Bay Mortgage - Located in Traverse City, Michigan


Bay Mortgage Northern- Damaged Credit, Bankruptcy and Foreclosure

At Bay Mortgage, it is not about fault or blame when it comes to credit scores.  If for one reason or another, your credit score has been damaged - we don't judge. 

What we will do however is look closely at the guidelines for the programs that we have available.  Often we can look beyond collections and still deliver a mortgage for you.

The good thing, is that it costs you nothing to find out if we can help.  If we can - excellent, you are on the road towards purchasing a home or refinancing your existing.  If you don't qualify today, we can put you on the path to re-establishing your credit so you can purchase or refinance in the near future.

If you've gone through a Bankruptcy, Foreclosure or a Short Sale, there are often waiting periods before you'll qualify for a conforming or government loan.  Knowing that every lender must abide by these waiting periods can help you avoid the frustration of making numerous phone calls to banks, credit unions, mortgage brokers, etc.  These are the rules we all have to play by.  The wise thing to do is structure a plan to save money and work on your credit score so you can position yourself to purchase when the window of time is up.

But keep in mind that just waiting for time to pass is NOT the only consideration when you try to apply...

• The borrower must have “re-established good credit”, meaning they had no late payments, collection accounts, or any other derogatory credit for the 12 months prior to the loan application.
• To re-establish credit, you must use credit.
• The guidelines mentioned here are ONLY for Fannie Mae, FHA, and VA. The borrower must ALSO comply with the guidelines of the individual lender and the mortgage insurance company (if the loan is a conventional loan).


Here are the waiting periods for each of the most common mortgages available.

Federal Housing Administration (FHA) Insured Loan

  • Foreclosure – 3 years
  • Deed-in Lieu – 3 years
  • Short Sale – 3 years
  • Bankruptcy (Chapter 7) – 2 years from bankruptcy discharge (1 yr with proof of extenuating circumstances)
  • Bankruptcy (Chapter 13) – 1yr of the pay-out period has elapsed. Most lenders like to see the BK discharged for 2yrs


USDA/Rural Development Loan

  • Foreclosure - must have occurred over 1 year ago (as evidenced by Sheriff’s Deed) and must receive an Accept/Eligible recommendation.

  • Bankruptcy - Must be discharged over 1 year ago (as evidenced by Sheriff's Deed) and must receive an Accept/Eligible recommendation.

  • Short Sales/Pre-Foreclosure Sales -  will be considered as foreclosures, and must meet the applicable 1 yearwaiting period on a GUS Accept. If the GUS findings do not recognize the short sale from the credit report,the 3 yearseasoning requirement for a manually underwritten loan must be applied.

    *If a deficiency balance is reflected owing on any federal debt, such as the result of foreclosure,the debtmust be paid off before the borrower is eligible for an RD loan.


Veterans Administration (VA) Guaranteed Loan

  • Foreclosure – 2 years.
  • Deed-in Lieu – 2 years.
  • Short Sale – 2 years.
  • Bankruptcy (Chapter 7 or 11) – 2 years from bankruptcy discharge
  • Bankruptcy (Chapter 13) – 2 years from bankruptcy discharge for automatic approval 


Conventional Conforming Mortgage Loan (meets Fannie Mae (FNMA) and Freddie Mac (FHLMC) Loan Purchasing Guidelines)

  • Foreclosure - 7 years for full eligibility with Fannie Mae and Freddie Mac. (A three-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the completion date of the foreclosure action.)
  • Deed-in Lieu- After 4 years for up to 90% LTV(10% down)  and 2 years for up to 80% LTV (20% down)
  • Short Sale - As early as 2 years with up to 80% LTV (at least 20% down).  After 4 years for up to 90% LTV(at least 10% down).  After 7 years for higher than 90% LTV (less than 10% down).
  • Bankruptcy (Chapter 7 or 11) - 4 years from bankruptcy discharge or dismissal with Fannie Mae and Freddie Mac (A two-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the discharge or dismissal date of the bankruptcy action)
  • Bankruptcy (Chapter 13) - 2 years from bankruptcy discharge (4 years from bankruptcy dismissal) for automatic approval with Fannie Mae or Freddie Mac. 

Conventional Non-Conforming (JUMBO loans which exceed the maximum loan amount which will be purchased by Fannie Mae or Freddie Mac)

  • Foreclosure – 7 years.
  • Deed-in-Lieu – 7 years.
  • Short Sale – 7 years.
  • Bankruptcy – 7 years.

     Please note, if extenuating circumstances apply, waiting periods may be reduced.  


If you're waiting period is up, just click on the application link below to find out how Bay Mortgage can help.  If you'd like to discuss a strategy to prepare for a future mortgage, we can help with that too. And although we're not credit repair experts we can give you some basic info to get you in the best postition to qualify when your time comes.

Get Pre-Qualified today. Apply Online

Bay Mortgage, Traverse City, Michigan