A borrower has a bankruptcy discharge that occurred 30 months ago and has since established new credit with timely payments. For a conventional loan, what is the typical waiting period after bankruptcy discharge?
Correct Answer
D) 4 years from discharge date
Conventional loan guidelines typically require a 4-year waiting period after Chapter 7 bankruptcy discharge or 4 years after Chapter 13 dismissal/discharge. Since the borrower's bankruptcy was discharged 30 months ago, they would need to wait approximately 18 more months to meet conventional loan requirements, though some lenders may have overlays requiring longer waiting periods.
Why This Is the Correct Answer
Conventional loan guidelines typically require a 4-year waiting period after Chapter 7 bankruptcy discharge or 4 years after Chapter 13 dismissal/discharge. Since the borrower's bankruptcy was discharged 30 months ago, they would need to wait approximately 18 more months to meet conventional loan requirements, though some lenders may have overlays requiring longer waiting periods.
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Previous Question
During a rate lock period, market rates increase by 0.75%. The borrower asks to switch from a 30-year fixed to a 15-year fixed loan with the same lender while keeping the locked rate. What is the most appropriate response?
Next Question
An MLO discovers that a borrower's income documentation contains a mathematical error that overstates their qualifying income by $500 per month after the loan has been submitted for underwriting. What is the MLO's obligation under good faith and fair dealing principles?