Buy Again After Bankruptcy, Short Sale, Foreclosure or Deed in Lieu?

February 2nd, 2011 by Scott Schang
Topics: Home Mortgage News

Click Here to view Buy Again series in Video Library

2013 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

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.

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.

714-805-7268

Scott Schang

Manager at Broadview Mortgage Katella in Orange, 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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649 comments

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byrdman52

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.

ScottSchang moderator

@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?

byrdman52

@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.

ScottSchang moderator

@byrdman52 @ScottSchang feel free to call tomorrow me Chris, my cell phone is 714-336-8286.

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.

byrdman52

@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.

ScottSchang moderator

@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 @byrdman52 Scott, the co borrower kept the home and I have nothing to do with it. Thanks for all the information you provided. I also wanted to know if you lend in Ohio or have a contact here. Thanks.

ScottSchang moderator

@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.

byrdman52

@ScottSchang @byrdman52 Scott do you lend in Ohio, if not, do you have a contact that you can put me in touch with.

stevebook

Scott, thank you for this fantastic forum.

I'm in exactly the same position as Bree below. That is: We tried for a loan modification and short sale and deed in liu, all were rejected. (We had to stop paying the mortgate just to get to that point.) In September, 2009 we walked away and April 2010 were told that foreclosure proceedings had begun. Because of other debts, we went BK 7 and included the property. The BK7 was discharged June, 2010. But like Bree, the bank did not transfer the title until June 2011.

About 6 months ago, we found a house we really liked and decided to try via a mortgage broker. We were informed that we would have to wait until June 2014 before trying again.

A few weeks ago, the house came back on the market as an REO and we asked the broker if there had been any changes that would allow us to purchase now. The house is $350 and we can put down 25% cash (401k loan + stock option sale) He ran us through the desktop underwriter and we received Approved / Eligable for an FHA 203(k) loan (the property needs a new septic.) We had our offer accepted and sent $4k earnest money to the title company.

Is the FHA underwriter going to see the deed transfer date, or the bk date? If the underwriting software accepted and approved us, is the underwriter going to see something different?

Does a large downpayment hold any sway? Stable income (24 years in the industry, 14 years at this company)? Re-established credit with a score of around 690.

If the FHA underwriter rejects the loan based on the deed date, would we have any other avenues?

Thanks!

ScottSchang moderator

@stevebook on page 3 of the 1003 Loan Application, under the Declarations section, it asks if you have had an interest in a property that has been foreclosed on in the past 7 years. If this was answered correctly, it should have triggered a "condition" to the approval that requires the underwriter to do further research about the timing and circumstances around that incident. This is where you may have challenges. Simply going off the credit report, you would not have any indication that a foreclosure occurred and it's entirely possible that you can get an approve/eligible if you are credit worthy on all other counts.

My recommendation is that you make sure that the lender knows exactly what they're dealing with. If you did not volunteer information that you thought might hurt your prospects of qualifying, I assure you it will not make it to funding. Try your best to get your loan rejected! I know that sounds counter intuitive to accomplishing your goals here, but I'm telling you that being surprised by a denial in the 11th hour is not going to be a good time for anyone involved in the transaction.

If you are eligible for VA financing, the waiting period is only 24 months. Other than that, with 25% down, you may be able to explore alternative financing options with equity based, private lenders (hard money). Expect it to cost a little more and require a bigger down payment, but it's possible.

Hope this helps?

meddian

Hi Scott, I am a veteran and trying to refinance my FHA Home Loan. I owe 420K. I am trying to get a VA LOan. I filed BK7 in 2009-discarged 04/2010. I was told I had to wait 7 years to qualify with the VA? Is this true? I thought it was 2 years with good credit standing. I have been in my home since 2005, I kept the home and never late. The loan officer told me their was a 7 year wait for homes over $417 is that true? I thought that was ONLY for a IRRL VA streamline. Pleas advise. thank you meddian

ScottSchang moderator

@meddian I am unable to find a requirement of a 7 year wait to do a IRRL for VA loans over $417,000 after a bankruptcy. The only reference to BK in the VA underwriting manual is as follows:

"The fact that a bankruptcy exists in an applicant’s (or spouse’s) credit history does not in itself disqualify the loan. Develop complete information on the facts and circumstances of the bankruptcy. Consider the reasons for the bankruptcy and the type of bankruptcy filing.

Bankruptcy Filed Under the Straight Liquidation and Discharge Provisions of the Bankruptcy Law
You may disregard a bankruptcy discharged more than 2 years ago."

What State are you trying to refinance in? I can look into this for you if you are in California. If you are in another State, I have a friend that I can recommend that has extensive experience with VA financing.

Hope this helps?

meddian

@ScottSchang @meddian

Hi Scott-no I am in Virginia. Thank you. This was Wells Fargo, MD office. It was horrible. I called VA Home Loan Section and they told me there is no 7 year wait, its them, and this is very excessive-- their guidelines. Why not up front versus having me send papers etc. I have never heard of this from any Loan officer ever. Yes, if you could help. But now I have a hard pulls on my credit. She thought this was funny. My CS is 654 now.

meddian

1 Like

@ScottSchang @meddian

Hi Scott thank you so much!

ScottSchang moderator

@meddian @ScottSchang VA only requires a 620 credit score so you're ok there. I sent you an email introducing you to a close friend of mine that can help in Virginia. Please let me know how it turns out?

shussain28

I was discharged from the bankruptcy in Dec 2007. I tried to reaffirm my mortgage, but bank couldn't do it in time and it was discahrged in the bankruptcy. We statyed in the house and have always been current in the loan payment. Last month,we tredi to apply for a new loan and the the DU denied our loan stating foreclosure. Even though we never foreclosed or went through short sale of any sort. I am just totally confused about that..

Any help will be highly appreciated.

ScottSchang moderator

@shussain28 I know we spoke offline, but wanted to make a public comment so that others may benefit if they find themselves in a similar situation.

You can buy again after a bankruptcy (2 years for FHA, 4 years for conventional) while staying in your home and making payments on time. If you have less than 30% equity, you would have to qualify for the payments of both current and new home.

If the mortgage is reporting as a foreclosure within the last 12 months, you would receive a refer/ineligible decision from DU. If it was outside 12 months, DU should not consider it.

If you would like to update us on your situation, that would be great!

Puchy

I had bankruptcy three yrs ago & a short sale one year ago. I applied for a USDA loan In a rural community with a brand new home. After the home was built and three months after the underwriter had the loan they denied the loan. I live in kissimmee, Florida. First the underwriter stated it was denied because of a letter I could not obtain. Then he said it was because of the short sale. What are my options at this point? Can someone else proceed with the loan? Thanks Jose

ScottSchang moderator

@Puchy USDA typically requires 3 years before you can qualify to purchase after a short sale. If the loan officer was unaware of this guideline, or failed to recognize that you did not retain the home after the bankruptcy, there may not be too many options.

ppaul

Scott,

I am approaching the 2 year mark of my short sale. My credit report is noted as paid for than less than full balance on a 1st and 2nd mortgage. I have been able to save 20 percent down for a new purchase. Based on the conventional guidelines listed above I should be able to obtain a mortgage at the 2 year mark. The problem is every mortgage professional I speak to indicates that it will be a 3 year wait at minimum. Are these time frames based on California residents or it this nationwide? I will be an Pennsylvania borrower by the way. Do you have any Pennsylvania branches?

Thanks,

Preston

ScottSchang moderator

@ppaul Hi Preston, you could be eligible 2 years after a short sale with conventional financing with 20% down and a minimum 680 credit score. The only challenge that could come into play would be if you filed a bankruptcy in addition to the short sale. Conventional requires you wait 4 years after bankruptcy, which would exceed the waiting period for the short sale.

If you did not file BK, I do not have the ability to lend in Pennsylvania, but I do have a very good friend that can.

If you would like a referral, send me an email at scotts@broadviewmortgage.com and I will forward you his contact information.

Cal Carpenter

1 Like

Scott,

I have a question. I had a Chapter 7 after being unable to work out a modification of an adjustable loan and being in it for ~8 years. I received my discharge but the bank delayed for over a year and change in their foreclosure (home was included). I've heard from the lawyer my date to be concerned with started on my discharge date yet in other places it appears that it was the date the property was transferred back to the bank even despite their delay. The good news is since the bankruptcy I've gotten things straightened out financially and see bright things ahead... however I'm seeing VA lenders wanting 3 years from the time of discharge/foreclosure and I'm wondering which date do I shoot for? Thanks ... Cal Carpenter

ScottSchang moderator

@Cal Carpenter Hi Cal, you actually need to be concerned about both dates - the discharge of the BK and the foreclosure. In almost all cases, the foreclosure is the one you really need to focus on since it's usually a longer waiting period and it happened after the BK. Unfortunately, there is no requirement for the bank to foreclose in a timely manner. I have heard of banks taking 3-4 years to foreclose!

The waiting period to buy again using a VA Veteran loan is 2 years from the discharge, 3 years to buy using FHA and 7 years to buy using Conventional financing.

Hope this helps?

Cal Carpenter

1 Like

Scott,

It did help.. thank you. It confirmed my fear but is at least definitive and will provide me that one more year to boost the credit score a little and save more for a down payment and possibly improve the rate I'll qualify for however slight it might be. I guess if nothing else I'll look at it that way and make lemonade out of lemons. Thanks again Scott.

Cal

kristenmarthabrown

Scott have you had practical experience with a borrower getting a Fannie loan 2+ years after a deed in lieu w 80% LTV? I'm running into what seems to be a catch-22 - sounds like Fannie will approve, and most lender's guidelines say they will approve, but will not issue approve/eligible. I'm having a heck of a time finding a lender to do a manual underwrite for Fannie. Any insight you have would be SOOOO appreciated!

ScottSchang moderator

@kristenmarthabrown Yes, we have done several of these, even after other lenders are getting refer/ineligible. There are a couple of issues you might be having. The first issue is that many times the lender does not report the deed in lieu correctly to the credit bureaus. They report it as an 8 or 9 (foreclosure or charge off), which would instantly cause DU to deny. Even after borrowers track down lender and get supporting documentation and send to bureaus, we have found that some lender credit agencies still do not read the credit report correctly. We've recently closed 2 loans where the other lender could not get and approve/eligible and we were able to using our credit report. It's definitely not black and white, kind of frustrating.

So, I recommend starting with making sure the bureaus are reporting the debt accurately as settled account for less than amount owed. Then, if that's accurate on all three bureaus, it might be your credit provider. If you have the ability to use a different provider, try that.

Hope at helps?

MarcL

Hi Scott, Great advice column. Thank You. I have yet anther scenario I have not read about. I received a Ch7 discharge in 01/13. 1st and 2nd mortgage. Neither reaffirmed. Current on 1st. 18 months behind on the 2nd but it is underwater. I know two years waiting for FHA financing until 01/15 and 4 years for Fannie financing 01/17 due to bankruptcy. If we voluntarily settle our 2nd Lien with the bank as we are working on for say 10 - 20% of balance, we would get lien release and not be liable for the deficiency due to the ch 7. Since there was no deed in lieu or foreclosure, are all the waiting periods still from the date of ch7 discharge, or from the date of lien release for 2nd, since there was deficiency in 2nd payback (is this like a short sale even though the deed for the home is not being transferred - or is it just like paying off the second if the bank agrees to the settlement.)? This all assumes we sell and pay back the 1st in full at some time later. It might take another year to settle the 2nd and get lien release, so just trying to understand the waiting periods we would be facing. Thanks.

ScottSchang moderator

@MarcL technically, short sale would be reflected as "settled as agreed for less than amount owed". Since the 2nd mortgage was included in the bankruptcy, you would not get this status on your credit report. Here's where it gets tricky. All outward appearances might be that there is no second mortgage (if you are able to settle with lien holder), and you may even get an automated approval from a lender - the challenge is that at some point in the approval process, the underwriter will discover the second lien, notice that it's payoff date on public records, and you will be subject to "short sale" waiting periods. I say this is tricky because an uninformed loan officer may very well tell you that you're eligible to buy again, when in fact it will be declined further into the process, maybe even just before you think you're ready to close escrow.

Hope this helps?

MarcL

@ScottSchang Hi Scott. Thank you for your quick reply. That is very good information to have. I will keep the short sale waiting periods in mind starting from settlement of the 2nd date. Luckily we are not looking to move, just want to fully understand what our limitations are. Also plan to be upfront with any loan officer about what happened and when. The information and service you provide through this website is SO valuable. Thank you again.

lawsuit

Scott, We purchased a home with other family members in 9/2004 and ended up in a 4 party lawsuit that spanned nearly 8 years (Seller, Broker, 2 Buyer Parties) with the judge ordering a disolution of partnership in 2010 and multiple short sales falling through while trying to meet the judges order. During the lawsuit there was no ability to sell the property due to a "les pendes" having been filed, so we were forced to remain in the property and watch it lose more than $600,000 in value. Long story short, a DIL was accepted and recorded in 03/2012. We are thinking that we must wait until March of 2014 to buy, but were wondering if something like this might be granted an exception. Income is great with over 30 years with same employer. In addition, through out the entire ordeal we have zero other credit issues.

ScottSchang moderator

@lawsuit my experience with extenuating circumstances make me lean towards no. Extenuating circumstances are defined by Fannie and FHA as something that happens completely outside the control of the borrower, examples are death of a primary wage earner/borrower and permanent disability resulting in significant income loss by primary wage earner/borrower.

As the guidelines stand now, you would be able to buy using conventional financing with 20% down and a minimum 680 credit score in March of 2014.

lawsuit

Thanks Scott, thats what I thought, it would just be nic to get back on track after an 8 year derailment.

This comment has been deleted

househelp

One more thing. My husband is a teacher in California. Are there any special programs that help teachers?

ScottSchang moderator

@househelp In California, CalSTRS offered a special home loan program that has since been discontinued. They are supposed to be announcing something this month, and we expect a new Teacher loan by 1st quarter 2013! If you entered your email for updates, you will definitely know something when we know.

ScottSchang moderator

I'm writing you a book of an email right now :) You will have it in a couple of minutes. Unfortunately, the CalSTRS loan is conventional and is subject to conventional guidelines

househelp

@ScottSchang

Thanks Scott. Will that have different eligibility requirements than FHA for post BK & foreclosure?

needtono

My husband filed Chapter 13 Bankruptcy 2 1/2 years (yes we were married then) ago but I didn't. Both of our names are on the bank loan. We are now going to short sale our home and the bank has offered us a $20,000 incentive if we get a contract and close by a certain date. If we get this incentive will we have to give the trustee the entire $20,000 or a portion because I am on the loan and didn't file a Chapter 13?

ScottSchang moderator

@needtono this is definitely a question for your bankruptcy attorney. Since the creditor is offering the incentive, It doesn't make sense that they would turn around and then require you to give it back to them. I would also ask the creditor (bank). Does the short sale department know that the loan was included in a chapter 13? In either case, I am not qualified to give you an answer as I am not an attorney and not familiar with chapter 13 bankruptcy law. Hope this helps?

jnnfrshw

I have a question regarding a short sale after a chapter 7 discharge (August 2011). Our mortgage was included in the BK and we did not reaffirm. We are still paying the mortgage and living in the home as the bank will not foreclose as long as we keep making payments. We have never missed or been late on a payment on anything prior to the BK and after the BK (we filed before we defaulted because of an impending pay cut). My question is if we short sale our home is it technically a default because we filed for BK? Would we have to wait the 3 years even though we were technically never delinquent?

ScottSchang moderator

@jnnfrshw if the bank agrees to allow you to sell the home for less than what is owed on it, then yes, it is a short sale and there would be a waiting period. It's not really the late payments that the lender is looking at, it's the fact that the previous lender had to take a loss on your previous loan. The bankruptcy does not mean you do not owe the mortgage, it only means that you will not incur any tax penalty and the lender cannot pursue a default judgement for any losses that may occur form the short sale.The short sale will not be reported on your credit report as the financial liability was discharged through the bankruptcy. You could be eligible to buy again in 2 years using Conventional financing with 20% down and a 680 credit score, or 3 years with 3.5% down and a 640 credit score using FHA.Hope this helps? Feel free to call me or reply if you have any further questions

lynn4700

@ScottSchang @jnnfrshw

Hi Scott! Thank you for taking the time to answer so many questions, repeats as well! When I read jnnfrshw's question and then your answer, I find myself asking this: when you stated "The short sale will not be reported on your credit report as the financial liability was discharged through the bankruptcy. You could be eligible to buy again in 2 years using Conventional financing with 20% down and a 680 credit score, or 3 years with 3.5% down and a 640 credit score using FHA". My first question is: is that 3 years from the chapter 7 discharge date? or the date of the short sale? If the answer is from the short sale date, how does FHA know you short saled if it isnt on your credit report? If the answer is from the chapter 7 discharge date, then I am confused as I have read many articles saying the requirement is 2 years (FHA) from the chapter 7 discharge date and now I see you saying 3 years (FHA). Why the difference in dates? (not sure what I am missing). My next question is that, I thought someone had to wait at least 4 years for the Conventional loan and now I see you are saying 2 years. Still confused. I hate to ask you the same things that I have read through the many comments after the articles, but I am still lost. Please clarify! Thank you so much!

ScottSchang moderator

@lynn4700 @jnnfrshw I get horrible cell reception here at home, you mind calling on Monday? I have an appointment in the morning 9-11am PST. Leave me a message with your number if I miss your call and I promise I'll call right back! Have a great Sunday :)

lynn4700

@ScottSchang @jnnfrshw

I would love to pose my specific situation to you. When is a good time to call?

ScottSchang moderator

@lynn4700 @jnnfrshw Hi Lynn, yes this can get very confusing and quite honestly, sometimes I myself get my timelines crossed.

You are correct about the bk seasoning being 4 years to be able to buy again using conventional financing. In jnnfrshw's question, the bankruptcy was August 2011. They still live in the home and have never missed any payments.

It's a matter of timing here. All waiting periods run concurrently so if the home was short sold, both the bk seasoning and the short sale waiting period would have to have elapsed before being eligible for financing.

For FHA financing, the bk seasoning is only 2 years. The waiting period for a short sale, deed in lieu or foreclosure using FHA financing is 3 years. To buy using FHA, the bk seasoning wouldn't even come into play in jnnfrshw's scenario since the waiting period for the short sale would extend past the seasoning of the bk.

I'm not sure if that was any more clear :)

Feel free to call me on my cell phone at 714-336-8286 and we can get to the bottom of your specific situation.

jjms2love

1 Like

Thx!

jjms2love

Hi Scott. Thanks for sharing your knowledge with us! I Foreclosed in 2008 (had a first and a second)and IRS has placed a hold on my bank account and I also have an income tax lien. Am I not eligible for the tax forgiveness act till the end of this year? What can I Do? In the process of filing bankruptcy for a NEW START but the taxes they say i owe are alot and IRS say are due bcuz of the foreclosed home. I need direction to clear this up and work towards purchasing a new home :/ Thx DELETEReplyLike

ScottSchang moderator

@jjms2love If you are eligible, you do not have to wait until the end of the year to use the mortgage debt forgiveness. This is a question you should ask our accountant or CPA as it's an IRS issue and I am not licensed to offer tax advice. Here is the link to the IRS site that details the program - http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-

Hope this helps?

JeffreyA

Scott, I am in Las Vegas Nevada and am approaching my 2 year mark in Oct. of my Foreclosure...i tried for 1.5 years with Freddie Mac to get a Modification and no dice....i ended up letting the property go to Foreclosure and am now living in another property that is in my mothers name loan and all however i have paper trail that i have paid since day one on the property..... we are trying to get the loan in my name now and im over 700FICO with 95K income yearly no debt minus 22 K on a car. I have been employed at the same place for 11 years in sept and income is now booming as it has for 3 years now.....what are my options without going through Aloha Credit Union at 6+ Percent on my loan .... i bought for 250K and owe 188500 so the property still has 20% equity .... is this even pheasable or am i barking up a silly tree???

ScottSchang moderator

@JeffreyA You're definitely not barking up a silly tree but there are going to be certain "waiting periods" and other qualifying guidelines you'll need to be aware of.

First, if you plan to live in the home and wish to write off the mortgage interest, you may want to get added to the title of your mother's property that you live in currently.

Making the mortgage payments and being on title would allow you to "refinance" the loan in your name since you own the home (on title) and you can show a history of being responsible for the mortgage.

I'm not quite sure what you mean by "i bought for $250k and owe $188,500" - are you talking about the equity in the home that's in your mom's name? Either way, you would need equity - and if you want to refinance in your name, what I've previously described would be your best course of action I believe.

Hope this helps?

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