Scott, thanks for providing valuable information and also for having this forum. I live in Ohio and I have been trying to get a conventional mortgage, however, I am having a difficult time. I have spoke to several lenders, all that claim they cant financing for me. However, once they submit it to the underwriter, they cannot do it. The sad part is that I tell them up front what is on my credit report and ask them to talk to an underwriter before I continue with process. The problem is that I have a second mortgage that charged off in 2010, I paid it, think I had to, I actually settled for less the full amount in 2012. My question is how is this treated or looked at and what is the waiting period to apply for a loan. My score is around 670 and I currently have 5% to put toward the purchase. Thanks in advance for your advice.
@byrdman52 the second mortgage settle for less than the amount owed would considered a short sale in terms of the required waiting period before being eligible to buy again. Was there a bankruptcy involved?
Also, if you could clarify, it sounds like you sold your previous home but there was not enough equity to pay the 2nd in full?
If you did have a short sale (and no bk) you would have to wait a minimum of 2 years from the date of the short sale, date you settled the second for less than the amount owed (2012) if you have a minimum 680 FICO and 20% down payment.
You would be able to buy using conventional in 3 years with 10% down, or FHA in 3 years with 3.5% down.
Hope this helps?
@ScottSchang @byrdman52 Scott, I did file a Chapter 7 Bankruptcy that was discharged in September of 2004. I did not reaffirm the house. However, the attorney left off the second mortgage which eventually was charged off in June of 2009 or 2010. I settled with them in May of 2012. The house was not in foreclosure. Thanks.
It's actually not the loan that you need to be concerned about, it's the lien against the home that you need to address. You need to get title out of your name, either through foreclosure, or best case scenario is to short sale the home.
Very worse case scenario here is that you would be eligible in 3 years form the date of the foreclosure. That date could be as soon as 2 years if you are able to short sell or do a deed in lieu of foreclosure.
@ScottSchang @byrdman52 Hi Scott. Not one Lender has provided me the information you gave in the previous post. Based on what you told me, I have alot of work to do. and I am not ready to buy. Not sure what I'm faced with. Wells Fargo is my mortgage company and according to them, they wanted me to quit claim the deed over to the co borrower but never indicated why. I was under the assumption she was assuming the loan. With that in mind, she would need my signature, which I would gladly sign off on. More recently, I just learned the house is in foreclosure and i am still considered on the loan. Any other suggestion would be fine. I know its a waiting game until the house is sold. I wish those lender were up front about things and not waste theirs and my time. Thanks.
@byrdman52 @ScottSchang I do know lenders in Ohio, and I want to follow through with this conversation because I think there are many people have these same challenges, and i want to try to provide answers and I want to make sure you understand your options.
It sounds like you believe that because of the BK, and because the co-borrower lives in the home and you do not, that you are eligible to buy now. You are not. You are still on the hook for the short sale, and possibly more challenges in the future depending on whether or not your name is still on the first mortgage and if you are title to the home still.
Bankruptcy does not mean that you do not owe the mortgage, or you are not responsible for it - it simply means that you are protected from any tax liability in the event of default, or loss incurred by the lender in your case, by settling the amount for less than amount owed.
A knowledgeable lender would have asked more questions and never let you apply in the first place, you're still a year or two away from qualifying for a mortgage.
While I could send you to yet another lender, you will get the same answer - I really just want to make sure you don't have any more surprises in the future and that you have a reliable timeline for when you would be eligible to buy again.
@byrdman52 @ScottSchang what about the 1st mortgage? Are you still in the home? The challenge you're having with the other lenders is that the second mortgage probably stopped reporting when you filed BK. They would not know until they looked up public records that the lien was released and the debt was settled for less than amount owed (viewed as a short sale) in May of 2012. Depending on what happened with the 1st mortgage, your timeline to buy again would begin from May 2012 and you would be looking at a minimum of 2 to 3 years before you would be eligible again.