FHA Mortgage after Bankruptcy with improving Credit Scores but limited TLs

[Anonymous]

I am coming out of bankruptcy, it will be two years in May.  I am looking to purchase a house and it will probably have to be a FHA loan.  My current scores are:

TU-582, Experian-671, Equifax-658.  I have long credit history with good postive TL still showing but only 2 current CC that are showing with current activity (12 month) -Capital One, and Macy's.

Will FHA use my credit scores or since I only have TLs being used require alternative credit scoring?

I also have a car that I continue to pay on that will be completely paid next year.  The problem is that 2 of the CAs are showing it as part of the bankruptcy, how can I get credit for the 6 years of perfect credit on my car if I didn't officially reaffirm the debt.  I thought I did during bankruptcy but didn't, I just filed the intention to reaffirm.

[ShanetheMortgageMan]

If your debt to income ratio qualifies, then with your credit scores, the odds are pretty good you'd be able to pass automated underwriting.  If that is the case, then whatever is on your credit will suffice, you wouldn't need to show alternative trade lines or the payment history on the car.

However if you need to get an approval through a manual underwrite, then be prepared with at least 3 trade lines post-BK that are 12 months in age.  This could be the credit cards you have on your credit report, any closed accounts that report for at least 12 months after the BK, and non-traditional credit such as utilities, cell phone, non-payroll deducted insurance, etc.

As far as dealing with the payment history on the car, just get a letter from the creditor stating your payments were made on time from XX/XX/XX until XX/XX/XX and that should be sufficient for the underwriter.

[Anonymous]

Shane,

Know of any automated underwriting that will approve with verifying no documentation?

[ShanetheMortgageMan]

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@Anonymous wrote:

Shane,

Know of any automated underwriting that will approve with verifying no documentation?

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For an FHA loan?  No, FHA requires all loans to fully document income, employment & assets.

For a conventional loan, both Fannie Mae (DO/DU) & Freddie Mac's (LP) automated underwriting systems can approve a loan without requiring income and/or assets to be verified.  Usually need perfect credit (720+), some equity (5%-20% more than the minimum required), a good debt to income ratio (35% or below), and ample reserves (4+ months worth).

Message Edited by ShanetheMortgageMan on 10-01-2008 08:42 AM

[Anonymous]

shane are you saying that you can get a mortgage after bk after 2 years but you have to wait 3 years on a foreclosure that wasn't really a foreclosure??? i was just told that my past lates (showing 120+ that wasn't really, it was a loan modification) is preventing me from getting a loan. last i checked my scores were 604,614,535 this is a drop since i lost points after opening a new account. (car loan)