Scott, I wrote you more than a year ago, but would now like some additional advice. After a lawsuit over our primary residence that was jointly purchase with family. We were ordered to sell the property in late 2010, after other related legal snags, we recorded a DIL on 03/29/2012. All of the info says we can buy again in 2 years, 20% down and a 680 credit score. We both have 30 years with the same employer and solid income, we left So Cal on a formal job Relo and are trying to buy in Las Vegas NV. I have just begun to look for lending, and am running into what is being called an Overlay of the requirements adding a year by the big guys, Chase, Quicken, etc. Can you give me a referral or direct me so that I do not have my credit pulled multiple times? Thanks.
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2014 FHA Guidelines
- 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
2014 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
2014 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.
2014 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.
2014 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
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 or leave a question below.
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 (562) 999-1355 or ScottS@broadviewmortgage.com
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Scott, you've been a wealth of information, and I hope you don't mind one last question. Its been 3 years (and a day!) since my foreclosure was recorded, and so we're starting to look again. We expect to get an FHA loan with 5% down. Santa Cruz County has a loan limit of 625,000. We've found a home that we'd like to make an off on, and we have a pre-approval letter in hand for a loan on a house that is at $595. Here's the rub and the question: the house in question may be "non-traditional" in that it has a geodesic dome roof. However, it is listed on zillow as "Traditional" construction. Do you know if the FHA can demand more money down in this case? I realize ultimately its up to the lender to decide whether they will lend the money, but I'm wondering how the FHA sees properties like this. If the FHA wants us to put 20% down, then we won't even make the offer. Thanks!
Our primary mortgage was written/charged off in Dec 2011, we were behind in payments. We made payments every month since Dec 2011 and as of April 2014 made a settlement with the bank. The loan of 171,000 was settled for 60,000 with a payment plan for 60 months. We missed one payment in April because the letter stated the new pmt amt would be due May 31 and for that reason the loan was transferred to a collection agency. The collection agency is willing to honor the settlement of 60,000.
We consulted a BK attorney who advised us to let the property go and file BK since we don't intend to keep the property. The value is less than 60K and the prop needs work. The attny said we would not be responsible for the debt if filed but the property will still be in our name and we'll be held responsible until the bank forecloses.
We were told we will no longer be financially responsible for the debt, is that true? Do you recommend if we intend to purchase another home that we just give up on this situation? Do you have any thoughts on how we should move forward and whether BK is our best option? The prop taxes are behind and it will be going to Auction in Aug if we don't pay. Thanks!
Hoping you may be able to provide guidance and have a long story.
I took out a VA 1st mortgage in 2004 and then in 2008 added a second mortgage through a local credit union. Went through a divorce house went into foreclosure (2009) but I ended up working out a modification with the 1st, but second refused to modify or work with me.
Payments were made timely since modification. Second refused to modify and ended up suing ex wife and myself causing me to file chapter 7 (2011). Didn't reaffirm mortgages and have paid since 2011 without showing on credit. Sold property this week, for full payment on first and VA and a settlement that removes lien against second. 2 years after my BK was approximately Jan 2014 and went to try and obtain a new mortgage. Since I had the previous mortgage I was told that I had to refinance it, so I chose to sell it. Now I'm being told that I have a short sale and I am ineligible for another 3 years.
I feel as though I am being punished twice; first for the chapter 7 (which I agree with and understand) and now for this second who pushed me into chapter 7 in the first place. If it doesn't show on my credit as a short sale nor will there be liens against the property is there a way around this? Thanks
We just closed on our new home. We were able to get fha financing despite the heloc settlement post ch 7.
We had a Ch.7 discharged over 2 years ago but our HOA foreclosed last October. There is no mention of foreclosure on our credit report. When will we be able to try and get a VA loan. Our credit score is in the 680's.
We are buying in rhode island. We stopped paying the HELOC during settlement negotiations. I guess we are looking at waiting a year?
We had a ch 7 bankruptcy discharged in december 2011. The first mortgage and HELOC were included and never reaffirmed. Stayed current on first mortgage and settled HELOC for a lump sum to remove the lien on the house. The HELOC was charged off september 2013 settlement finalized february 2013. Can we get a mortgage on a new house and rent our current home? We are $20,000 underwater on the mortgage but qualify based on debt to income ratios to carry mortgage on our current home and a new home. Credit score is high 600's .
Just wondering about auto loan that is showing on my credit report that I reaffirmed but the bank claims they never got the paperwork. I tried to get it corrected but it was like dealing on a deaf ear. My attorney gave me copies of the reaffirmation but the bank said it wasn't filed. Anyway I have 2 payments left on the loan and it still shows on my credit report with a high balance, due to non-reporting by the bank. Is this going to cause me problems when I go for a mortgage after my 24 months?
We completed a DIL in September 2013. I am closely following my credit reports, because with our planning, we will have our 20% down on a house at the 24 month point after the DIL. Question is on the credit reports. My reports are showing:
Experian: CRD--creditor received deed
Equifax; 120+ days late (comment field states creditor received deed in lieu of foreclosure
Transunion: 120+ days late
I cannot see my MOP codes to know how this is coded. I was not in default per the bank and not in any foreclosure process at that point.
Is my report showing correctly? How can I find out if my MOP codes are correct? My credit score has not fallen < 700 at this time, and I have 2 car loans that I keep up to date and 2 credit cards that I use sparingly and pay off at the end of each month, so I feel confident that as long as the credit agencies are reporting as DIL and not as a foreclosure, I should be ready to re-enter the market in the last quarter of 2015.
Any direction regarding ensuring the credit report is correct? Anything else you suggest?
This thread has been a great resource. My question is about timing. The deed on my foreclosure transferred on 2010-06-27.
If I want to buy again with FHA, should I:
A) Get PreApproved and find a house BEFORE that date, and get the loan officer to delay sending it to underwriting until after 2011-06-27
B) Not bother even looking until after that date.
C) something else?
I'd be putting at least 20% down, long work history, 700 FICO. Chapter 7 discharged in June, 2010, Foreclosure deed transfer June, 2011. (House was included in bankruptcy, and we'd moved out, but they took two years to foreclose..)
OK I have a question! am trying to purchase a home thru USDA . i found our home but the bankrupty wont be 3 yrs till june 2014 will they go ahead and approve it now r will it have to be exactly the date of june?
Scott, what about the Back to Work Program:
AUGUST 2013 FHA UPDATE: If a borrower meet the new FHA “Back to Work” program criteria, they will be eligible for an FHA loan 1 year after short sale.
Something else just came out in January 2014 about your debt to income ratio and what it needs to be to qualify for a mortgage.
My husband and I are hoping to qualify for this, we live in Worcester MA. Bankruptcy, chapter 7 in 2009, short sale in 2011. I have 4 collection medical bills on my credit report that state they were included in bankruptcy. I also have 1 late payment in 6/12 for a credit. I have disputed this, setup automatically payments thought they would be indefinite, but because of capital one buying orchard bank auto pymts were setup for 3 mnths. I had email alerts setup but did not receive them. I called they said they would take care of it and were sorry for the problem.
Will one late payment really stop us from getting another home if I can't resolve this?
My husband and I had a home foreclosed on in 2008 due to a predatory loan and then we filed Chapter 7 with a discharge date of 1/24/2012. We received a 1099-C on the foreclosed home in 2009. My credit is a 696 and my husbands is a 676, we have re-established credit with 2 car loans and no late payments. Will we be able to buy a home on a USDA guaranteed loan?
I have a chapter 7 bankruptcy discharged 9/12, Lost job due to injury on the job and I am now on Disability with steady income. I have established new credit card accounts with 12,500 line of credit which I am only utilizing about $400.00. No late payments or any derogatory issues after the bankruptcy. I keep reading all over the internet that you can get financed after on year if you have extenuating circumstances. Would I qualify? And if so who does these type of loans, I haven't been able to find anyone. Looking to move to Florida. Any help or suggestions? Thanks!
@stevebook I'm going to have to do a little more research on this - are you Pre-Approved with us? We are a direct lender in California. If not, what is your other lender saying?
2nd Question - is it only the roof that is geodesic, or is it a dome house? Zillow rarely has accurate information about anything - Zillow is not meant to be accurate, it's an advertising site so they can sell leads to real estate agents. Still, it must has said somewhere, on some public record, or some MLS listing by an agent at some time in history, in order for that information to make it's way to Zillow.
Last thing I can think of, is if you can shoot me the address (you can email to ScottS@Broadviewmortgage.com - let me do more extensive research through public records and title reports.
@VDThom "not financially responsible" is not the best way to phrase it in my opinion. BK will protect you against any default judgements, or tax liability in the event that you should default on the mortgage. BK may also postpone the auction - however, you will still need to get the lien removed from the home. Simply including the mortgage in BK will not put you in a position to buy a new home sooner, you have to get the home out of your name which will occur through foreclosure, short sale, or deed in lieu of foreclosure.
Hope this helps?
@jayns I can completely understand why this is so frustrating and confusing. BK only protects you against a deficiency judgement, or taxable event in the case of settling a debt for less than amount owed.
BK does not in any way, shape or form remove your responsibility for the mortgages against the home - that's where the confusion is coming in.
If the sale did not pay both loans in full, then you indeed have a short sale. You are not being penalized more than once, because only the BK will show up on your credit, and not the subsequent short sale which would have significantly damaged your credit scores.
While it's true that you now have this short sale waiting period, it does not have to be 3 years. VA allows you to buy again in only 24 months from a short sale, Conventional financing allows you to buy in as little as 24 months with a 20% down payment and minimum 680 credit score. FHA financing requires a 3 year wait.
Thank you for sharing your story, this is a very, very common challenge that folks are experiencing due to a lack of accurate information about how BK works when a mortgage is involved. You sharing your story will help others that find themselves in a similar situation.
Hope this helps?
@gsn That's great news! Congratulations
@knurbina If your mortgage was included in the Ch.7, and if you were not making payments on the mortgage, then a foreclosure would not show up on your credit report. A foreclosure is a public record and will show up when the underwriter begins the approval process.
VA allows you to buy in 2 years from a foreclosure. The "starting date" of the 2 years is the day your name was removed from the title of the home. Hope this helps?
@gsn this is a great question, thank you for asking. This is a potentially complicated scenario because there may be a few moving parts. You could possibly be eligible to buy using FHA financing 2 years from the discharge date if the HELOC payments were made on-time up until the date that you settled.
If the HELOC was in default when you settled, you would have to wait a minimum of 12 months (with no mortgage lates) before you could apply.
What State are you buying in?
@crna1ab I would recommend making the last two payments, then dispute the reporting of the balance with the credit bureaus. It will not negatively affect your credit with it showing included in BK, it's just not helping contribute to the on-time payment history you are trying to establish after a BK to rebuild your credit.
Your lender should ask about the auto - If the loan officer you're working with does not have much experience of working with borrowers after BK, it might not come up until later in the loan process, after it gets to an underwriter.
Simply keep all of your paperwork showing the auto was paid in full.
@sunshinestate The MOP codes used to be a really big challenge, however, that has more or less been removed as a hurdle when buying after a hardship. Fannie Mae made changes to their underwriting engine to specifically address those MOP reporting errors.
If you were in fact120 days late, the loan was in default, and the deed in lieu of foreclosure is something that is easily documented. As long as you meet all other qualifying criteria, you should have no challenges applying in 24 months.
Hope this helps?
@stevebook The foreclosure was 2011 or 2010? You mentioned 2010 in the 3rd sentence. My advice for people in your situation is to get with your lender and at least get your credit qualification done. You can certainly try to narrow down your County, City and/or neighborhood, but I would not recommend making offers.
As far as the lender in concerned, you would not be able to submit the loan for underwriting (DU) until after the "waiting period" date.
So yes to getting pre-approved, no to making offers :)
Hope that helps?
@SMR2014 it is unlikely that you will get an approval until after the 3 years are up. Your lender should be able to "credit qualify" you based on your income, assets and credit - however, you would not be able to start the loan process until after the 36th month.
Hope that helps?
@kgarson22 Hi KG, The waiting period after a short sale is 2 years if you have 20% down and a minimum 680 credit score using Conventional financing. FHA only requires 3 years from short sale. It doesn't sound like you would need to worry about qualifying for an exception since you're already close to meeting the waiting period.
The late payments should not be an issue as long as there is not a pattern of delinquent payments after the BK. Lenders are typically looking at the last 12 months of payments when determining loan eligibility.
Hope this helps?
@hswallis USDA requires a 3 year "waiting period" before you would be eligible after a foreclosure or bankruptcy. You are well past your waiting period for the foreclosure, but the BK puts you at 1/25/15.
FHA only requires a 2 year wait after a bankruptcy which would make you eligible now. Since your foreclosure was in 2008, you are also considered a "first time homebuyer" for many buyer assistance programs.
What State are you buying in? We are a direct lender in California. If you are also in California I would be happy to give you more information about assistance programs that can get you close to the 100% financing that USDA offers.
Hope this helps?
@crna1ab what you are seeing online about buying a year after bankruptcy is the FHA Back to Work extenuating circumstance exception. You have to specifically ask the lender if they are able to offer that program, not all lenders can. If you do not already have a lender in mind, I can recommend someone I know that might be able to help.
In regards to the disability, if you are permanently disabled, and receive permanent disability social security income, then you can actually buy 1 day out of bankruptcy. You will have to show that your disability is permanent and that it resulted in a 20% or greater loss of income, the result of which caused you to file the bankruptcy.
If you would like that recommendation, shoot me an email to firstname.lastname@example.org and I will make an introduction.
Hope this helps?
@stevebook another question about the property - is it typical for the area? Are there other homes in the area that are similar? The biggest challenge with unique properties is finding comparables for an appraisal - that might be what we're looking at here.
@ScottSchang @gsnGreat question. I am in virtually same scenario. Ch 7 discharged 1/2013, always current on first. Settled 2nd 11/13, but it was not paid since 8/2011 (same date as ch 7 filing, so current prior to filing). So 12 month waiting period after settlement of 2nd, and 2 year wait after discharge, so eligible for FHA in 1/2015? Question regarding the timing of the 12 month waiting period after settlement? Settlement was offered by bank, and accepted by us, and payment made in 11/13 (and confirmed received), but we still have not got the lien release. Does the 12 month waiting period run from the settlement date or from the Lien release date? My lawyer says the lien release date is irrelevant and of no consequence, but I believe the waiting period would only start at lien release date. Could you clarify? Love this blog BTW - thanks for doing it. Any advice on getting a Lien release after settlement was agreed to and payment was made 5 months ago. Bank says it is "in process". I believe they are just stalling as long as they can to keep punishing us.
Okay. I was worried because I heard that 120+ days late was seen as a foreclosure, and that for
Fannie Mae, foreclosure was a 7 year wait. So, even though it says 120+ days late, I should be okay. How do the underwriters/DU tell the difference, or will I have to submit my executed DIL documents as proof?
Also, TU shows my DIL as 9/13, but for 10/13, 11/13 and 12/13 they are reporting at 120 days late. Reporting stops after that. I assume that I will have to dispute and send them my executed documents as evidence of finalization of the DIL prior to 10/13 to get 10-12/13 removed from the credit report--is that correct? All others end reporting 9/13. I also checked with the county and the deed exchange was reported for 8/13.
Are there any other snags that I need to be following up on? How does a consumer actually get their MOP codes for these items? Is there a specific code I need to worry about? Or prefer to have?
@SMR2014 We have a 700 credit score , my husband is disable, we was told we was pre qualified . so we found the house and they r fixing to run all this thru , i do have a lender . Last year we spoke to a lender same company but it was 2 yrs at that time , so now this is the third year , the lender last year talked like the could lock it in before he realize house was including in bankrupty, of course this is a new guy because the guy i spoke to last year apparently no longer there.. when i called this guy n explained i spoke to someone last yr, he pulled up file but was thinking did he realize r doesnt matter! it wont be till june? This is so driving me crazy because of course we love this home.....
@ScottSchang we are in Oklahoma. I've look at the FHA back to work program and it appears that may be something we would qualify for. I've also seen different grants that are available for down payment assistance. We do have a mortgage broker and she seems to only want to go the USDA route and thinks that she can get us approved even though we aren't past the 3 year mark. We aren't dead set on the USDA loan but we are ready to get out of a 2 bedroom rent house with 2 kids!!!
@gsn @ScottSchang technically, it's a delinquent mortgage until the lien was removed. The underwriter will ask for a 12 month Verification of Mortgage during the process, which for the 1st, will come back with no issues. I would definitely try to get a second opinion from a lender in Rhode Island, but the way we would have to look at it (as a California direct lender) is that there is a history of delinquent payments on the 2nd mortgage, and we would need a minimum of 12 months time to pass from the date the lien was removed.
@ScottSchang Thank you Scott. As always, a clear and understandable answer.
Just to be clear, there is not really a "waiting period" per se when we are discussing this scenario, there is however the underwriting guideline that states that there can be no more than 1 x 30 in the past 12 months - but in your case, the delinquency went beyond 30 days, so we have to wait for 12 months to show that there were no mortgage delinquencies in that time.
As for the lien, until that lien is removed, the lender has the ability to begin foreclosure proceedings in the event of default (which you are in default on the 2nd mortgage). The 12 months of no late payments could not start until the lien is extinguished, which is evidence of the debt being settled.
@sunshinestate There was a time when a 120 day reporting on your credit would indeed read as a foreclosure, but Fannie Mae has made significant changes that no longer trigger that result.
The date you need to be concerned about is the date that your name was removed from title (public records), not the date of the DIL paperwork.
Fannie actually created the ability to manually adjust foreclosures, short sales or DIL that are reporting inaccurately.
I wouldn't worry about the reporting dates on the credit report as long as it is accurately reporting the DIL and not continuing to report late payments.
Hope this helps?
@ScottSchang I guess ill just have to wait and see just works your nerves not knowing. we r renting and just ready to move:)
@ScottSchang I know this may sound confusing to you! But it is to me am just wondering if this guy did the foot work after me telling him i spoke to this guy last year... And when i called this company and ask for the guy from last year, he said he can assist me. ( found file) told him information n apparently to pulled it up on his computer , check credit n even mention credit was better then last yr.like no problem pre approve!
@ScottSchang which i guess he looked it up and gave me the date of June 15, 2014
@ScottSchang It dont sound silly , i feel like these questions am asking are silly.... the guy i spoke to last year like i said he wasn't aware there was a home in the bankrupty and at that time we was looking and found a home and when i called him , he was gonna find a lender to lock, i guess a loan in , till he realized we needed to wait 3 yrs... which it will be june 15 . 2014
The BK and the removal of the lien against the home included in BK are two separate events that can affect your timeline for buying after a hardship.
I just don't want you to have any more surprises!
@SMR2014 I know that USDA does offer a Direct Housing Loan that may have more flexibility when it comes to buying after the BK. You might want to ask the loan officer about that program. This might be a silly question, but was there a mortgage included in that Bankruptcy?
@ScottSchang oh my gosh Thanks a Million @ScottSchang. We've been waiting patiently for buying a home and with a 16 year old (well tomorrow) and a 14 year old we are ready to get more room. I'll definitely ask our broker and let her know if USDA won't do it we aren't opposed to doing FHA by no means. You've made my day.
It is certainly possible that your broker can get an exception for USDA. As long as you can credit and income qualify, I don't see anything that should prevent you from qualifying.
Sounds like you need to unleash those kids and get them their own rooms :) Good luck!