Bankruptcy/conventional loan question

[Anonymous]

I probably know the answer, but still will ask the question.

Is there any option out there to get a conventional loan less than 4 years post bankruptcy?

My bankruptcy was filed after my husband died 3 years ago - it is 2 years old now.

In the meantime I worked arms and legs on my credit and both Transunion and Equifax are above 700, Experian is lower, but scores are not my issues here.

I earn close to 400K a year now and saved good 20% of a downpayment for the home I would like to purchase.

I got my pre-approval and secured mortgage insurance, just to get a phone call from the mortgage company (literally a day before we wanted to make an offer) that the loan would not get through because of the 4-year post bankruptcy period. I got pre-approved for the full $341K FHA loan with no problems, and, I know you may think I am just unreasonable, but this is not enough for the dream-home I considered (and could easily afford).

Any input would be appreciated.

[Lel]

If the bankruptcy was filed because of the loss of your husband's income, then his death might be considered an extenuating circumstance.  For BKs with extenuating circumstances, the waiting period after discharge or dismissal is 2 years, not 4.

[Anonymous]

The trustee did ask me at the discharge hearing why the bankruptcy was filed and I presume my answer was documented that it was because of his death.

But I never noticed it being mentioned in the discharge papers (not that I inspected it close enough, I was just relieved it was over, made sure all accounts were in and filed it away). Would mentioning the event, of course with proper paperwork, be enough?

[Lel]

It might help, but to be honest, I don't know what kind of documentation is needed to establish an extenuating circumstance.

I should also clarify something.  The waiting period after bankruptcy is a minimum guideline set forth by Fannie Mae.  Individual lenders may use stricter criteria - for example, they may require a longer waiting period, regardless of circumstances.  So even though you meet the extenuating circumstances definition, a lender may still not offer you a loan, and they're not obligated to.  But if you were to shop around at other lenders, you might find one that would offer you a loan now.

FHA criteria permit for a shorter waiting period, but if I understand correctly, the loan amount is not sufficient for your desired home in your area.

Was this chapter 7 or chapter 13?

[Anonymous]

I do realize times are tough and the bankruptcy is a huge blemish on my credit. My bankruptcy was chapter 7 .

I did e-mail my mortgage broker with a question about it and will see tomorrow what the reply is.

It is NOT the end of the world - I may just have to save up more or borrow from my parents, or just find a lower priced home.

Thank you so much for your input though

[ShanetheMortgageMan]

Sorry to hear about your loss, it's obviously pretty devastating when a spouse dies, but death alone doesn't cause a bankruptcy unless there was something else tied to it - such as like Lel mentioned, if your husband made a significant portion of the household income and it was needed in order to maintain being current on payments.  If that is the case, then to document it you'd need a copy of the death certificate, evidence of his income at the time (tax returns or W-2's should suffice), and evidence of your income at the time so you can show that his income was a substantial portion of the household income, for example if yours was $400k/year at the time and his was $50k, it'd be hard to justify his $50k would make/break being able to pay finances.

[Anonymous]

Thanks for the input and I agree with you that the bankruptcy was for that reason.

Obviously I did not have that kind of income at the time - I was a medicine resident and have since graduated.

[Anonymous]

Update: Got approved for a conventional loan under "extended approval" and did not even have to go for a manual underwriting which apparently saved me some interest %%.

I'm in contract on THE house! Closing in March.

Keeping my fingers closed that everything will go smoothly!

[Anonymous]

My Chapter 7 bankruptcy was filed in NY in  November of 2010.The only debt I have at this time is with TD Bank for a car loan for which I have never been in arrears pre and post bankruptcy.

     I have found a condo in NY for a list price of  $70K. This community is not FHA approved.  I have $10K for a down payment.  Closing fees are not an issue as well.

     Not exactly sure if I have any extenuating circumstances that will count.  However, life events in my family caused  the "BANK OF MOM"  to claim bankruptcy.  Helping my family first before myself caused my current situation.  

     I had excellent credit up to my decision to wipe out my debt .  This included on time payments right up to the end.  My FICO score post bankruptcy is presently is 688.   Does anyone have ideas as to where to turn to secure a conventional mortgage in NY without having to wait.  I do not want to give up on this property at this time.