VA guidelines for derogatory credit information part three

Dated: October 23 2012

Views: 2367

Here are the derogatory events associated with a Veterans Administration Loan and the waiting periods associated with a derogatory credit event to be able to re-qualify. This in general determines when a loan can be initiated after the events listed below.

VA Loans (Determined by the Date of Credit Approval)


Deed in Lieu of Foreclosure


Foreclosure: Home was given back to the bank- No Owner participation.

2 years from date foreclosure completed and transferred back to the bank.

12-23 months from date foreclosure completed and transferred back to bank if credit re-established and paid as agreed and was caused by acceptable extenuating circumstances.


Short Sale


Short Sale: Home sold but sales price did not cover amount owed

2 years from date of sale closed and transferred to the new owner.

No waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions.


Bankruptcy Chapter 7


Debts are discharged through bankruptcy. Client does not pay any debts owing.

2 years from date of discharge

12-23 months from date of discharge if credit re-established and paid as agreed and was caused by acceptable extenuating circumstances.


Bankruptcy Chapter 13

Debts are paid back on a monthly scheduled payment plan by client.

1 year payout period under bankruptcy has elapsed the borrower’s payment performance has been satisfactory and all required payments made on time.


*** Examples of extenuating circumstances (circumstances must be verified and documented):

VA: Unemployment, prolonged strikes, medical bills not covered by insurance, etc. Divorce not viewed as beyond the control of the borrower and /or spouse.



Source:THINKBIGWORKSMALL; The RE Resource, The Real Estate Resource(pub.)

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