The Mortgage Brothers Show

Up to date news, tips, and advice, so you can make real estate decisions with confidence.

Mortgage After Pre-Foreclosure, Foreclosure or Bankruptcy

03-30-2011About MortgagesEddie Knoell

Fannie Mae, Freddie Mac, FHA and VA all have guidelines that they set for borrowers who have had a short sale, pre-foreclosure, AZ foreclosure or Arizona bankruptcy to obtain a new mortgage. The waiting period for a short sale is generally two years with the exception regarding FHA, if you were not late on your payments and were relocated because of a job transfer.

The waiting period for foreclosure for VA loans is 2 years, FHA is 3 years and conventional loans is 5-7 years. For a bankruptcy, the general waiting period is 4 years and 2 years with extenuating circumstances such as death, disability, job relocation or divorce.


A foreclosure or short sale stays on your credit 7 years. Your credit score could dip as much as 200-300 points. A good foreclosure defense attorney may be able to negotiate with your lender that a short sale not only satisfies the loan balance, but they may be able to get the lender to report the transaction as satisfied or paid, which is less damaging to your credit. After a couple years of paying your bills on time and not incurring any more debt, you can expect your credit score to go back up to the high 600’s. Bankruptcy stays on your credit 10 years. The most serious impact is the first year or two after the bankruptcy discharge. After that, your score will increase over time. Expect to pay higher interest rates until you are able to improve your credit score. Also, don’t spend over your credit limits. Pay cash whenever you can. Having too much credit can lower your score as well. Keep your credit cards to a couple with credit limits $5,000 or under. Credit counseling and sticking to a budget are recommended if you have experienced a short sale, foreclosure or bankruptcy. Learning how to manage debt responsively is important so that you don’t fall into the same old bad credit spending habits.

Right now many people are experiencing financial hardships and credit problems. While it is very serious and stressful to go through a pre-foreclosure, foreclosure or bankruptcy, for most people these are temporary situations that will improve for them. Lenders realize that extenuating circumstances occur and acknowledge and understand today’s economy, loss of jobs, falling housing prices and loss of equity have created the conditions that millions of homeowners are experiencing. Lenders would prefer to work with their borrowers to find ways to resolve their mortgage situation. The best advice is to talk to your mortgage broker or lender if you are in trouble and try and work out a solution that works for all parties.

Arizona borrowers who have experienced a short sale, foreclosure or bankruptcy in the past few years and who are ready to purchase another home, should talk to their Arizona mortgage broker to find out if they qualify for a new Arizona mortgage.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.


Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to or

Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.