loans as well as Carrington. Oak Tree is entering the market, but it is not an easy process. FGMC used to do these loans, but they have exited the market completely.
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Wow. These are great loan programs. If it were not for Carrington, many homeowners could not buy a house after selling their home if they have late mortgage payments in the past twelve months. Thanks Michelle.
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Non-QM Notes Following Bankruptcy Or Foreclosure
Non-QM (Non Qualified Mortgage) loans, such as reconstruction loans, may be easier for clients who have undergone bankruptcy or foreclosure to get. Here’s a broad synopsis of what benchmark requirements would most likely be associated with these kinds of loans:
Credit Score Requirements
Minimum Credit Score: The minimum score required to qualify for many non-QM lenders is 620, let alone those who have undergone foreclosure. The required score is, however, dynamic and will be determined by the specific lender and loan program. It is reasonable to expect that most lenders will set minimums higher for better terms.
Down Payment Requirements
Down Payment: Besides good credit scores, borrowers may have to make a down payment ranging from 10% to 20% or even higher, depending on the loan, the lender, and the loan. In some cases, a higher down payment reduces the adverse effects of the past credit history.
Credit Requirements
Bankruptcy: Regarding the collapse of a Chapter 7 loan, most renowned and credible borrowing agencies do not implement waiting times, making it possible for many borrowers to refinance immediately after the foreclosure so they may obtain a non-QM loan. However, some terms may vary depending on the borrower’s guidelines and the lender’s profile.
Foreclosure: Like their counterparts, these loans are offered at, and in scenarios after the bankruptcy, and non-QM loans offer the possibility to borrow without a waiting period after a foreclosure. But it must be stated that this depends from one lender to another.
Further Thoughts
Documentation: Hire purchase loans for investors are a form of non-QM facility. They don’t document at least as much as traditional lenders, but some form of income and assets will always be assessed.
Debt-to-Income (DTI) Ratio: The non-QM loan is acceptable even for higher DTI, more than 50% in some cases, which have high capacity actuarial and other positive factors that easily manage high-risk rates.
After going through bankruptcy or foreclosure, non-QM loans can provide a great alternative for borrowers who require no waiting periods. The requirements are as follows:
Credit Score: 620 should not be less.
Down Payment: 10% to 30% down payment.
Credit Requirements: Immediately after a bankruptcy or foreclosure, they might qualify.
DTI Ratio: The debt-to-income ratio should not exceed 50%.
Borrowers should reach out to certain lenders as there is great variability regarding multiple options in the non-QM area.