my wife and I recently divorced in june of 2013. we started our house loan in 2003,after switching several lenders for better rates my now ex wife lost her job in 2009. to that point we were not behind or late on any payments. she struggled to find a new job until 2010. by that time we were behind on the mortgage and were advised out best option would be to give up the house in bankruptcy. it was discharged in aug 2010. now we are divorced and I am trying to get a home loan (don't care for renting anylonger). who are the best options as far as getting a loan with past bad credit. my score is 651 but that mostly reflects the bankruptcy. I am having trouble finding a reputable lender willing to help me start over. I am not looking for an extravagant house out of my means, just a $75000 loan on a home appraised for $110,000 from a friend. any help would be greatly apprieciated..
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2013 FHA Guidelines
Breaking News: FHA Back to Work Extenuating Circumstances
August 2013: FHA acknowledges recession as cause of bankruptcy, foreclosure, short sale or deed in lieu. If you experienced one of these hardships after a 20% or more drop in household income, you’ll want to read this:
- Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy. You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
- Foreclosure - You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
- Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
- Credit must be re-established with a 640 minimum credit score
2013 VA Guidelines
- Bankruptcy Ch 7 - You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
- Bankruptcy Ch 13 - If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
- If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
- Foreclosure - You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
- Short Sale / Deed in Lieu - You may apply for a VA guaranteed loan TWO (2) years after a short sale, unless it was a VA loan then restrictions apply
- Credit must be re-established with a minimum 620 credit score
2013 USDA Guidelines
- Bankruptcy - You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy
- Foreclosure - You may apply for a USDA rural loan THREE (3) years after a Foreclosure
- Short Sale / Deed in Lieu of Foreclosure - If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640. Over 640 your UW will make the call but typically not less than one year.
Although I have not personally processed a USDA with a short sale under 3 years, I have heard of instances when it is possible to buy again with re-established credit in as little as 18 months.In some cases there is not a waiting period.
If the credit was perfect and they had to move because of a relocation or something and had no choice but to ask for a deed in lieu of foreclosure you would be ok.
2013 Conventional (Fannie Mae)
- Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
- Foreclosure - You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure. Additional qualifying requirements may apply,
- Short Sale / Deed in Lieu of Foreclosure - UPDATED 12/16/11
Currently treated the same as a foreclosure with a waiting time of SEVEN (7) years before you can buy again using a Fannie Mae conventional home loan.
- TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment
- FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
- SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
Credit must be re-established with a minimum 680 credit score.
Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.
2013 Jumbo Mortgage Guidelines
- Bankruptcy - You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcy occurs on credit profile.
- Foreclosure - You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure. Additional qualifying requirements may apply,
- Short Sale / Deed in Lieu of Foreclosure - You may apply for a Jumbo mortgage loan:
- FOUR (4) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
NOTE: If hardship is the result of an extenuating circumstance, waiting periods may be reduced. Contact lender for details.
Preparing to Buy Again after BK, Short Sale or Foreclosure
You should begin looking at your credit at least six (6) months before you are ready to buy again.
Quite often there are things left over on your credit report that can delay your ability to qualify.
With a little head start and good advice, you can get your credit in line, qualify for financing and buy again in the lowest priced real estate market that California has seen in years and years!
We specialize in these situations so feel free to drop me an email, call/text or LIVE CHAT anytime we’re online.
Branch Manager at Broadview Mortgage Long Beach, California, I am passionate about educating and empowering consumers. Feel free to call, text or email me at (714) 805-7268 or ScottS@broadviewmortgage.com
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I have a question, If my brother goes through with a "deed in lieu" instead of a short sale would I be eligible to purchase his home? This my be a silly question because I know in a short sale situation family members can not purchase the home but how about a "deed-in-lieu"? Thank you for any and all help you may have =)
Can the 12 months of on time payments consist of car note and credit card payments? Also what fico score is needed?
I want to make sure I understand you correctly. If I made 12 months of on time mortgage payments prior to deed in lieu I would be eligible to buy immediately after recording deed in lieu ? Or that even with on time (12 payments) I still need to wait a year from recording deed date to utilize FHA program?
California resident, chapter 7 bk filed/discharged in 2010 and divorced in 2011. Spouse had lost his business and home wasn't reaffirmed was in pre-foreclosure limbo for 3 years. With that being said all finances fell in my lap. Deed in lieu just recorded last week (yippee). My question is, do you think I will be a candidate for FHA back to work extenuating circumstances ?
Thanks for any information you can give me
crazy question but i have gotten no answers from my BK attorney at all, I lost my job in 2009, 2010 i was forced to file BK including the home. the home just now went to sherrifs sale on 5-30-13, sold to the lender HSBC. now it was just listed with a realtor for about 50% of our mortgage amount. We considered buying it back now but also noticed my name is still on the title even 4 months after the sherrifs sale. Also during the BK proceeding i was forced to get another title copy as the one on record was incorrect. Does this mean anything or am I just beeing hopeful we could buy our house back or move back in as the current owners? I know its a dumb question and Im probably being hopeful somehow they messed up the title during one of the many bank transfers. We had about 6 different mortgage holders throughout the mortagage, just kept getting sold off to different lenders.
you have the bankruptcy criteria for FHA incorrectly listed as two years after a chapter 7, the new rules allow for an FHA loan after a chapter 7 BK has been discharged for 12 months
I had a foreclosure. The deed transfered on 11/09 to the bank. They sold the difference to a collection agency that shows it as a mortgage on my credit report. Even though its been over 3 years, a 703 credit score and income of over $100,000/yr for over 10 years...banks see that mortgage collection and tell me theres nothing they can do. Shouldn't I qualify for FHA? What are my options? Thanks very much for any info.
Hi I cosigned a house I was living in with my sis then I moved out into my own home she has lost her job and has even been in the house 2 months what can we do to let the bank have it just so we dont foreclose the bank is secu in nc I can float 2 house s and I dont want to lose mine our loan was 85 000on a house that appraised for 11000
My name is Melissa, and i have a question for you. I live in Kentucky, my husband qualifies for a fha loan, do to some car issues i had to use our down payment we had saved to fix it. We filed bankruptcy with a house on it, discharged and sold in May of 09, i live in a rual housing area and i wanted to know if we would qualify for it. I know his credit score is a 620.
Hi, our bankruptcy was in 2009. We kept the house but now husband health is going down and he cannot go up stairs. We owe more on the house than it is worth and would like to move to a ranch style home. How do we go about doing a short sale. We have never been late on a payment. Then can we buy immediately if we can do a short sale? We live in Colorado. any recommendations would be appericated.
Hi Scott, I have been reading your forums for quite a while and keeping up with the changing housing markets. First of all, thanks for keeping us informed. We filed bankruptcy in 2007, and had a short sale in 2010. We have restablished credit over 640, and have been renting for almost four years without a missed payment. According to the FHA guidelines listed on this site we COULD be eligible to purchase again in September 2013. I was wondering if there are there any home loans available out there for "boomerang owners" with no money down?
I just realized I'm in this same situation. I had my Chapter 7 discharged over a year and a half ago and our house was foreclosed (included in the Chapter 7) and sold at auction 6 months ago and yet it's "still" in my name on the town records. Is there a way to expedite or force them (bank or new owners I guess) to get it out of my name. It's frustrating as you try to get the "fresh" start and do the right thing and realize after 2 years your "fresh" start hasn't even started yet.
Hi Scott, I have a situation I need help on. I bought a house in 2005. My spouse and I refinanced it together in 2007. After finding mold the house, having a sick child and a husband with a chronic cough from the mold, we decided to let the house go. We owed more then what it was worth and couldnt remediate the mold because we had no more money. We moved out December 2008. We filed chapter 13 bankruptcy to try to repay what we could, but my husband had to have surgery and was not working so we had to change it to a chapter 7, which was dismissed in October 2010 We were told due to changing the bankruptcy the home was never forclosed on, the sheriff sale in 2009 was cancelled. It was just sold at sheriff sale October 5, 2012. It is not listed on our credit reports as forclosed. Fannie Mae is supposed to be the new owner of the property, but I just got notice that there was an amended sale. So I'm guessing that means the home is still in my name???(how do I find out if it is still in my name?) I know the standards for buying after forclosure, but according to our credit reports we were never forclosed, and they have never titled the home to anyone else yet. So we have not had a home for 5 years, but we are stuck because it is still in our names and can not find a lender to help us get a new home. what would you suggest??? Please help, I really would like to have a home for my 3 children again.
I am so glad I found this forum.. I really need your advice! My husband and I are in a similar situation as many below. I will try to summarize as much as possible the 3 year journey we have been on...! Due to employment circumstances in January 2010 we applied for a modification until we could get back on our feet to afford the regular payment. Chase bank screwed around with the modification so much that we decided to try a short sale. We had an offer but Chase never got back with us after repeated attempts and we lost the buyer. Chase then put the home into foreclosure. They filed for a summary judgment and it was denied under the estoppel law due to the fact that they told us to stop paying for 2 months before we could even apply for a modification or short sale. We went to trial in the foreclosure and they didn't show up to the trial so it was closed. They refiled for foreclosure so we are now going through the entire process again. This all began in 2010 and as of July it has been 3 years since we have made a house payment. In 2010 my husband filed chapter 7, I however did not. We can afford the house payment again but at mediation the bank wanted $ 51,000 to reinstate our loan. The house is worth $ 30,000 less than what we owe on it so I am not sure it would even be worth it to try to stay now, although I don't want a foreclosure on my credit. We are planning to counter sue the bank for predatory lending in the hopes that we can drag it out a little longer to figure out what our next step is. My question for you is what should we do now? One thought is to try the short sale route again to prevent the foreclosure but from what I am reading it is the same on your credit as a foreclosure and takes the same amount of time to be able to purchase a home again (36 months after the sale or home is out of your name). Our gross income is around $ 120k, I make 75% of that and I didn't file any type of bankruptcy, so we could afford to rent a decent home until we can buy again. Should we just walk away at this point and rent until we can buy again in 3 or 4 years or do you think we should fight to stay in our house? Thanks so much for your help!
My husband did a FHA ss in November 2010 though the HAFA program. Currently my debt to income ratio is lower than the current market in Virginia were i live and i need him on the loan for income. Can we put a contract on something or do we have to wait until November which would be the 36 months wait? I know we could move $$ around and pay off some of my debts to get the ratio higher, but it gets so bothersome inclusive of all the things you already need to do in order to get a loan now a days.... it just doesnt seem worth it. What are you thought? We'd like to buy now... how can we do it?
@ckrocknroll this really all comes down to what happened to the home after including it in the bankruptcy. BK will protect you from any tax liability resulting from the default on the mortgage, but it does not extinguish the liens against the property, you still own the home until your names are removed from title.
There are a lot of moving parts here, it's not really possible to unravel all of the possible challenges or options based on the information you've given me here.
It sounds like there may be a case for qualifying under the Back to Work extenuating circumstance due to a drop in household income (when your wife lost her job). That would put you in a position to possibly buy again sooner if you lost the home as a result.
What happened to the home after the BK?
@StephanieHansen this is a good question! A short sale occurs when the bank allows the owner of the home (your brother) to sell the home for less than what is owed on the mortgage. Under this circumstance, as you know, the bank will not allow the home to simply be sold back to the owner (through relatives) at a discount.
There is not "sale" per se, with a deed in lieu. A DIL is the bank agreeing to relieve your brother of the debt in exchange for the signing over the title (ownership) directly to the bank. At that point, the bank will repossess the property and most likely process and resell it on the open market as a REO (real estate owned).
You can monitor the activity on the home and as soon as a for-sale sign goes up, you can make an offer to purchase the home at fair market value.
Hope this helps?
@Beastie2us FHA typically requires a minimum 640 fico score, however, individual lenders may require higher. 12 months on time payments will consist of all liabilities that show up on your credit report including your home.
@Beastie2us That is correct. If you can show that the hardship resulted in 20% or more drop of household income, and you can show that you've recovered from that hardship as evidenced by 12 months of on-time payment, you could be eligible.
The 12 months of on-time payments includes all payments on credit report.
Again, we can determine if the hardship qualifies for "Back to Work" by collecting all of the documentation that FHA is asking for as proof. But of course you would have to have the 12 months payments before you get a full approval.
@Beastie2us It does sound like you have the extenuating circumstance of a 20% decrease of household income over a 6 month period. The loss of income can be documented with tax returns, unemployment benefits, or public, 3rd party verification of business closure (did it make the papers?)
The second part of this is the 12 months of on-time payments. Unless you caught all the payments up prior to the deed in lieu, that 12 months starts last week.
Shoot me an email with your contact information if you would like us to review everything and get you pre-approved for new home (pending the waiting period).
@tjohnson999 this isn't a crazy question, it's a good question. The biggest challenge you would have is the fact that you had a defaulted mortgage up until at least 5/30/13.
Normally, you would have a minimum 3 year wait to buy after foreclosure using FHA financing, but it sounds like you may qualify for the Back to Work Extenuating Circumstances exception.
You would need to speak to a lender (what State do you live in?) to explore using the this exception, at the very least, you're going to need 12 months with no late payments - even so, that puts you at 5/30/14 before you're eligible.
Lastly, most lenders will not sell the home back to the person that they had to foreclose on so even if you are eligible to buy.
Hope this helps?
@one4debate The new FHA exception re 12 months out of BK, Foreclosure, Short Sale, etc. has some requirements to be aware of: Borrower must demontrate/prove a minimum 20% decline in income proceeding the derogatory credit, have no accounts currently in collection, no late housing payments for last year, no more than 1 30 day late on any other accounts in the past year, and must get FHA approved counseling prior to applying (not completing - applying) for the loan. There may be other requirements, too. Strategic defaults/BK's will not not have the 12 month waiting period.
@one4debate which guideline are you specifically referring to? If you're referring to the Back to Work Extenuating Circumstances, that is an exception, not a change in guidelines.
Thank you for the comment! I appreciate your help in keeping this information as up-to-date and accurate as possible.
@ajtraylor I would need a lot more information in order to tell you specifically what the challenge might be. You are correct that would be eligible based on a the waiting period from a foreclosure, but it doesn't sound like that's the problem here. Did you have a HELOC, or second mortgage? Or just the first?
Are you in California? I would definitely like to take a closer look. Doesn't make sense from what you've explained.
@mtllvr Hi Melissa, thank you for the question. USDA guaranteed requires a 3 year waiting period before after a hardship such as bankruptcy or short sale. Based on that, you're eligible to start getting the fact about the loan options available to you. With the 3 year waiting period, you would also qualify for VA or FHA financing. I have a friend that can lend nationwide and specializes in USDA rural loans. I will send you contact information by email.
Hope this helps?
@traverse other than VA financing for U.S. Military, or USDA Rural Development Loans (must purchase in specific designated areas), the only way to buy with no money down is to stack Buyer Assistance programs on top of FHA financing. It's important to also keep in mind that even though you may be able to achieve zero down, it doesn't mean no cost. You should figure that the cost to buy a home will be about 8% of the purchase price. This is a rough estimate and includes down payment, inspections, closing costs. Depending on the State and County you live in, start researching assistance programs now, so you know how much to save to bridge the gap.
If you're in California, I may be able to help with that.
Hope this helps?
@calcarpenter1 how do you know the home is sold if your name is the owner of record? You can certainly follow up with the lender, or the "buyer" if there is one. Technically, nobody else owns the home if you're still on title....you could move back in if you like.
Unfortunately, there is no law (currently) that forces a lender to foreclose if you default on the mortgage. The only thing you can try to do is to speak to the lender. If indeed the home was never foreclosed, and you do still own it - try listing it for sale with a local Realtor. A short sale is the only way you will have any semblance of control over the process.
I wish this was an easier process for folks like yourself, unfortunately though, bankruptcy attorneys don't always explain clearly that including a mortgage in bankruptcy does not relieve you of your obligation to the loan, or your change your ownership in the property.
Hope this helps?
@mcmomma711 you can look up the chain of title to determine if you've been removed as owner. Many Counties have this information online, a lender or title company may be able to get this information for you, or you can go down to the County recorder's office to get this information. You will need to verify that you've been removed from title.
The credit report is not the record that lenders will look at to determine if there was a foreclosure, they look at public records (chain of title). Bankruptcy protection, and default/foreclosure are two completely separate events. Because the BK was discharged in 2010, you are clear of the waiting period for the CH7.
You will need to determine if the home is foreclosed, then you may be eligible to buy again using FHA financing in 3 years from the date your name is removed from title as long as all other credit qualifying criteria is met.
Hope that helps?
@taniakay66 if the home that short sold was FHA, and it sounds like now you're trying to use FHA financing to buy gain, the "waiting period" begins when the mortgage insurance claim was paid, not necessarily the sale date. That said, unless you're using conventional with 20% down, or VA financing, you would have to wait until after 36 months after the FHA MI claim is paid.
Hope that helps?
@ScottSchang @ckrocknroll the house went to the mortgage company and was sold at auction. for half of its appraised value. its currently owned by a new couple. we had a deed in lieu on the home which clears the 3 year wait period in april of 2014. we definetly loss the home due to my ex wife's loss of her job. up to that point the mortgage was in good standing and both of our credit ratings were around 700. now that its just myself I'm trying to get a home for myself and my son but finding it challenging to find a lender willing to "take a chance" on me.
There's no second. It's the original loan. The difference between what it sold for and the loan amount was sold off as debt to a collection agency called Real time Resolutions. It shows on my credit report as a past due mortgage, even though they admit that the property has been sold. I have title work showing the deed transfer to the bank and then them selling it and transfering the deed again. I did not have a HELOC. I live in Florida. Thanks again for any info
@teri2010 there's not really any such thing as just "giving it back". You should certainly inform the lender that your sister is having employment challenges. There may be a program to help cover her payments in the event that she's laid off (California has a program like this).
The lender cannot come after your home, however, you will have a blemish on your credit report if your sister defaults on this loan.
Hope this helps?
Thanks Scott, i did the search and found out even though the house sold at sheriff sale oct 2012, they didnt change the deed till may 30, 2013. My next question is, since the home was only deeded to me and not my husband is it possible for him to get a home loan? He had rebuilt his credit after our bankruptcy by getting a car loan, and credit card. What else can we do to try to rebuild to buy again?
Thanks for ur advice!
hi Scott, yes we'd be trying to use FHA again....k so after the closing in 2010 was completed how long does it take for the funds to be sent to FHA? it was done through MBH so it should have been immediate through a wire transfer.... but either way you're saying if i use him we stuck with waiting, or getting a house i can afford on my own credit and debt to income ratio.
If you do not have any revolving credit lines, you'll need to get some. The biggest challenge I've seen with folks coming out of bankruptcy is that they don't purposely build good credit after letting everything go.
I learned that one the hard way myself. You have to credit cards, and pay them down to $0 every billing period.
@ckrocknroll @ScottSchang ok, good! It sounds like worse case scenario is that you are eligible for FHA financing in april of 2014, and, with a minimum 680 credit score (shouldn't be too hard to get 30 points) and 20% down payment, you would be eligible for Conventional financing now.
It sounds like you definitely have options. The real question is can you buy before April of 2014. You can if you meet the conventional guidelines, or if your'e eligible for VA financing.
@ScottSchang @kristenmarthabrown @one4debate Exactly, hte Back to work program, it is just my intent to let people know, there are exceptions to the rules, Kind of gives hope to those who did have extenuating circumstances beyond their control, just so they are aware they CAN still qualify for FHA should they meet the criteria under the new program.
@ScottSchang @ajtraylor That would be great Scott, thank you. I'm currently dispute this with the credit reporting agencies. How can they show an open mortgage account when I don't own any properties? Is this the normal way to try and collect on a foreclosure deficiencies? The company that's doing it won't send me validation to collect on this loan. Very shady.
@teri2010 no, nobody can come after your home specifically. However if the home defaults, you may receive a 1099 for any losses the lender may incur as a result. You probably want to speak to a real estate attorney to get all the facts about what to expect and how to prepare yourself for any liability that may come from you co-signing on the loan.
@teri2010 If you are on the loan documents and the Note, then any default would affect you just as it would your sister. A deed in lieu on your credit would require you to meet the minimum "waiting period" before you would be eligible for traditional financing.
@mcmomma711 If you husband was on the loan he would have to wait. If he was not on title or the loan, then yes - as long as he could credit and income qualify on his own.
ok great. thanks for all your help. i looked up what I could afford on the FHA site and it seems I should be ok. I'll talk to a broker local.. .thanks again :)
@taniakay66 your loan officer can look up when the MI claim was settled in "FHA Connection" - they will know what that is. Unfortunately, yes - you're stuck with the waiting period if you don't qualify on your own