I Am 8 Months Out of Ch 7 and my FICO is nearly 700.

[ezdriver]

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@StartingOver10 wrote:

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@ezdriver wrote:

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@StartingOver10 wrote:

Can I ask - how did you get a mortgage 3 months from Ch 7 discharge?

Every matrix I have seen requires a longer timeframe including the Back to Work program. I am asking because I am a Realtor and many of my clients would like to buy right after discharge. Did you use hard money?

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I'm wondering about that too. Seeing that land was used as collateral, it would mean that the loan was not your standard residential mortgage but is likely a construction-to-permanent loan. Since the land belonged to mom, it is likely that mom is a co-borrower on the loan.

Let's see if the poster shares some details.

As an FYI, I am in Northeast Florida and I have found more than one source for residential mortgages for folks with one day after discharge ... but the rate is close to 10% and a 20% downpayment is required. In other words, it is "hard money".

I also have one source that allows conventional mortgage with one year after discharge and the rate is closer to 6% with 20% downpayment. The sources are out there but most buyers cannot handle the higher rates.

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I have the hard money sources and the terms I see here are 8.99% to 10.99% with 30% to 35% down. True hard money.

I don't have any conventional mortgages with one year post BK unless it is extenuating circumstances. Two years post BK conventional with 20% down, but not one year without the extenuating circumstances. Is your source a regional lender or private lender?

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@I have one buyer who did not make it through the Back To Work program guidelines [had slightly less than 20% income reduction] and the LO referred him to a national lender offering a 5/1 ARM @ 6% with 20% down. I can get the lender's name for you if you wish. The other is a local credit union and it is a portfolio product.

[jcknight007]

Hi guys. Thanks for all of your input and replies. I'll try to explain and elaborate.

First, let me say that I don't condone even my OWN methods. This post was for educational purposes. It's what I did.

Yes. I'm familiar with Soulmaster's posts. I have followed him for quite some time and he's been instrumental more than once in guiding my decisions. I can't say he'll agree with my methods, lol.

There seems to be some head scratching over how I obtained a mortgage. I'll try to explain. I researched the idea for weeks. I found that the big players have zero interest in financing anyone with credit issues so I started looking elsewhere. FHA is the best deal going for the credit challenged via the back to work program. However, you need a year out of BK, 3% down, documentation of extenuating circumstances, and a dancing bear who will swallow swords. I do not relish paying PMI for the life of the loan either. So I started talking to small local banks. Banks that have a dozen or so locations in the region. I found two that would talk to me. One wanted wayyyy too much money down but the other sat down with me and brain stormed. My mother had some vacant land valued at around $100k that will be my inheritance at some point and she agreed to allow me to use it as collateral. Now, the house I bought was nothing fancy. (Less than $150k, which in most areas outside the South translates to approx a $225k purchase.) Anyways, the bank put a $70k lien against the property as security. My terms were not fab. 6% escalating to 8% 7 year baloon. Thankfully, We have an agreement to refi at two years with the caveat that I keep my credit clean. You asked how much money down? Lol, $500 earnest money. (That's not a typo). That's how I did it. Please feel free to ask any specific questions.

I've made many mistakes in the last year. I don't advocate anything I've done. Most of it was wrong. I got lucky.

If you're wondering how I wound up in this mess to start with, it was due to a 30% reduction in income and a foundering economy. Thank your government.

[jcknight007]

Hi. Thanks for your question. No, mom is not a co-borrower. My wife and I are the only ones on the loan (joint bk by the way). I put $500 down as earnest money. That's it. No, it's not a conventional mortgage. At least not yet. It's one of these local Southern banks where you can go in and sit down to coffee with the VP without an appointment. Being from Florida I'm guessing you know what I'm talking about.

One thing everyone should know. The Southern states have been fairly insulated from the US economic woes. (Florida notsomuch) The housing market where I am is booming. Very few repos on the market. People here still have jobs and money and the economy is vibrant. The local banks are not running scared. My state has never had a bank shut down by the feds to my knowledge. It's just different. I lived in the Midwest until two years ago. Bless yall's hearts *wink*.

[SoulMaster]

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@ezdriver wrote:

Soulmaster is goona have heartburn when he reads this thread. lol

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No he's not.

I've said a thousand times that there are multiple ways to get to 700. That the 7 to 700 guide is as much about personal growth and responsibility as it is about building a score.  It also works every single time for every single person who follows it.  The thing that gives me heartburn is when people who are following it, jump off of it, then wonder why they can't get the Disco and ask for help.  As for people who don't follow it and have great successes, power to them!

There are four important things to take away from the rebuild above:

#1 - As mskarma noted with a little less vigor than I will; the OP likley committed a felony.  The mere act of disputing accurate information on a credit report can run afoul of federal bank fraud legislation.  That's one of the reasons why the boards here don't allow it to be discussed.

#2 - Hard-money lenders exist in every state; not everybody has 20%+ to put down 3 months post-BK.  (The collateral was the equivalent down payment and the terms are clearly hard-money terms).Opening a primary-residence mortgage will instantly land you 6-21 points when it reports (assuming it reports).

#3 - I wonder which FICO the bank gave the OP.  There are ~40 different formulas x3 reports = ~120 different scores  with differing ranges that mean different things.  If the OP wouldn't mind, what's your myFICO EQ score?  I know that the score here is practically worthless in the real-world but it's a great measuring tool to make sure we're all measuring the same thing.  Also, some banks are now using Beacon 5.0 instead of FICO which ads more reports/confusion to the mix.

And finally (and most importantly) #4 -  One-off accounts of really fast rebuilds are great... I love to read about them.  However, I'd caution other poeple that might try to follow them that they're not scientific until there's more data to say whether it works for everyone or not.  That's why the 7 to 700 plan  gets such positive response... it works for everyone who follows it.  In this case, I'd wonder what the scores would be if not for the mortgage and without disputing valid things... most people don't have that 20+% and/or don't want the horrible terms that hard money guys want.  They'd rather wait 1-2 years.

jcknight007, good luck to you and your continued rebuild.

-SM

[ezdriver]

If a lien was place on that land property owned by mom, then mom is on the deal as she would have authorized the bank to place the lien. The only way for this to not be true is if the land was given by mom to the op. To say that mom is not a co-borrower is technically correct but she is part if that deal by approving the lien.

Like the saying goes, the devil is in the details.

[jcknight007]

Thanks Soulmaster. You are correct on many points. I never posted what I did as a guide. Just sharing my experience. Let me clarify a few things however.

1. I went over my CR with a magnifying glass. If I found ANY and I do mean ANY inaccuracy it was disputed. (I didn't find many entries that didn't have errors). That's what I disputed. Rock solid stuff with no errors was left alone (Public Records, etc) No crime was commited. 

2. I didn't put any money down. The land stood for the loan. I used a FDIC mainstream bank. (Local but a regular bank nonetheless) I did not use a hard money lender. 

3. Equifax, (my lowest score comes in at 644 as of this posting.) The bank gave me three scores and averaged them. 

At any rate. It worked. I have a house, two cars, a pocket full of credit cards and a score in the fair to good range in less than a year post Ch7. 

To the last poster: My mom did indeed authorize the lien on the land. it still belongs to her but it is used as collateral for the loan. She did not co-sign on the mortgage documents, just the quit claim deed. (or whatever it was) 

[SoulMaster]

I hate to break this to you, but:

If your mom quit-claimed the property to you (or the bank) she doesn't own it anymore.  If she released the land to lein from the new lender, and you start missing your mortgage payments, the bank gets to take both.

You put more than 20% down, it just wasn't cash, it was collateralized into the other property as the new lien is attached to both.

You stated the terms of the loan "Anyways, the bank put a $70k lien against the property as security. My terms were not fab. 6% escalating to 8% 7 year baloon."  Again, I hate to break it to you, but those are hard-money terms.   Pretty much anything that's not conventional (yours isn't, b/c the BK) and isn't FHA  (again, yours isn't) that has less-than-ideal terms and 20+% down is seen as hard-money by people familiar w/ the industry.  FDIC has nothing to do with it.  

Finally, the reason people are calling you out on your disputes is that you wrote "2. Dispute everything even if it's legit. I had several baddies removed that were indeed mine." <-- This is pretty much an admission of guilt and extremely taboo to say on these boards, regardless of what you meant to say/type.  I was genuinely surprised that this whole thread didn't get edited out by the mods for that one (seemingly simple) statement.

I honestly don't mean to sound like I'm calling you out and I apologize in advance if what I wrote is taken that way...  These forums are incredibly popular with rebuilders and the newbies who come here very easily get the wrong idea.  In other words, I'm only trying to clarify that your rebuild-path is unique to you and won't work for most.  For instance, using the same example I've been using, most people can't use mom's land to collateralize a home purchase.  But, some readers will ignore that part and think 685's are common place 8mo out of a 7.  Another good example would be if I posted that I had a 749 score (I do) but it came out later that it was a TU VantageScore (it is) and not a TU FICO (709 last time I checked).

Like I said before, I wish you nothing but good luck on your continued rebuild.

Cheers,

-SM