Loan after foreclosure

[Anonymous]

I searched the forums but couldnt find an answer to anything similar to my situation.

I am looking to go through the homebuying process later this year. Foreclosure was initiated on my last house back in 2008 but does not appear as a public record on my credit report. It was an 80/20 loan. My credit report shows me being 120 days late on my second mortgage through TransUnion in June of 2008. On the primary mortgage Equifax and Transunion show me 120 days late as of October 2008.

I am wanting to build a new home that would hopefully be completed by the end of this year. Since the foreclosure is not a public record will I still have the 3 year waiting period for the FHA loan? How bad will the 120 day late payments on my previous mortgage hurt when applying for a new one? Since the foreclosure I have been able to purchase a vehicle and get a credit card and havent been late on any of those payments.

Any info will help...... Thanks

[Lel]

Hi grashoprtakeover, and welcome to the FICO Forums.

When was the foreclosure actually completed - that is, when was the sheriff's sale?  It is my understanding that the three year clock begins at the time of the sale.  If the foreclosure did complete sometime in late 2008, then theoretically you should be eligible for an FHA loan by the end of this year.  However, you might want to check to see if there are any additional stipulations for getting an FHA loan after foreclosure.

Even if your loan isn't marked as "foreclosure" on your credit reports, you are legally required to disclose this on your loan application.  If you don't, it will almost definitely be discovered by the underwriter as your file is processed.  That will very likely kill your application, and may expose you to legal risk.

It's great that you've already been able to start the process of rebuilding your credit.  Keep up the good work.

[Anonymous]

I appreciate the quick response. I went to the assessor's web site for the county that the foreclosure occurred in and it shows the bank buying the house from me on 10-18-2008. Would this represent the date of the sheriffs sale? or is there something else I need to do to check on the actual date?

[ShanetheMortgageMan]

That would probably be the date.  However you can call the county recorder and ask for a copy of that deed, may cost a few bucks for the copy, but you'd then have in writing when the foreclosure sale was.  If that is the date, as long as you'd close on the new home no sooner than 10/18/2011 you would meet the 3 year requirement.

How has your credit been since then?  How many positive trade lines have been on your credit since then, and how long has each of them being going on?  Since it was over 2 years ago, and your scores are around 620, do you have balances on credit cards?  Just trying to figure out why your score isn't more like 660'ish.

[Anonymous]

My credit has been pretty good since the foreclosure. I have two 30 day lates two months after the forclosure on an auto loan that was then paid off. There is also one 30 day ding in Nov 2009, which will hopefully be good willed off. I have had the credit card and the auto loan for over a year now and havent missed a payment on either of those. I have a 3% balance on the credit card. My score with experian just jumped to the 660 mark so you were right on. We are hoping for an FHA loan for the low down payment option. My wifes score is in the 640's range last we checked.

[Anonymous]

Also if we wanted to build, would a lender be able to check our report and tell us if we would be okay after we hit the three year mark and give us the okay to started building before the three years or would we have to wait until the three years is up to even start the building process?

[BrianB_The_Loan_Professor]

Getting a loan to build a home is a whole different procedure - finding a bank that will lend so you can build will be tough on its own - FHA will not allow this so you may be looking at even longer since FHA has the 3 year timeline and is the shortest post foreclosure

I have not seen any banks offering construction loans - now if you are talking about buying in a new subdivision and getting the builder to start your lot prior to the three year mark that would take some negotiation with the developer - 

the banks will not look at your loan until the three year mark.

Good Luck

B