04-24-2009 08:07 AM - edited 04-24-2009 08:16 AM
Hello everyone. I am getting mixed information and thought I would check to see if anyone could give me an even slightly definite answer on this topic.
The basics of our situation are that we got caught in the real estate market crash like a lot of people (by purchasing a lot to build on and then not being able to build on it or sell our then current home), so we had to file for Ch 7 bankruptcy in 12/06, which was discharged 4/07 (we have just passed our 2 yr post-bankruptcy date for FHA). However, during the bankruptcy, our lender lifted the stay and began to foreclose on our home (1st & 2nd conventional mortgage) as well as our lot loan (conventional), simultaneously. The foreclosures were completed in 11/07 and the property was sold 12/07 & 1/08 (due to the lender's atty's delay). Now, I have read the FHA guidelines that said you need to be 3 yrs post-foreclosure in order to obtain an FHA loan (and recently I've heard 5 yrs for a conventional mortgage). I have been told that the foreclosure can be considered as part of the bankruptcy (2 yrs before allowed) since there is no deficiency judgment and the foreclosure began during and as a part of the BK. However, I've also been told that the BK has absolutely no bearing on the foreclosure 3 yr date (meaning we'd have to wait until 01/11), even though the foreclosed loan amounts were covered by the BK...which I do not understand?
Will someone please let me know whether or not we can apply now (2 yrs post-bankruptcy) or if we are forced to wait until the 3 yrs post-foreclosure are up? Also, are their any differences between FHA underwriting guidelines between banks and credit unions?
Also, our credit scores respectively are, my husband: 655, 704, 711, mine are: 665, 709, 719, we have reviewed corrected and disputed all possible information and are now just working on building more.
Thanks so much.
04-24-2009 08:13 AM
04-26-2009 07:39 AM
Thanks for the suggestion, I really appreciate it, but I have checked on the USDA loan already. We do not qualify b/c our income is too high, which would be laughable, except that it means we really do have to wait the 3 yrs. Ridiculous if you ask me, b/c essentially there would have been no bankruptcy if not for the home loans and it was the primary reason we filed and actually the only reason we qualified for the Ch 7. Oh well, thanks for the help though.
04-27-2009 02:31 PM
04-28-2009 05:50 PM
Thanks for the reply! The only "public record" showingI on all of our credit reports (both mine and my husband) is our bankruptcy as well. All of the home loans (1st, 2nd & Lot loan) show as included in Ch 7 Bankruptcy, but also listed however as being "adverse accounts".
My questions for you, if I may, are:
(1) To clarify, you were officially / completely foreclosed upon for at least one of your home loans?
(2) The loan you recently applied for was FHA?
(3) Does LO mean Loan Officer? (We were told by one loan officer that it could be done, but he hasn't been responding recently... doubting that's a good sign. He said that it essentially depended on how it is presented/received in underwriting)
(4) Our credit score range is from 655-719, and so, is this comparable to your range when applying?
I am really starting to think it's simply a matter of finding a reputable lender that hasn't completely restricted their underwriting guidelines (pertaining to foreclosure). If you have any specific company information you feel comfortable sharing, can't tell you how much that would be appreciated.
At any rate, thanks so much.
04-28-2009 06:13 PM
1. I don't believe that we were "officially/completely" foreclosed on, but foreclosure proceedings were definately started before we filed for ch 7 bk.
2. We have applied for an FHA loan. Also, the loan on the primary residence was also an FHA loan. This can be tricky. We were lucky that somehow when the bank sold the house, it sold for more than the principle balance of the loan so there was no claim made to FHA. Thus we weren't in the CAIVRS system. If any of your foreclosures were on an FHA loan, and there was a claim made to HUD, then you will have to wait 3 years from the date of the claim. This may be as early as the sale date or it could even be a couple months or a year later. Only a loan officer/broker can tell if you are in the CAIVRS system. If none of your foreclosures were FHA, then you are fine on this point.
3. LO means Loan Officer. We are using the mortgage brokerage associated with the real estate company of our realtor. I would look into talking to another loan officer. This is a brutal process and you're going to need someone who will return your calls and be on top of your file/situation.
4. When I initially applied, my score was in the 580s. I was pre-approved and locked in before the FHA lender imposed score requirements increased to 620. We weren't able to close in time because of title issues and our rate lock expired so we paid a few credit cards down and did a rapid rescore. My scores are all 630-650 now (I'm the only one on the loan). With FHA, 620 is the magic number.
I should also mention that I have very good employment and excellent dti ratios. FHA is also going to want you to have perfect credit since the bankruptcy. As for lenders, our LO is working with Huntington which is more of a regional lender. We completely made it through underwriting with franklin american but the title issue with the relo company seller kept us from closing. Our LO selected Frankline b/c they were the last to go to 620 min score for FHA. She selected Huntington b.c they had the fastest turn times, and believe me, even that isn't very fast.
04-29-2009 04:00 AM
Wow, you have been helpful, thanks!
1. Glad to hear you weren't, but we were, so that could be the difference, I don't know. Not sure why the 3 yrs would apply to you though, if it didn't complete (that seems less fair than my problem).
2. Our loans were not FHA (Countrywide junk, but conventional nonetheless).
3. What company are they with? We have spoken to 2 brokers, the one who disappeared and the other said we had to wait the 3 yrs.
4. Our scores are all above 655 (up to 719!), so we are clear there.
We also have excellent employment and DTI ratios, depending on how they feel about car loans, but nothing extraordinary to say the least. No late payments etc since the BK either. I am contacting both Huntington and Franklin American to see what they say, so who knows... I would love to have a broker to sort through it all, but need to find one that says "yes"!
You have been super helpful, thanks so much.
04-30-2009 07:19 PM
If the foreclosure isn't showing up on your credit report I don't think that you had a full foreclosure. I'm not an expert but I certainty got the impression that if the house was included in the chapter 7 it was not a foreclosure. I guess only the loan officer would know for sure. Either way for us it was beyond the 3 years, but all our LO said was that it needed to be 2 years after the chap 7 and since the report said the house was included in Bk it was ok. We had talked to a broker a few years ago and he said no because of the 3 years, but our credit report at the time didn't list the house as being part of the BK. He also said we'd never be able to go FHA again, but we just got our full approval and are closing on Monday. I'm thinking he was lazy and wasn't checking everything...
Again, Good Luck!!
04-30-2009 07:28 PM
Just because it's not on the credit report doesn't mean it wasn't foreclosed. I think that's actually fairly common when there was a BK involved - certainly that's how it worked in our case.
There is no foreclosure shown in the public records section of our credit reports. The mortgage tradelines show as IIB.
Unless you signed over the title in a "deed in lieu of foreclosure" or sold the house, it would eventually be sold in foreclosure proceedings.
Back in the fall when the new rules were effected, there was some fuzziness about how foreclosure dates would be handled. Now I think most LOs are pretty clear. I've had them actually look up the court records as soon as they saw there was a property included in the BK. (And even if it wasn't a foreclosure, just having a 120 day late on a mortgage line is enough for it to be treated the same as a foreclosure.)
Even six months ago you'd have probably gotten by - now I highly doubt it.