Fha - loan turned down - chapter 7 discharged in 2007

[curleyp28]

Hi,
Very frustrated right now!!! Yesterday we were told FHA turned down our loan to purchase a new home. Chapter 7 discharge in March 2007...house included. Our BK lawyer put a phrase in the BK papers that said"debtor will retain collateral and continuing making payments". House was NOT reaffirmed. This "phrase" send our loan back from the senior underwritter for explanation. Long story short.... 2007 discharged...stayed in the house for about 2 years making payments, tried to do a short sale, but we refused to sign old mortgage papers saying we are responsible for any loss the incur. House went into forclosure and came out of our name in 2009. We are now being told we have to wait 3 years from the date the house came out of our name to get a loan and not the 2 years after discharge. Our credit reports show $0 balance...house included in BK - No forclosure. Why is FHA going by the date the house came out of our name and not by the discharge date? We are now told to wait until 2012 to apply for a loan which would be 5 years after discharge.
Thanks!

[DebtEnder]

This is standard FHA process. If you had kept the house and not let it foreclose you could have probably been able to get financing. However they often want to know what yer doing with the old house and I have heard that can cause problems as well. I am in the exact same boat. Been discharged for well over a year, and took a long time for even that, but for my last old rental house it was JUST finished off 3-4 months ago. As such unless I move away from the city area and go with USDA it will be 2013 before I can look to purchase a house via financing.

In short Foreclosure while after BK do not affect your credit there is a separate program used to track your housing history. If that shows a foreclosure within 3 years you will not get a FHA loan.

[LSUTiger32]

Yep, it sucks but those are the rules. Two years from the discharge and three years from the foreclosure date, even it they take their sweet time foreclosing.

[CCsAreEvil]

I can't say what will happen in 2013 or later, but I'm guessing for the next "couple" of years, housing will still be in the dumps.. so it's not like you will be missing the "bottom" so to speak.