Buying a house after Bankruptcy

[anykey]

It is 2 years- for PFHA.

[okteacher]

My home was destroyed in the May 20th, OKC/Moore tornado. I paid the reminding mortgage with the insurance check & have over $50,000 in savings for rebuilding. I was discharged from Chapter 13 in May 2012. I am completely frozen, lost and terrified about applying for a new loan. (Not exactly sure why) I need suggestions of who to approach about a new loan, etc. Thanks

[antithat27]

I don't know what FHA rep you spoke to or from what center. I've called in to question a guideline which was questionable and can tell you that a few of them just read from the 4155. And as mentioned earlier...some lenders do have overlays which limit their risk of buy backs by adding additional requirements to the guidelines. Couple this with the fact many loan officers have been in business less than 5-9 years, and are only familiar with FHA the last 4 years. Some un-educated loan officers actually call FHA the new subprime.

I would most certainly start the pre-approval process. It will at least give you a clearer idea than posting on this board and potentially receiving mis-information.

Just keep this in mind. It will not be easy, it will not be a walk in the park, you will get frustrated, you will feel like the lender is asking for two much, but you very well may be a home owner again.

I mentioned yesterday, that one of my recent clients was in a similiar situation. BK in 2010 with included 1st and 2nd included. Bk seasoned through 02/2012. Pre-approved 02/2012 with 635 midddle credit score. Offer made on new home 03/2012. Loan approval issued 03/2012 with 2% down----special program, also approved 203b with 3.5% down. Final Clear to Close issued 03/2012 and borrower will move in early 04/2012.

I don't tell the story above to boast or prove everyone wrong...I tell it because it's true and you have the potential to realize the same opportunity

marcer,

It's awesome to know that you can give us all good news about owning a home after BK. When possible, please let me know if you recommend any lendor/realtor in my area that specializes in these type of home loans. Thanks.

[tobee43]

You don't need 20% down, go to FHA and they require 3.5% down. They require 2 years after bk discharge...You should have at least 3 credit lines established post bk, and you need to show perfect credit history for 2 years post bk. Get some credit cards, even if they are secured and make regular on time payments, and keep your balances down.

it's still up to the discretion of the lending institute and most are not lending with exception of lucky few. i have seen people out of bk 5 years perfect record, charge cards ...seen people with more than 20% down and still can't get the loan. i actually saw someone with more than 50% down and still couldn't get a loan.

[denisec]

You don't need 20% down, go to FHA and they require 3.5% down. They require 2 years after bk discharge...You should have at least 3 credit lines established post bk, and you need to show perfect credit history for 2 years post bk. Get some credit cards, even if they are secured and make regular on time payments, and keep your balances down.

[girlgator95]

Hi All,
We are about 17 mos. out from our CH7 discharge. We also have a foreclosure that occurred prior to our BK filing. Our home was resold in Dec. 2010 by the bank. My question is...since our foreclosure happened prior to the BK filing, will we be able to start looking for a new home in January 2014? We are saving up as much as possible for a down payment, but don't know that it will be 20%. Our FICO scores seem to be improving little by little. I think they are in the mid 600's currently. Any advice on finding mortgage brokers/banks when the time comes?

[HOMEBODY]

Can someone PM me for a broker in Southern california? I want to purchase a house that costs $260.00. I have the 20% to put down. I filed for BK in June 2010 and discharged August 2010. I included an investment home which foreclosed in Feb 2011. Is it possible to buy a home now?

[sofarsogood2]

Working with a smaller bank right now on a refi- will let ya'll know how it goes.

He seems to think he can do this. He agrees with Mercer that the date of the BK- not the date the bank sells.

Fingers crossed!

[scht65]

Hello, just completed my Chapter 13 (100% payoff) and have a job offer to relocate to California. I have not had any chance to rebuild my credit as of yet. Where would I look to for pre-qualification for Northern California

[ironpirate]

Just want to make a note that Veterans United isn't bankruptcy friendly and don't use them for a VA loan.

[metoo]

Can you post or PM me the Bank/Broker you used?

[LadyInTheRed]

I have given up hope of purchasing a home after bankruptcy. I filed chapter 13 in Oct 2009 and have 19 months left in my plan. So it should be paid off approx April 2014. Then you can't even think about applying for a mortgage for 2 years. The way the banks are working these days you'll probably get the run around and be required to put down a 10-20% down payment. Personally, I've found it very difficult to save any money and if I'm lucky I can stash away a couple hundred bucks by the years end. During chapter 13 your credit report is shot and will be for 7 years after the discharge date, so it's basically on my credit report for 12 years. I found it nearly impossible to get a secured credit card during bk and you really can't begin to rebuild it till after the discharge.

FHA guidelines allow loans to people in an active Chap 13 as long as they can document 1 year of timely plan payments and get court approval. The trick is finding a lender who will not add additional restrictions.

A Chap 13 remains on your credit report 7 years after filing, not discharge. Actually, by law it can remain for 10 years after filing, just like a Chap 7. But BKforum members who filed Chap 13 have reported it dropping off their report after 7 years. Most Chap 13 debtors are not allowed to incur debt during their plan, even if they could get credit. So, yes you have to wait until after discharge to start actively rebuilding. Many find their scores have improved during their Chap 13 simply because there are no recent delinquencies and their debt to income ratio is low.

But, if you can't save even a couple of hundred dollars in a year, you can't afford to own a home.

[tradinglife]

I hope this will help people understand my messages earlier and on another post here. BK and Foreclosure are two separate legal options. One is for the role of debtor and the other is for creditor. Ch. 7 allows a debtor to seek relief from his/her creditor. Once the BK has been accepted and discharged, the debtor is absolved against future damages the creditor may experience. Foreclosure is for the role of creditor. This allows the creditor to take back property and sale the asset to recoup any and all losses. Previously, any loss taken by the lender could be passed on to the debtor in the form of income for which he/she would be required to include to the IRS.

Additionally, the lender could seek relief from you for losses taken. In 2007,8, or 9, The foreclosure and short sale act allowed for a borrower to obtain relief from claiming lenders loss as income, and to have lenders seek additional damages in the future-------You can look it up on the IRS webpage..I may be leaving these out, but this is the basic premise. Now...with BK, there is no future damages, hence the date the lender sells the property is never a question. If you have received differently from a lender...run and don't look back.

To be fair, many brokers, also known as mortgage bankers, have additional overlays to the guidelines of the investor. Where FHA requires a minimum 500 credit score to obtain a loan ******with strong compensating factors***** many lenders will not allow for less than 640 and some are as high as 680. This is called an overlay. An overlay is where a lender will add additional qualifiers to mitigate any risk and make the loan more attractive for purchase. Soooooo....where FHA has clear guidance on BK vs.. Foreclosure, the lender to which you are speaking with may have their own overlay which lumps the two together or takes the worst case such as date of sale for property.

BTW: Mortgage brokers/bankers are not bad. I'm not suggesting in anyway that someone not use them just because they are not a banker. I've been on both ends and both sides have their pros and cons.

In closing.....BK seasoning is needed when mortgage is discharged through BK. Date of sale or for some lenders date of reconveyance is needed on foreclosure or short sale with adverse mortgage history. I have another post under FHA which goes into greater detail.

As for renting versus buying...depends. Seattle has an index of 21. This is high and would suggest renting. I disagree only because rates are low, home prices are low, and rents continue to increase. Good luck and happy hunting.

Marcer you where right, we just closed on a USDA loan 3.5% interest last month, our BK was discharged 2 yrs in Octoner 2012. Home finally out of our name JUly this year 2012. However it took some work and finding a mortgage broker who knew what you knew. At least 6 brokers told us we would have to wait another 1-3 years.

[sofarsogood2]

Mercer,

I hope you can help me out.

BK13 discharged 1/2010. Included investment house (IIB) in BK. Still living and paying on primary residence.

Long story, but due to a HAMP forgiveness of principle, would really like to get this house re-fied ASAP.

We have reestablished good credit. Hubby on the same gov't. job for 30 years.

Since BK discharge- bought 2 cars, paid one off, have several CC's, credit score in the lower to mid 700's last time we looked.

Every bank (I have tried many) we have talked to says 3 years after deed transfer, which didn't happen until 6/2011, when they sold the house to a new owner.

It seems, if I am understanding correctly, that you stated that is not the case. If I could get this done it would really save us a lot each month as the original interest rate is high compared to rates now.

Can you recommend anyone that you know in FL who sees the guidelines as you do, or could you do this with us?

Thank you sooo much for your time.

[BrokeDan]

I have given up hope of purchasing a home after bankruptcy. I filed chapter 13 in Oct 2009 and have 19 months left in my plan. So it should be paid off approx April 2014. Then you can't even think about applying for a mortgage for 2 years. The way the banks are working these days you'll probably get the run around and be required to put down a 10-20% down payment. Personally, I've found it very difficult to save any money and if I'm lucky I can stash away a couple hundred bucks by the years end.
During chapter 13 your credit report is shot and will be for 7 years after the discharge date, so it's basically on my credit report for 12 years. I found it nearly impossible to get a secured credit card during bk and you really can't begin to rebuild it till after the discharge.