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Getting a new loan before foreclosure

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Anonymous
Not applicable

Getting a new loan before foreclosure

My wife and I bought a house 2 years ago in California. We had low scores at the time, hers was low 600s mine was mid 500s, so she went on the loan only in her name. We have the infamous adjustable rate mortgage, the lender has said they will not consider modification or adjustment to our terms and it has gone higher than we can afford now and we will be facing foreclosure if our short sale is not approved or completed in time to avoid it. We can afford a mortgage, just not at the rate and terms we have in this mortgage now. i make 55k and my wife is self employed and her income varies. My question is, since it is likely my credit score has gone up in the past two years, does anyone know if it might be possible for me to apply for an FHA in my name only and qualify while in a shortsale / foreclosure situation?
Message 1 of 12
11 REPLIES 11
Lel
Moderator Emeritus

Re: Getting a new loan before foreclosure



@Anonymous wrote:
My wife and I bought a house 2 years ago in California. We had low scores at the time, hers was low 600s mine was mid 500s, so she went on the loan only in her name. We have the infamous adjustable rate mortgage, the lender has said they will not consider modification or adjustment to our terms and it has gone higher than we can afford now and we will be facing foreclosure if our short sale is not approved or completed in time to avoid it. We can afford a mortgage, just not at the rate and terms we have in this mortgage now. i make 55k and my wife is self employed and her income varies. My question is, since it is likely my credit score has gone up in the past two years, does anyone know if it might be possible for me to apply for an FHA in my name only and qualify while in a shortsale / foreclosure situation?




Are you on the title of the house, or just your wife?
Message 2 of 12
DallasLoanGuy
Super Contributor

Re: Getting a new loan before foreclosure

I believe that the holder of your current note would NOT be happy about this....
I also believe that what you are attempting to do is blatant FRAUD.
 
But good luck with all that...............
Retired Lender
Message 3 of 12
Anonymous
Not applicable

Re: Getting a new loan before foreclosure

It is highly unlikely that you would be able to do this.  California is a community property state, so both of your debts will be counted towards the FHA loan even though it would only be your loan.  The underwriter is only suppossed to use the spouse debts, not actual credit history, but your DTI will be blown out of the water supporting 2 mortgage amounts (assuming you want to do this prior to foreclosure)  On top of that, you are unlikely to get any "compensating" factors by an underwriter if you or your spouse have an obvious foreclosure in the works or in the immediate past.  Now, if your credit score is high enough that you can get a non FHA loan, then you might have an option there as non FHA will not need your spouse's income.  There is also talk about legislation/rule changes to go after people doing this as it is pretty much blatant fraud.  Your best bet would maybe be to contact FHA and try to do a joint re-finance of your existing home and avoid the foreclosure all together.   Of course, you would have to have been there long enought to have at least some equity.
Message 4 of 12
Anonymous
Not applicable

Re: Getting a new loan before foreclosure

@mickie08

We are doing what we can at this time to try to keep our home as a back up to the short sale and we are looking into the refinance program beginning in October...

Message Edited by mrBlasehBlah on 08-07-2008 11:41 PM

Message Edited by mrBlasehBlah on 08-07-2008 11:41 PM
Message 5 of 12
Anonymous
Not applicable

Re: Getting a new loan before foreclosure

@DallasLoanGirl

I certainly am not looking forward to going through a foreclose and If i had the means to keep and pay for our mortgage i would... We would rather NOT walk away. We have always been determined to be good borrowers, make payments on time, honor our debt, keep our credit solid... We have tried on numerous occasions to communicate with the lender and we hit a brick wall... here's a question for you: Wouldn't it make sense for the investor to work with someone who would prefer to keep their loan rather than allowing it to go to foreclosure? I thought so, however when I contacted my servicer's "home retention team" we were told our investor would not allow or consider loan modifications or restructuring... That was our first course of action once refinance was not an option... a representative basically told me that the investor would likely rather the home went to foreclosure than take a loss on the loan?? it just doesn't make sense to me... We take full responsibility for getting into the loan in the first place, all we have asked is to give us the opportunity to keep our home... My intention is not to commit FRAUD, just keep our family in a good home...
Message 6 of 12
DallasLoanGuy
Super Contributor

Re: Getting a new loan before foreclosure



mrBlasehBlah wrote:
@DallasLoanGirl

I certainly am not looking forward to going through a foreclose and If i had the means to keep and pay for our mortgage i would... We would rather NOT walk away. We have always been determined to be good borrowers, make payments on time, honor our debt, keep our credit solid... We have tried on numerous occasions to communicate with the lender and we hit a brick wall... here's a question for you: Wouldn't it make sense for the investor to work with someone who would prefer to keep their loan rather than allowing it to go to foreclosure? I thought so, however when I contacted my servicer's "home retention team" we were told our investor would not allow or consider loan modifications or restructuring... That was our first course of action once refinance was not an option... a representative basically told me that the investor would likely rather the home went to foreclosure than take a loss on the loan?? it just doesn't make sense to me... We take full responsibility for getting into the loan in the first place, all we have asked is to give us the opportunity to keep our home... My intention is not to commit FRAUD, just keep our family in a good home...

Fannie Mae recently changed their guidelines because of people who walk away from their homes.
 
You are a renter.
Retired Lender
Message 7 of 12
Anonymous
Not applicable

Re: Getting a new loan before foreclosure

so often today there is not just one, but several entities that own a piece of a loan it is not always possible to get any adjustments.  This gets even more difficult with all of the financing options and 2nd and 3rd mortgages out there.  In a case of multiple mortgages, why would the 2ns or 3rd mortgage agree.  The first mortgage compnay gets all their moneyback prior to the 2nd or 3rd.  If it forecloses and goes to auction, the money is split.
Message 8 of 12
Anonymous
Not applicable

Re: Getting a new loan before foreclosure

While I understand COMPLETELY the desire and importance of having a good home for your family (we're working our patooties off to hopefully get approved for one soon, too), you have to understand that what you're trying to do IS unethical.

I understand what you're trying to do, though. Since your wife is the only one on the existing mortgage, you essentially want to slip by on a technicality: that being that you're NOT on the mortgage-going-bad.

While TECHNICALLY it might not be fraud, per se, it sure is an attempt to thwart the system, no matter how "good" the intentions.

Bottom line: Extremely deceptive, teetering on mortgage fraud at best, fines and/or jail time at worst.

Would it really be worth having to spend the rest of the "new" mortgage loan's life looking over your shoulder??
Message 9 of 12
lagb
Contributor

Re: Getting a new loan before foreclosure

I feel for you!  We were in the same situation with Ameriquest  (the thieves).  They frauded us into a mortgage that we didn't understand at the time (naive - our fault, I guess), overstated our home's worth and WAY overcharged us in closing costs.  But hindsight is 20/20 and we are involved in a class action lawsuit that our lawyer says looks promising. 
 
We were fortunate though (I guess) because we were able to sell our house and not as a short sale.  It was in 2006, just before the market crashed.  We rented a home after that and now we are house hunting again.
 
Ameriquest wouldn't work with us either, and no other reputable lenders would look at us because by that time we appeared to be 120 days late, even though we were making some payments on the account - it wasn't payment in full, so AMC reported us as 120 late.   Then AMC would send back our payments because they wanted the whole monthly payment or nothing at all! 
 
I don't have any real advice, but I feel for you and I hope you find a way to stay in your home.  Good luck. 


Message Edited by lagb on 08-08-2008 08:21 AM
Message 10 of 12
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