Bankruptcy ( Chapter 7 or Chapter 11). A four-year period is required to re-establishcredit; measured from the discharge or dismissal date of the bankruptcy  action. Exceptions for Extenuating Circumstance: A two-year period is required to re-establish credit; measured from the discharge or dismissal date of the bankruptcy action.

Bankruptcy ( Chapter 13). A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The time period required to re-establish credit for Chapter 13 bankruptcy actions is measured as follows:
• two years from the discharge date, or
• four years from the dismissal date.
This policy recognizes that borrowers have re-establisted credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse. A borrower who was unable to complete the Chapter 13 plan and received a dismissal, will be held to a four-year time period for re-establishing credit. Exceptions for Extenuating Circumstances. No exceptions are permitted to the two-year time period after a Chapter 13 discharge.

Multiple Bankruptcy Filings: For a borrower with more than one bankruptcy filing within the past seven years, a five-year period is required to re-establish credit; measured from the most recent disnrissa1 or discharge date. Note: The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default.

Foreclosure. A five-year period is required to re-establish credit; measured from the completion date of the foreclosure action as reported to the credit report or other foreclosure documents provided by the borrower. Additional requirements apply after 5 years up to 7 years following the completion date:
· The purchase of a principal residence is permitted with a minimum of 10% down payment and minimum representative credit score of 680.
· The purchase of a second home or investment property is not permitted.
· Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
· Cash-out refinances are not permitted for any occupancy type.

Exceptions for Extenuating Circumstances. A three-year period is required to re-establish credit; measured from the completion date of the foreclosure action. The additional requirements listed above apply after 3 years and up to 7 years following the completion date, except the minimum credit score of 680 is not required.

Deed in lieu of Foreclosure. A four-year period is required to re-establish credit; measured from the completion date (the date the deed-in-lieu was executed). Additional requirements that apply after four years and up to seven years following the completion date:

· The borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10% minimum down payment or the minimum down payment required for the transaction.

· Limited cash out and cash out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.

Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit; measured from the completion date. The additional requirements listed above apply after 2 years and up to 7 years following the completion date.

Preforclosure Sale. A two-year period is required to re-establish credit; measured from the completion date.

Exaptions for Extenuating Circumstances. None.

EXTENUATING CIRCUMSTANCES for DEROGATORY CREDIT: Extenuating circumstances are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower's claim. Examples of documentation that can be used to support extenuating circumstances include  documents that confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower's inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.). The lender must obtain letter from the borrower explaining the relevance of the documentation. The letter must support claims of extenuating circumstances; confirm the nature of the event that led to the bankruptcy or foreclosure-related action; and illustrate the borrower had no reasonable options other than to default on their financial obligations.

REQUIREMENTS for a RE-ESTABUSHED CREDIT HISTORY: After a bankruptcy or foreclosure-related action, a credit history must meet the following requirements to be considered re-established:

· It must meet the requirements for elapsed time since the derogatory credit event, outlined in the topic 408.05, Derogatory Credit Information.

· It must reflect that all accounts are current as of the date of the mortgage application.

· It must include a minimum of four credit references. At least one of the references must be a traditional credit reference, and one of the references must be housing-related.

A housing-related reference must cover the period following the bankruptcy discharge or dismissal, foreclosure or deed-in-lieu and can be in the form of mortgage payments or rental payments.

If rental payments were not reported to the credit repositories, the lender must obtain copies of bank statements, money orders, or cancelled checks for themost recent 12-month period as a supplement to the rent verification.
· It must reflect three of the four credit references, including rental housing references as active in the 24 months preceding the date of the mortgage application.

· It must include no more than two installment or revolving debt payments 30 days past due in the last 24 months.