Trying to Buy a House after BK, What I learned

[Chuck]

First my background. My BK was discharged in Sept of 2009. We included our house in the BK.

Three months ago I applied for a new mortgage after speaking with the underwriter to be sure my house being included in the BK wouldnt pop up at the end of the process and stop the whole thing.

The lender prequalified me for an RD loan. My credit was ran and my three scores were 683, 686, 692. This was perfectly acceptable.

They then asked for my documents. Check Stubs, Tax returns. I sent those over and the loan officer told me everything was fine and she would fax over the preapproval letter later in the day once the underwriter verified everything for her.

At this time we were pumped! thought everything was fine, but then I get a call from the loan officer. She says we have one small problem. About 70% of my income is from commission, and since I had recently switched jobs (back to my old job) I would need 6 months history for them to be able to count the commission income. I said no problem, weve been without this long, whats another three months.

So on the 15th of November I hit the 6 month mark, she called me that day and asked for the new check stubs so we could wrap this thing up. I gladly faxed them over and awaited the preapproval letter once again. Didnt hear back from her that day.

The underwriter called me the next day. She says we had a new problem. Apparrently the RD rules were updated in October and they now required 2 years of commissioned income history.

Now here is the hard part. with my scores, they can get some exceptions approved with RD loans. My first exception was waiving the 36 month waiting period from the date the home sold in the sherriffs sale (oct, 2010). The second would have been to shorten the length on the commission income history. She says that if I was a few months short, or maybe even a year she could get it through, but not 18 months.

Long story short, I got anywhere from a year to 18 months to go before I can move my family of 5 out of this 1200 sqft trailer and back into a reasonable home.

[tobee43]

that's so much for this informative experience. i think it's so important to hear from those that are out a few years and trying to get a mortgage again after bk.

here's my take on it, and you shouldn't feel all alone with your denial. it appears these banks, even when you have met all the criteria change the rules as they go. if you produce what they ask, they ask you for something more and more and then again MORE.

here's a good example for you. my daughter, never filed bk as close to 800 in credit scores was buying a house last month with just about 20% down. (her husband's score is under 700). they got pre approved, submitted all there paper work and everything was good to go! pay stubs 1040's all of it. found the house, everything good to go. they had their inspection as per the lender's request and their closing date, hired the moving trucks packed up everything with two small children.

well, 4 days before closing the lender now says, since they own another home and can only produce 2 years of payments from the land contract they did on that house, they, the lender has now decided to view this as a liability as opposed to an asset and now want a co-signer. so.......we get them a co-signer. now the lender comes back and says they want ANOTHER co-signer, we get yet ANOTHER co-signer, that's TWO co-signers , 20% down and a partridge is a pear tree...you get my drift? i wanted to push it with the lender, but my daughter said forget it, it still angers me.

my point here, is that i really think the lenders are thinking of anyway to get out of lending any money, even to those that have no bk's and good credit. they are simply holding that bail out money tight and will not release anything. actually, i know of NO ONE that has gotten a mortgage in the past 2 years, not a one person. (i'm certain there must be someone?) the homes that have sold here in my area were either cash deals or owner financing and a few are land contracts. i know we had to go around the bank and were lucky enough to find an owner willing to hold the mortgage for us, as i know we'd never get a dime from any bank.

if i were you, i would begin to research other alternatives to conventional bank lending.

best of luck!!

[dspii]

By way of their own mistakes, banks have almost closed the market for new mortgages, let alone a challenging one, like from one of us BK'ers. My hope is that as time heals our wounds (credit) the banks can eventually remember that there are honest hard working people out there. As the masses flock from the big banks to the community banks or credit unions, they will hopefully need to reinvent themselves to be more friendly to John Q.

[marzipan13]

everything's gonna be alright...

Well, we ended up trading in both our cars (w/ high interest rates) and getting a new car that is just a little bit more than the balance on our 2 auto loans, got good trade in deal - plus we got 3.55% interest & low monthly payment. Our credit scores were high-600s to low-700s.

FYI - We are not living beyond our means. We have a combined income of $70k and are only using ~50% of our available credit. It is that high because we used CC to buy groceries while I had been laid off and my husband had been laid off. We both are doing a lot better financially. $5k+ take home a month less bills/CC payments $1750 = $3,250 to sock away each month for house down payment. We don't have much right now because we were paying down my car payment. Went from 2 car payments to 1 (where I will make double payments), where we were paying $1k+ a month just to build up our credit - which we have and will continue to do so.