One of the problems facing Tennessee home buyers looking to purchase their home after a foreclosure is the amount of time the banks often take to complete the foreclosure process and actually retake possession of the property. Although the foreclosure process may have started three years or more ago on their Tennessee home, the bank may have not completed the process for one, two or in the case with a recent client the bank waited three years to complete the process.
The difficulty with this reality is that in most cases the Tennessee USDA Rural Development underwriting guidelines require the three year waiting period following the completion of the foreclosure process, meaning that the bank has retaken possession of the home. Thus, if the bank waits two or three years to complete the foreclosure process on a home, the Tennessee home buyer would have to wait the two or three years for the completion of the foreclosure process and then wait an additional three years before they are eligible for a Tennessee USDA Rural Development loan. The wait can be as much as six years or more due to the bank’s delay in completing the foreclosure process.
However, there is an exception to the rule that requires the three year waiting period to begin after the foreclosure process has been completed. In situations where the home that has been foreclosed was included in a bankruptcy, the bankruptcy waiting periods require required for a Tennessee Rural Development loan takes priority over the foreclosure waiting period. The benefit of this exception is immense for home buyers. While the foreclosure process can take years to complete to complete, the bankruptcy process can be completed in just a few months. So, although the Rural Development waiting period for both a foreclosure and bankruptcy are both three years, the three year waiting period on the bankruptcy begins as soon as the bankruptcy is discharged while the waiting period on a foreclosure can take years to begin.
The result is that home buyers that had a foreclosure that was part of a bankruptcy will be able to qualify for a Tennessee Rural Development loan much quicker than those borrower’s that had a foreclosure that was not part of a bankruptcy.
Call VanDyk Mortgage today at 865-686-8711 to answer your questions about a USDA Rural Development Loan.