Tag Archives: distress

Home Buying After Foreclosure or Bankruptcy- How Long Until I Am Eligible?

Only a few short years ago, the Denver Market was flooded with short sales and foreclosure properties for sale. The bankruptcy rate in Colorado was still fairly high then. Many people lost their homes during that time and have been renting since then. With the current tight rental market and rising rental rates, they may now be wondering, “How long until I can buy again”?

The answer is “it depends…”. Bankruptcy, Foreclosure, Short Sales and Deeds-in-Lieu are all called, “derogatory credit events” in the lending world. The waiting period before you are eligible for a new home loan will vary depending on: which type of “event” you had, the circumstances that lead to it, and the type of loan you want to get for your next house (VA, FHA or Conventional).

The lending world breaks down these events types even further: Foreclosure, Deed-in-Lieu, Short Sale, Multiple Bankruptcies, Chapter 7 Bankruptcies, and Chapter 13 Bankruptcies.

VA seems to be the most forgiving of these derogatory credit events. With VA financing, the buyer is eligible for a new loan only one year after a Chapter 13 bankruptcy. The wait period for the other types of events is only two years.

For FHA, the wait period for Chapter 13 bankruptcies is also after one year of on-time payments and approval from the bankruptcy court. It is 2 years for a person having a Chapter 7 or multiple bankruptcies, and 3 years for a Foreclosure, Deed-in-Lieu, or Short Sale.

Conventional Loans tend to be less forgiving. Wait periods range from 2-7 years depending on the type of event. After the wait period is up, the buyer may also be required to come with a higher down payment amount for their new loan.

The following chart, provided by the Wynn Team with Citywide Loans, provides a “short and sweet” visual summary of the waiting periods required for each circumstance and loan type.  Here is the link to the chart:

Derog Waitng Period for mortgages

Buyers should keep in mind that even if the waiting period has elapsed, lenders still make loan approval decisions based on credit scores and debt-to-income ratios. The waiting period is an added requirement.

If you are ready to buy or sell a home, please contact me!  I would love to help you make that move!  Or, if you have any questions, also please fill out the form below.


Distress Sales in the Ranch & Ranch Reserve

Real Estate statistics for sales across the Denver Metro area indicate that the real estate market is improving.  Prices are up, inventory is down, and sales are closing much more quickly than a year or two ago.  This is all good news for sellers!  But since the “devil” is usually in the details, it might be a good idea to take a closer look at those numbers to get a better feel for the recovery of any specific neighborhoods.  For example:  The Ranch, and The Ranch Reserve.

How have we been affected by distressed sales in The Ranch and Ranch Reserve?  The charts below break out the types of sales that we are still seeing in these neighborhoods.  “Distress” sales, such as shortsales and Foreclosured properties (BANK/REO/HUD) can take a toll on the home values in a neighborhood, since these are usually sold “as-is” and, depending on the property’s condition, may be sold significantly below market value.  This has the effect of bringing down the property values in the surrounding area when used as a “comparable sale” in home appraisals.  In high foreclosure and high shortsale neighborhoods, values may stay depressed for a longer period of time than a neighborhood that has mostly “normal” types of sales.

So how does the Ranch and Ranch Reserve stack up?  In the past twelve months, in both neighborhoods, only about 65% of the homes were sold in what would be considered a normal sale by an individual (no banks involved, no corporate approvals, etc).  Of the homes currently on the market (active, pending, or under contract), the market looks better in both The Ranch and The Ranch Reserve.  About 82% (18 of 22), of homes in The Ranch and 92% (11 of 12) of the homes in the Ranch Reserve are normal sales.

That’s a good sign for these two neighborhoods- hopefully one that will continue!  In recent years, home values in The Ranch and Ranch Reserve were in decline by up to 10% per year.  In Filing 6, for example, homes backing to the golf course sold for around $400k-425k in 2004, but recent sales of these homes are now closer to $380k!  We still have a lot of ground to make up to get back to the “pre-crash” levels.  But things are improving, with less distress sales and more demand in the overall market.  That should keep property values moving in the right direction (up)!

SOLD (in the Past 12 months):  

Sale Type Ranch Ranch Reserve
Regular sale by individual 17 13
Short sale 0 1
Bank/REO/HUD 5 4
Corporate/Estate/Trust 4 2
Total 26 20


Sale Type Ranch Ranch Reserve
Regular Sale by Individual 18 11
Shortsale 1 0
Bank/REO/HUD 2 0
Corporate/Estate/Trust 1 1
Total 22 12