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2014 Buy Again After Bankruptcy, Short Sale, Foreclosure or Deed in Lieu

Boomerang Buyers Buy Again After Hardship

Click Here to view Buy Again series in Video Library

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) – UPDATED 7/29/2014

  • 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 – Effective 7/29/2014:  Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.
    • UPDATED – Effective 8/16/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
  • 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 620 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.

562-999-1355

Scott Schang

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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795 comments
donovan32
donovan32

Good Morning, Scott.  I owned a condo through the USDA loan and it went to short sale in 2011, and then I filed bankruptcy in June, 2013. My current credit score is 682 and I have 2 questions:

1.  Will the government (for the loan) still try to collect money from me after all this time?

2.  Will I be able to get another mortgage loan through the USDA or any other government or private agency?

Thank you so much in advance,

Sharon

geeooff1
geeooff1

Hi Scott. My question is my mortgage was discharged from a chapter 13 bankruptcy in November 2012. It was just recently sold to another lenders in August 2014. They Said they are reporting to the credit reporting agencies but it has not shown up yet. Will it shows up. My previous lenders did not report payments? Thanks.

dodgeit99
dodgeit99

Scott,

My wife and I filed for CH& and it will be 3 years discharged in Feb.  Our current house was not reaffirmed along with a HELOC, but I am current on both. I've rebuilt our credit to about 675.  I spoke with my HELOC bank since my loan is interest only about refinancing it so I can make regular payments but they have no interest in helping.  Our house is small and we would love to move, but I'm not sure if we can get a loan since we still have our house and are current.  Do we have to let it get foreclosed and then wait the many years before we can do anything? Our house is worth around 100,000 now due to foreclosures in the area etc and I owe 118,000 on it and 28,000 on the HELOC.  Can I get a loan and rent my house? I had a few months of late payments (there was some confusion when our new home insurance took over and the bank wasnt sending out statements) although they dont show up on my credit report.

matt bbb
matt bbb

Scott, I left a home in 2010. I filed chapter 7 with the home included. My old home is still in the foreclosure process. When does the clock start? After my discharge date or after the home is forclosed on? Thank you for your help.

feebee
feebee

Hi Scott,


This has been a really great post and I've learned a lot from the comments.  I received chapter 7 discharge in August 2011 and would like to purchase a new construction home in August 2015 or later.  The issue is it takes 10-12 months to build.  I am not sure when I should start the process for the new home.  We would like to move to a better school district before my stepson starts high school.  I did not reaffirm my mortgage during the bankruptcy but still live in the house and continue to pay the mortgage.  I would be selling this home and use the proceeds towards the down payment of the new home along with savings.  Do you have any advice for someone looking for new construction homes after a bankruptcy?  We would use a nationwide builder (Pulte, Toll Brothers, etc) as that's what seems to be in our price range and in the area we want to move to.

tmtam
tmtam

Hi Scott


In term of the FNMA's waiver "Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date."

A question for you, If my intention on the Chapter 7 petition is to reaffirm the mortgage and ended up NOT reaffirmed the mortgage (no reaffirm agreement was filed with the court) and received  a discharge and the credit report stated that the mortgage was discharged. How does the underwriter view this when he/she looks at the package?


Thanks,


tmtam

ke47
ke47

Hi Scott-  Yes, the mortgage was included in the bankruptcy, and it is showing as such on our credit reports.  I questioned this with our BK attorney a few months ago when I saw it on the credit report since we had completed a reaffirmation agreement.  I also called the Credit Union and the gal stated that because the attorney didn't file it with the courts, it didn't count and the mortgage was still considered included in the BK.  The attorney said that in their experience the lender usually did the filing of the reaffirmation agreement with the court.  That was the case with our auto loans.  Both of those are showing as reaffirmed on the credit reports and show our good payment history.  


I agree that we want to do the right thing, but when trying to get the credit union to budge before we filed Chapter 7, they were unwilling to help in any way, we also had other loans with them at the time.  In some ways, their unwillingness to work with us to reduce our payments created the need to file in the first place.  My husband lost his job and when he became employed again, it was for a much smaller salary and my income also was reduced due to the economy and other circumstances.  I'm not saying that we aren't willing to try, but I'm thinking the credit union will not bend now, since they didn't before when things could have turned our much differently.


Is the appropriate way to go about this to contact the credit union, or should we talk to a realtor who specializes in short sales, or even an attorney?  As I mentioned, we are current on our mortgage and I've read that this sometimes makes a lender more reluctant to agree to a short sale as well.  We would be eligible for a VA loan in the future. The mortgage in question was originally a VA loan, but we refinanced with the credit union and it is now conventional.


We are just confused and appreciate any advice you can provide on this.  Thanks for your answers so far!  :)



ke47
ke47

We have a house included in Chapter 7, discharged in May, 2013.  We filled out a reaffirmation agreement, but the credit union never filed it with the court.  We have never been late on a payment,either before, during or since the BK. My husband has received a job offer in another state and we would like to move.  We are underwater on the property by at least $25,000-$30,000 and we would be unable to rent the property for the amount of the mortgage. We are considering our options.  Is it better to try to go for a short-sale vs. just walking away and doing a foreclosure?  What is the difference and how would each affect us?  Am I correct in my understanding that the credit union could not come after us for the deficiency? 

Noahs23
Noahs23

Scott,

We had a VA guaranteed loan that we ended up losing as a Deed In Lieu of Foreclosure. What are the special restrictions with getting a new Va Loan after the waiting period?

gopher
gopher

Scott,

I live in Hendersonville NC.  I own a home worth around 450000-500000 and currently owe about 358000 on it.  My income is probably around 45000 a year but could be higher around 75000 a year if I move some money around from my businesses.  I went through a loan modification coming up on five years next month.  My current payment is around $2100 at 5.25%.   My credit has a 120 day late and foreclosure started on it that is almost five years old next month from the loan mod process, plus a KD or Derogatory from a credit card that was settled and should fall off in April or May next year at the 7 year mark.  My credit scores for the two I know are 688 Experian and 662 Transunion.  I am hopeful these should get better once the effective 120 day late foreclosure started hits five years old. More hopeful if April rolls around and the KD drops.  My questions are: Given I probably make less than the loan guidelines say I should for the amount I owe, even if I have made all payments since the mod and the house is worth far more than the remaining balance.  What are my options for refinancing here.  Am I just stuck or is there something I should qualify for somewhere with someone.  Also do you have any experience regarding what this "almost foreclosure loan mod"  will do to my credit at five years old if anything? 

Sincerely Al

Nicolemaria1981
Nicolemaria1981

Thank you, Scott! That does help! I was hoping that was the case. I was just a little confused since the short sale was about a year or so after his bk. Thank you for the clarification! I really appreciate all of your help and very happy you are able to help so many people!

Nicolemaria1981
Nicolemaria1981

Hi Scott!! With the updated conventional loan guidelines... I have a few questions. My husbands bankruptcy, which is about a year from the 4 year mark, did include a foreclosure and a home (which we were paying on and renting out/trying to sell at the time). We later short sold the rental after 8 years of not being able to sell. Since he didn't reaffirm the non foreclosure property his credit report states "included in ch 7". My question is, with the new rules, does it make a difference that the short sale was after the bankruptcy, yet included in it? On my report it states that there was a shortsale. Will it make a difference if there were no delinquencies prior to the sale?

Also, I have read a lot about writing goodwill letters to get delinquencies or accounts removed from credit reports. Do you have any advice on that? I am wondering if it matters when, in my husband's case, they foreclosure and one credit card were included in his bankruptcy. Only one of the credit reports shows delinquencies from the forclosed loan. And finally, have you heard of people having better luck at credit unions getting financed?

Thank you for all of your time and help! I greatly appreciate it!

renaissancedoc
renaissancedoc

Scott:


Thank you for your quick reply.


My deployment was covered by USERRA, but not as active duty military, rather as a member of a unit under direct Executive Branch directive (same protections, different command and control).


You are correct, I am going for a conventional mortgage. The suggestions about rolling "points" into closing are helpful, thank you. I am hoping to avoid paying points at all, but if that is not possible then I will pay and move on.


Best Regards,


MAR

renaissancedoc
renaissancedoc

Scott:

In Apr 2010, while I was deployed to Haiti following that country’s devastating earthquakes, I received a notice of intent to file foreclosure from my first mortgage lender. This was confusing as my mortgage had been paid current in Jan 2010. Despite letters and phone calls as well as continued payments, foreclosure action was served in Jul 2010. With the help of an excellent attorney, we succeeded in having the foreclosure dismissed as defective in Sep 2012, but not until much additional damage was done and my financial situation had changed due to an unrelated and subsequent disability and divorce.

As part of the foreclosure, the lenders (1st and 2nd mortgages) closed my mortgage accounts to additional payments. In 2012, the first mortgage lender even sent me a check refunding payments made since the Jan 2010 (before the foreclosure was filed). The second mortgage lender accepted and kept the payments that I made until July 2012.

The home was sold under a qualified disability HAFA sale (settled for less than owed) as part of the divorce. The HAFA sale was contracted for sale in early Sept 2012, but lender approvals were not received until Jul 2013.  The foreclosure was dismissed without prejudice by the Osceola County Court in mid-Sep 2012, after the HAFA Contract was accepted. Neither lender ever responded to any interrogatories, petitions or correspondence from my foreclosure attorney or from the Court from the time of the filing until after the dismissal. No new foreclosure action was filed after the Sept 2012 dismissal. 

The loan accounts were closed in July 2010 according to the original foreclosure petition, but my credit reports and the HAFA approval documents show that the accounts were closed as part of the HAFA sale in Jul 2013. The disability HAFA sale was completed with consent of both lenders on 30Jul2013. Now a year later I discover that both lenders are reporting to all three credit bureaus that I made no payments from Feb 2010 AND that the account was settled for less than owed after a foreclosure started. All of this despite the fact that there is no public record of a foreclosure on any of my credit reports or an independent search of public records.

Despite the fact that the original foreclosure documents precluded any mortgage payments I made to Wells Fargo/ASC or Citibank from being credited to the closed account and despite the fact that there was no foreclosure action filed or in process at the time the HAFA sale closed, the lenders refuse to correct their reports to the three credit bureaus.

Now I want to buy the house I rent. I have a very willing seller with a reasonable price. The bank is willing, but the interest rate is higher because my credit score (670) is damaged by the late payment reporting caused by the defective foreclosure and the refusal of the prior lenders to credit payments to my accounts. The new bank for this new purchase has recommended that I retain an attorney to have my credit cleared of the delinquent payment reports under the Fair Credit Reporting Act, which I have done. 


I read with interest your response to posts in May of this year and hoped that you would have suggestions for me on additional steps to correct this issue.


Also, on a separate note, where can I obtain the fabled HAFA Credit Education Classes for Returning Buyers?


Much Thanks!

MarcyCook
MarcyCook

I don't have a bankruptcy, don't have a foreclosure.  I am looking to buy my first home. I want to go with an FHA at 3.5% down payment. Are there ways to get the closing costs rolled into the mortgage?  How does that work?  And if I do that do I have to have assets and emergency savings in order to qualify?
  Credit score is 750

jenniferpuga71
jenniferpuga71

I have a question.  I have a credit score of 663.  I have a discharged bankruptcy.  It will be  year discharged in October 2014.  I had one house included in the bankruptcy and one house that was not.  I have been current on both houses for 5 years now, and recently, last October, was able to finance a truck.  No payments have been late.  I would like to buy a foreclosed house down the street, but I would like to flip the house and not hold on to it.  What are my chances of a loan, and what type of loan would you suggest.  Thankyou

Nicolemaria1981
Nicolemaria1981

Hi Scott,

My husband and I had our home foreclosed on in 2010. We had both been laid off from our jobs while expecting our first child, our lender would not work with us to modify and unfortunately we had not saved for a hard time. Definitely felt like a difficult time! We soon decided to move out of state for a career opportunity... My husband also had to file chapter 7. We have since saved up and would like to purchase a new home. Unfortunately, where we are looking the fha loan limit is pretty low... So we are assuming our only option would be a conventional loan. It has almost been 4 years since my husbands bankruptcy, his credit score is close to 700, when we look at the credit report the foreclosure is not listed. Would we be able to get approved for a conventional loan (does the bankruptcy take precedence over the foreclosure) or do we still have to wait 7 years?

martincan
martincan

Hi Scott,

I just want to make sure I understand correctly before I proceed with an FHA loan. My foreclosure will be gone from my credit report 8/2014. Does this mean I could qualify for conventional financing? If so, what is the minimum down payment?

Thanks,

MTH

lawsuit
lawsuit

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.

stevebook
stevebook

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!

ScottSchang
ScottSchang moderator

@geeooff1 If your mortgage was discharged in the bankruptcy, and you did not renegotiate the terms of the loan (loan modification or other), then it should not report on your credit report.  Is the mortgage being paid on time, or is it in default?  Under bankruptcy protection laws, a creditor is not allowed to report any negative activity on a debt that is discharged through bankruptcy.

ScottSchang
ScottSchang moderator

@matt bbb Hi Matt, if you are buying a new home using conventional (fannie mae) financing with 10% down, the clock is already ticking - 4 years from the discharge date as long as your name is off title for the included home.  If using FHA to buy a new home, the clock starts from the date your your name comes off title - 3 years.

Hope this helps!

ScottSchang
ScottSchang moderator

@feebee If the mortgage is current, Conventional financing allows you to purchase in 4 years from the bankruptcy discharge date, FHA allows you to buy in as little as 2 years.

You could start the home loan approval process now, but it would only be a credit qualifying approval until the appropriate timeline has passed, depending on what kind of financing you're planning to use.

What State are you trying to buy in?  If you are buying in California, I am a branch manager for a direct lender, and I could help point you in the right direction. 

Hope this helps?  

tmtam
tmtam

Scott


The underwriter could look at the original petition and see that I checked the box that the mortgage to be to be kept and reaffirmed.  The lawyer decided against reaffirming and I got a discharge without reaffirming the mortgage!  Will this create a problem for me to get a mortgage after 4 years from the discharge date?


Thanks,


tmtam

ScottSchang
ScottSchang moderator

@tmtam a reaffirmation is a document that the creditor must record with the bankruptcy court in order to exclude the debt from bankruptcy protection - I am not an attorney, so I would confirm with your BK attorney as to the exact rules and disposition of your particular debt.

An underwriter has no idea if your intention was to reaffirm or not.  The debt is either discharged or it isn't.  That's the only thing the underwriter will look at, or ask about.

ScottSchang
ScottSchang moderator

@ke47 Ok, you're in real good shape then - Yes, I would contact a Realtor that specializes in short sales, more specifically, when interviewing Realtors, ask if they have specific experience with working with that credit union.  Many Realtors will work with a 3rd party negotiator, if that's the case, inquire about their experience with that credit union.

The "walking away" option is not a bad option if the credit union will not cooperate with the short sale or deed in lieu of foreclosure, it just puts you at the mercy of their efficiency and ability to foreclose in a timely manner.  

When faced with being put between a rock and a hard place, no option is optimal.  Worse case scenario if the credit union will not short sale is that your waiting period to buy a new home using VA financing will be 24 months from the date your name comes off title to the home.

Hope this helps?

ScottSchang
ScottSchang moderator

@ke47 The first thing I would want to confirm is that your mortgage is indeed included in the bankruptcy.  It is not uncommon for lenders to not reaffirm the loan, and in your case let's hope that they did not reaffirm the debt.  If they did indeed reaffirm the mortgage, you would be liable and they can pursue you for any losses incurred as a result of defaulting on the loan.  The losses could be reported to the IRS, and you would have to pay income taxes on the amount.

If the debt is included in the bankruptcy, then I would recommend a short sale, or deed in lieu of foreclosure as opposed to a foreclosure, if for no other reason than to "do the right thing" and create as little a burden on the credit union as possible.  Short sale is the best case scenario here, because it would not require that the lender take possession of the home, and then have to sell it on their own.

I would go into the credit union and explain your situation, and see what price they would be willing to settle on in a short sale situation.  They will need to cooperate to make the short sale a smooth process for the new buyer.

In terms of affecting your credit, and your ability to buy again, if the mortgage debt was included in your bankruptcy, it would not hit our credit again, other than being "included in bankruptcy".

To buy a new home, your name would have to be off title of your current home.  If buying using Conventional financing, you could buy in 4 years from the discharge date of the BK.  If buying using FHA financing, you would have a waiting period of 3 years from the date your name comes off title.

If you are eligible for VA financing, the wait would be 2 years from the date your name comes off title.

Hope this helps?

ScottSchang
ScottSchang moderator

@Noahs23 typically, VA requires a 2 year waiting period following a Deed in Lieu of Foreclosure.  However, with the DIL being on a VA loan, it may affect the amount of your entitlement for any future use.  The best way to find out is to have your lender order a Certificate of Eligibility from VA and see what it comes back with.

If you are in California, we can help you with that.  Hope this helps?

ScottSchang
ScottSchang moderator

@gopher Hi Al, thanks for the question.  First of all, the "foreclosure started" comment on your credit report is not going to affect your ability to qualify.  Your credit scores sound like they are ok as well.  My experience is that DU, the automated underwriting program, is really only looking at the last 12 months for derogatory items.  It will consider past challenges, and may ask for an explanation, but from what you've stated here, I do not see a red flag that would cause me to believe that you cannot refinance, other than your "income" question.  

Qualifying to refinance is the same process regardless of whether or not you've refinanced in the past.  You would need to income qualify, and adhere to the debt to income ratios required from the loan program you apply for.

If you have not already reached out to a lender, I encourage you to do so.  I do not believe you will have any challenges as a result of the foreclosure started to loan modification comments.

Hope this helps?



ScottSchang
ScottSchang moderator

@Nicolemaria1981 If I understand correctly, it sounds like your husband filed the bankruptcy, but you did not?  If both the short sale home, and the foreclosure home were included in the bk, then your husband would meet the waiting period guidelines once the bk has been discharged for 4 years.

As far as writing letter to get delinquencies or accounts removed, that only works if the delinquency or account is reported in error.  I too have heard of attorney companies claiming to be able to bully creditors into removing derogatory credit, but I have no evidence that it will remove a credit line that is being reported accurately.

My experience with Credit Unions is that it is more difficult to get approved, since they do not sell their loans on the secondary market, and they are lending credit union member's money.

Hope this helps?

ScottSchang
ScottSchang moderator

@renaissancedoc This is certainly one of the more disturbing series of events that I've run into with almost 3,000 comments and questions on my website - I am so sorry you've had to go through all of this.

I am going to start by asking a couple of dumb questions.  When you say you were 'deployed', are you a member of the armed forces?  And second, what kind of loan are you trying to qualify for?

Let me explain my questions - When you say your interest rate is higher because of your credit score, what actually can occur is that the "cost" of the interest rate can increase, primarily if you are using Conventional (fannie mae) financing.  If you are using FHA, or VA (deployed = military?), this is not as much of an issue.

Should you be unable to raise your credit scores in time to close on your loan and buy the home you live in, the cost associated with your score can be paid as a closing cost, covered by a credit from the lender or seller - it does not necessarily have to translate into a higher interest rate.  Many lenders will roll this cost into the rate without giving you the option to have it paid through the alternative ways I've described.

I am unsure about HAFA Credit Education Classes, I am not familiar with this and have never had to require a buyer to attend a class.  Typically, the type of financing you are using to buy will either have Counseling requirements, or not.  I have only seen Counseling required in conjunction with using buyer assistance loans or grants.

It sounds to me that you have everything pretty much under control, including trying to have the erroneous information removed from your credit report.  While I am sure this has caused an enormous amount of paperwork and trouble, It sounds like everything can be explained and documented, and therefore should be able to be resolved.

Is this helpful?

ScottSchang
ScottSchang moderator

@MarcyCook Hi Marcy, on a purchase, you can't really "roll in" the costs into the loan, meaning that you cannot finance the costs, but there are certainly ways to get your down payment and costs covered in a number of different ways.

If you are in California, we specialize in many State Buyer Assistance loans and grants that can cover both closing costs and down payment.  You can also get closing costs paid through a lender credit, by taking a slightly higher interest rate, or a seller concession, which is when the seller of the home offers to pay for part, or all of your closing costs.

You do not need to have reserves, or assets to qualify for FHA financing, and your credit score is more than sufficient to qualify, you really only need a 640.

If you are trying to buy in California, you can shoot me an email at ScottS@BroadviewMortgage.com, and we can help answer your questions, and talk to you about different buyer assistance programs to help cover your costs.

If you not in California, I can refer you to a lender that I know and trust.

ScottSchang
ScottSchang moderator

@jenniferpuga71 Hi Jennifer, what you're describing would probably be a bridge loan, or a private money scenario.  You would be unable to buy using conventional financing until 4 years from the discharge date of your bankruptcy.  

Private money would probably require a minimum of 35% down payment.

Hope this helps?

ScottSchang
ScottSchang moderator

@Nicolemaria1981 this is a great question!  One that catches many by surprise once in escrow.  The foreclosure is a separate incident and would start it's own "waiting period".  Public records will be reviewed by the lender to identify what happened to the home once the mortgage was included in the bankruptcy.

Based on your story, I would believe that you could be eligible for an extenuating circumstances exception.  Freddie Mac (conventional) will allow you to buy in 36 months following a foreclosure if circumstances outside your control (layoff) resulted in a significant loss of income, which ultimately led to the financial hardship.

While Fannie Mae's definition is not as clearly defined, I do believe that it's worth fighting for.

If you have challenges finding a lender that will explore the extenuating circumstances exception, keep looking.  You may also have luck going to a local bank or credit union, as they may write their own loans and could grant the exception.

Hope this helps?

ScottSchang
ScottSchang moderator

@martincan  the reporting of a foreclosure on your credit report does not determine whether or not you are eligible for financing in the future.  

Depending on the type of loan you are applying for, there is a "waiting period" before you can apply for Conventional, FHA, VA or USDA financing.

Conventional guidelines will allow you to buy 7 years from the date your name was removed from title.  This date is determined by public records, not your credit report.  You can buy in only 2 years using VA financing, and 3 years after foreclosure if you are applying for a FHA or USDA mortgage.

Hope this helps?

ScottSchang
ScottSchang moderator

@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.

geeooff1
geeooff1

I did do a loan modification and yes payments up to date and all of the arrears have been paid.

matt bbb
matt bbb

Thanks Scott. Doesnt the chapter 7 take my name off? I just dont understand why it matters if the debt has been discharged?

ScottSchang
ScottSchang moderator

@tmtam I can only speak for my company, we are a direct lender in California and our underwriters have never asked for a copy of a bankruptcy petition.  There is nothing in any of the underwriting guidelines that requires, or suggests that we should take your BK petition into consideration.  My experience and opinion is that your fears are unwarranted.  

What State are you trying to buy in?

ke47
ke47

@ScottSchang @ke47 Thanks Scott!  Hopefully this all turns out well and the credit union will work with us.  I will look for an agent who has dealt with them.  I appreciate all of your help.  

Nicolemaria1981
Nicolemaria1981

Thank you for the quick reply! A little disappointing but definitely helps! Are there any situations where you can get a FHA loan above the county loan limit? I read about their jumbo loan... But couldn't find any details. Thank you again!

martincan
martincan

@ScottSchang @martincan 

Thanks for the response! 

I may not be understanding correctly so please forgive me, I am not real saavy when it comes to this. 

I don't know the date my name was removed from title, I just always knew when it would fall off my credit report. Since it has passed the 7 year mark I let a broker pull my credit and the foreclosure wasn't on there anymore. Does this mean I am in the clear for Conventional financing?  The broker I have started working with hasn't said anything about a public record coming back when he pulled my credit or made any mention about anything foreclosure related. When will he check for this and how will he check for this? I just don't want any surprises and I guess I don't really understand the process. Wouldn't he have mentioned if he saw something?

ScottSchang
ScottSchang moderator

@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
ScottSchang moderator

@matt bbb Unfortunately not Matt.  BK only provides taxation protection.  It also prevents the lender from trying to sue you for any losses that may incur from a default on the mortgage you have with them.  

I know it's confusing, but basically, in a "normal" market - if you walked away, and stopped making payments, the lender should have just foreclosed, taken title to the home, and moved on.  As a by-product of the craziness of the past 7-8 years, banks are not foreclosing when folks stop making payments.

Legally, you still own the home if your name is on title.  The bank only has the "right", not the responsibility, to take the collateral (home) back, and try to resell it on the open market to try to recover some of their losses.

Is that any clearer? (like mud!)

tmtam
tmtam


Scott


I really appreciate you take the time out of your busy schedule to answer my questions to keep me inform of the changes in the underwriting guidelines. I am in California and will definitely contact your company for a mortgage when my time is up in Dec 2015.


Thank you again,


tmtam 

ScottSchang
ScottSchang moderator

@Nicolemaria1981 In California, we have a HELOC program that will allow you to go over the FHA loan limit, but with Jumbo and this HELOC, you will find that the Bankruptcy waiting periods are much longer, and may even be treated as the same as the foreclosure.

I don't think there's any reason to be disappointed, I sincerely believe that you have a case for extenuating circumstances.  What State are you trying to buy in? 

ScottSchang
ScottSchang moderator

@martincan @ScottSchang it sounds to me that if your foreclosure has come off your credit report, that enough time has passed.  You can ask the broker to look up public records to verify, and if it's been longer than 3 years since the bank foreclosed, you are well past the waiting period to be eligible for FHA financing.

Nicolemaria1981
Nicolemaria1981

Thank you Scott! Every lender I have spoken to this far seems to give us incorrect information, so I greatly appreciate your help! We are living in Georgia and looking to buy a bigger home here to accommodate our now family of five. Our foreclosure was in Florida... Not sure if that makes any difference. The fha loan limit was in the 300's and has recently dropped to the low 200's... And of course home prices are rising!

Nicolemaria1981
Nicolemaria1981

Thank you, Scott! We really appreciate your advice and help! I will definitely give him a call as it gets closer to my husbands discharge date!! I am hopeful everything will work out!! Thank you again!

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