Buying a house after Bankruptcy

[marcer]

Marcer...A different question but related to mortgages included in discharge...When I apply for an FHA loan, will the lender tend to ask for VOM...and require proof of the last 12 months payments? I will have to give the address for the same house that is included in the bk, and have not paid for over 2 years....Thanks, just trying to anticipate any issues..As you have gathered on prior posts, these mortgages were discharged 7/15/09 ( so i of course won't try until 3 years later..in '12), and have shown 0 balances and no reporting since discharge. Doesn't seem logiical that they should require VOM, but who knows?

Mortgage included in discharge requires 2 years only. Technically, you could have started pursuing fha financing 07/2011. You do not need the 3 years.

Yes, You would be required to show proof of either rental or mortgage history. The fact that you've remained in the same home which you discharged through chapter 7 is puzzling. Why did you?

All lenders will require re-established tradelines post bk. For limited credit post bk, FHA will allow for alternative tradelines from two groups.

Group1: would include---pay here auto loan. Rental history documented by either 12 mos. cancelled checks or VOR from 3rd party management company and others

Group 2: would include ---utility reference, insurance reference and others

Need at least one group 1 and two from group 2.

I am a lender and have been for 17 years

[denisec]

Marcer...A different question but related to mortgages included in discharge...When I apply for an FHA loan, will the lender tend to ask for VOM...and require proof of the last 12 months payments? I will have to give the address for the same house that is included in the bk, and have not paid for over 2 years....Thanks, just trying to anticipate any issues..As you have gathered on prior posts, these mortgages were discharged 7/15/09 ( so i of course won't try until 3 years later..in '12), and have shown 0 balances and no reporting since discharge. Doesn't seem logiical that they should require VOM, but who knows?

[marcer]

It seems like it depends on who you talk to whether lenders go by discharge date or foreclosure date. I plan to test the waters on the 2 yr date of my BK discharge, and see what happens. Surely as many people that are on the sidelines right now that are in this situation something will come up as an option. News stories keep talking about the increase in renters versus owners, most report this news as people choosing to rent versus buying. I think a big part of recent renters like my self would prefer to buy. I hate writing that rent payment every month, feel like it is a waste of money.

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.

[tradinglife]

It seems like it depends on who you talk to whether lenders go by discharge date or foreclosure date. I plan to test the waters on the 2 yr date of my BK discharge, and see what happens. Surely as many people that are on the sidelines right now that are in this situation something will come up as an option. News stories keep talking about the increase in renters versus owners, most report this news as people choosing to rent versus buying. I think a big part of recent renters like my self would prefer to buy. I hate writing that rent payment every month, feel like it is a waste of money.

[denisec]

Again, I do not know who everyone is, but there is a bit of bad information from good intentions. I will say as i have said before and for how many more times you may ask me, the answer is "YES YOU CAN" You only need 2 years post bk and with established credit. If BOA hasn't sold your home yet...tough on them. This will not, will not, will not hurt you. Obviuosly there are other conditions which may impact you, but it will not be the BOA mortgages.

Thanks for the info Marcer...you give me a new thread of hope...I will start trying to get preapproved..I tried eloans about a year ago just to see what would happen ( I knew it was too early) one lender only replied and told me I had to wait 3 years from discharge date...although I didn't get any details...anyway will try again soon...and may just stay here and save some more money in the mean time...BTW you sound like a mortgage broker with all your knowledge, is that the case?

[marcer]

Yes you can

HI marcer, one more thing my BoA loans are not FHA but conventional....I did have a FHA loan before on my first home which was all totally fine...everything paid on time, sold for a good profit, no issues. I would love to get another FHA loan, if I can figure out if I can get a loan with 3 years after the Discharge and not after the foreclosure whenever that will happen? My credit has been perfect before the BK and since discharge...I paid off my student loan just last month..have 3 credit cards since discharge, and one used car loan paid off since discharge...I now have a total of $500 balance on a $2,000 Capital One master card, and stable job at $77k a year and in same job since 2006...
So if you have any good ideas on how to apply for new loan after my 3 years post discharge date...please let me know. If that's the case I would just as soon stay in this house, save a bit more and then purchase..Although I am still not sure..since
everyone else tells me I can't get a loan if I still have this home in my name, and need more seasoning post the auction sale...Please Advise.

Again, I do not know who everyone is, but there is a bit of bad information from good intentions. I will say as i have said before and for how many more times you may ask me, the answer is "YES YOU CAN" You only need 2 years post bk and with established credit. If BOA hasn't sold your home yet...tough on them. This will not, will not, will not hurt you. Obviuosly there are other conditions which may impact you, but it will not be the BOA mortgages.

[denisec]

HI marcer, one more thing my BoA loans are not FHA but conventional....I did have a FHA loan before on my first home which was all totally fine...everything paid on time, sold for a good profit, no issues. I would love to get another FHA loan, if I can figure out if I can get a loan with 3 years after the Discharge and not after the foreclosure whenever that will happen? My credit has been perfect before the BK and since discharge...I paid off my student loan just last month..have 3 credit cards since discharge, and one used car loan paid off since discharge...I now have a total of $500 balance on a $2,000 Capital One master card, and stable job at $77k a year and in same job since 2006...
So if you have any good ideas on how to apply for new loan after my 3 years post discharge date...please let me know. If that's the case I would just as soon stay in this house, save a bit more and then purchase..Although I am still not sure..since
everyone else tells me I can't get a loan if I still have this home in my name, and need more seasoning post the auction sale...Please Advise.

[denisec]

Here's the deal Marcer...DATE of DISCHARGE Including BoA first and second mortgages date: 7/09
Still no foreclosure on home, so foreclosure will happen AFTER the discharge...
Everything I have been told so far tells me that I still have to wait for FHA loan 3 years after foreclosure or auction sale date since the foreclosure will happen AFTER the BK?
Are you telling me that this is wrong? I would love it if I could start applying for FHA loan in 2012, and not have to rent. How do you know? And are you a lender or?
My credit is around 672, and both mortgages are reporting 0 balances and haven't reported since the discharge. I have no other debt, but have gotten a few credit cards that I have been paying timely on.
What happens when the lender sees that I have my name on a deed to this house when I apply for another mortgage?

[marcer]

Hi marcer, I am pretty sure that I have to wait for 3 years after sale of my property...
Bank of America hasn't even sent me a NOD yet after 2.5 years of nonpayment. My BK & was discharged 7/09 with mortgages, but no foreclosure yet, so I understand with FHA it will be another 3 years after sale date..so I am looking to rent now..Once I am in a rental, I would like to see if there's a way to speed up their foreclosure, but it seems like BofA, and my mortgage was originally with Countrywide, if really slow on proceeding with many of these deals....

Denisec~ I hate to be the bearer of bad news...so i won't. The discharge date of your mortgage through bk7 is the seasoning date. Many times, the bank will continue to report on your credit report as being late and this will require the lender to obtain a supplement to credit report showing no late payments past discharge. I see this often and can assure you that many borrower have acquired a new home after bk when home was included

[denisec]

reply to marcer

Hi marcer, I am pretty sure that I have to wait for 3 years after sale of my property...
Bank of America hasn't even sent me a NOD yet after 2.5 years of nonpayment. My BK & was discharged 7/09 with mortgages, but no foreclosure yet, so I understand with FHA it will be another 3 years after sale date..so I am looking to rent now..Once I am in a rental, I would like to see if there's a way to speed up their foreclosure, but it seems like BofA, and my mortgage was originally with Countrywide, if really slow on proceeding with many of these deals....

[marcer]

BIG NOTE******* Mortgagee Letter 2012-3***New changes now require all adverse credit with balances of 1,000.00 or aggregate---total combined all items--- to be paid in full at time of closing, have an accepted pay plan established with 3 months payments made, or paid in full prior to closing. This is for all case numbers issued after April 1st.

***Extenuating circumstances are not exempt. Section 184 loans for Native Americans or Alaska Natives are exempt from this policy****

If you are attempting to purchase a home in the near future...this could make things a little rocky. ****BTW...this includes medical collections now. Traditionally, medical collections were overlooked...not anymore****



FHA will allow borrowers to forgo seasoning requirements for adverse items when certain circumstances are involved. These include but are not limited to: Death of contributing member or spouse and serious medical illness of contributing member or spouse. U/W will generally have some flexibility on what they determine to be extenuating. Divorce or job loss is not extenuating, despite these being outside of the borrowers control. When applying for a mortgage, whether VA, FHA, USDA, or Agency, it is important to note the cause for adverse credit, what remedies are in place now, and why you feel you can manage your debt presently and in the future.

It is especially important that your letter be very detailed and have supporting documentation such as medical history, statements from physician, death certificates, and yes...even letters from creditors which you have history with. Note*** do not have your loan officer write your letter** Be prepared to bare it all out. The more you can humanize yourself, the better it is for the U/W to understand and possibly agree to approve you. ***Loan officers cannot tell the story like you can*** If your extenuating circumstance happened some time ago and you have recent adverse credit...you will be declined.

If you have not re-established credit since the adverse item, be prepared to provide letters of credit such as rent, car insurance, and utility bill for a 12 month period. Note**** alternative credit does not negate poor credit history but can illustrate your willingness to pay to an U/W*** Typically, extenuating circumstances are viewed much differently than just poor credit. Alt trade lines may not be needed if the extenuating circumstance is recent

[marcer]

[QUOTE=denisec;523030]You sound like you already know this but: Are you sure you don't want to go FHA? Is the home too high in price for FHA limits? You would only need 3 years after the BK discharge for FHA. Did your home foreclose at the same time that you had the bk discharge? The reason I ask is it's possible that you might have to wait 3 years after foreclosure (when the home is sold at auction) before you can get an FHA loan, if the foreclosure occurs AFTER the BK discharge, and this is pretty certain on a prior FHA, whereas other mortgages there is a chance that you can do 3 years after the discharge even if the foreclosure occurs later....that is if it's conventional. Good luck.[/QUOTE

Mortgage discharged through bankruptcy follows BK seasoning. Foreclosure w/o bankruptcy requires different seasoning policies

[larryt]

I agree, I have an off frame modular home, 3500 sq feet. financed with Bank of America, and gained in value, Built far better than many homes we looked at, including stick built. Id put my 2 x 10 roof framing and 2x6 outside walls against any out there. Modern Modulars are not the trailers of yesteryear. there are good and bad builders in both markets, Ive looked at many.

[denisec]

You sound like you already know this but: Are you sure you don't want to go FHA? Is the home too high in price for FHA limits? You would only need 3 years after the BK discharge for FHA. Did your home foreclose at the same time that you had the bk discharge? The reason I ask is it's possible that you might have to wait 3 years after foreclosure (when the home is sold at auction) before you can get an FHA loan, if the foreclosure occurs AFTER the BK discharge, and this is pretty certain on a prior FHA, whereas other mortgages there is a chance that you can do 3 years after the discharge even if the foreclosure occurs later....that is if it's conventional. Good luck.

[jwsmartin]

Anyone know of any banks that will do a manual override on a conventional loan? We have documented extenuating circumstances and we are about to hit 3 years out of our chapter 7 bk and foreclosure on fha loan. All documentation points to the fact that we can get a loan IF we can find a bank willing to do the override. Any help would be greatly appreciatted.