BUYING A HOME AFTER A FORECLOSURE OR SHORT SALE IN Pennsylvania

Buying a home after a foreclosure or short sale in Pennsylvania carries with it a lot of rules and regulations. These shouldn't deter you in any way though. You're trying to get back on track, and one of the ways in which you hope to do that is to buy a home. The rules of buying a home after a foreclosure and short sale shouldn't scare you off, but it will help to know them before you take the plunge into purchasing a home.

First of all there's a waiting period of 5-7 years that must be maintained. This waiting period begins from the date of when the foreclosure sale was concluded.The procurement of a primary residence is allowed with a bare minimum of a 10 percent down payment. It also requires a credit score of at least 680. During this time it is not permitted to buy a second investment property or home. However you are allowed limited cash-out refinances as it relates to any tenancy types that are pursuant to the eligibility requirements on the table in that period of time.

What is not allowed during any occupancy type are cash-out refinances. This is important to remember.

In cases of extenuating circumstances the waiting period is different. 3-7 years is the standard for any situations in which something occurs that is clearly beyond your control. Something that you can prove dramatically inhibits your ability to make the expected mortgage payments. Some of these circumstances can involve such situations as illness, death, divorce, some kind of job transfer or a serious accident.

4-7 years is the standard waiting period in cases of purchasing after a Deed-in-Lieu of Foreclosure. With extenuating circumstances however it can only be 2-7 years.

Although no exceptions are permitted in cases of buying after a short sale, it is possible to still buy after a short sale after 2 years from the date of completion. Short sale is also known as a preforeclosure sale. There are some things that are specific to short sales and preforeclosure sales that you should always keep in mind. This includes the fact that they are in fact two different things. Despite the fact that these terms have been used interchangeably, there is a noteworthy difference when it comes to obtaining credit.  In Fannie Mae purposes, a preforeclosure makes the assumption that the borrower has been aberrant in paying his or her mortgage. The lender then agrees to accept a smaller amount in order to avoid the time and expense of a foreclosure action.  Cases of a short sale can involve situations in which the lender of the mortgage consents to a payoff of a lesser amount than is actually owed, even on a current mortgage. This is normally done in order toaid the sale of the property to a third party.

With the exception of Chapter 13 the rule for buying after a bankruptcyis 4 years from the discharge or dismissal date of the bankruptcy action.

2 years from the discharge date and 4 years from the dismissal date are the standards for buying after Bankruptcy after Chapter 13.

One of the questions you might have is what the difference is between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?Chapter 13 allows a borrower with a steady income to suggest a plan to repay some or all of his or her financial responsibilities over a period of up to 5 years.  A borrower who files Chapter 7 is permitted to retain assets that have been exempted. They are also permitted to receive a discharge of the borrower's debts.  Chapter 7 is a fairly expedient liquidation process that is generally completed within 120 days. Only in the very rarest of cases are they dismissed.

With Chapter 13 the difference between a dismissal and a discharge is that a borrower who files a Chapter 13 can dismiss the case at any time in what is known as voluntary dismissal. Or the case may be dismissed by the court based on the borrower's inability to comply with the requirements of the Bankruptcy Code, or in some cases because of their failure to make the payments.  If the borrower who files a Chapter 13 case makes all of the payments obligatorywithin the plan, the borrower then receives a discharge when the plan has concluded.  However a borrower who fails to make all of the payments required by the plan can still be granted a discharge, under the condition that the court finds among other things, that the borrower successfully deposited a certain number of the required payments. Their failure to continue payments is proven that it was due to something beyond the control of the borrower.

When it comes to credit reports listing short sales (preforeclosure) or Deed-in-Lieu of Foreclosure, short sales may be indicated as having been “paid in full' with a “settled for less than owed” remarks code. The mortgage trade line would then indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu.

And what do you have to do to re-establish credit history? Several requirements must be made:

• It must meet all necessary requirements for elapsed period.
• It must show all accounts beingup to date as of the date of the mortgage application.
• It must include a minimum of four credit references.  At least one of the references will have to be aconventional credit reference. One of the references must be related to housing.With a reference that involves housing, the reference must cover the period following the bankruptcy discharge or dismissal, foreclosure, or deed-in-lieu. Mortgage payments or rental payments both qualify in this instance. In the event that rental payments were not reported to the credit repositories, it is the responsibility of the lender to attain to supplement the rent verification in the form of copies of bank statements, money orders, or canceled checks for the most recent 12 month period.
• It must reflect 3 or 4 credit references, and this includes references for rental housing, as having been active in the 24 months preceding the date of the mortgage application.
• No greater number of installments or revolving debt payments 30 days past due in the last 24 months greater than 2 will be allowed.
• No installment or revolving debt payments 60 or more days past due since the discharge or dismissal of the bankruptcy must be included. This also applies to the conclusion of the foreclosure-related action.
• No housing debt payments past due since the discharge or dismissal of the bankruptcy must also be included, and this can also refer to the completion of the foreclosure-related action
• There cannot be any new public records since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.  Public records include bankruptcies, foreclosure, deeds-in-lieu, preforeclosure sales, unpaid judgments or collections, garnishments, liens, etc..