08-16-2010 12:05 AM - edited 08-16-2010 12:07 AM
There's probably some extraneous info in here, but I'm trying to give as much info as possible to cover all bases so we can get some good direction from you knowledgeable folks reading this message.
My husband and I will shortly be going thru a BK. I lost my well-paying job due to the economic downturn. Our previous home was jointly owned by my husband and his parents and they refused to allow us to sell despite our circumstances and my husband didn't want to take them to court...long story short we ended up in a big financial hole to say the least. We managed to sell the house but took a $75K loss on the original down payment. We walked away with $55K split 3 ways - his parents refused to give him the half he was entitled to, and despite facing a trustee sale they refused to budge on that issue so my husband capitulated to 1/3 so we could get the house sold and be done with them and their crazy decisions and antics.
So we've got $18K plus what we've saved while staying with my parents since selling our house. My father will be obtaining a loan on our behalf since our credit is thoroughly trashed. (My huband's FICO averaging 599, I'm somewhere around 620 - but who knows what it will be once the BK is filed and hits our FICOs) My father has excellent credit. EX-783, EQ-774, TU-783. The only two credit balances he has are his AMEX card which is paid by his employer (documented) and a car loan he took out for my sister and she pays that (documented as well). So his DTI is essentially zero.
My father doesn't have a current mortgage in his name or hold title on the house he and my mother live in. So he qualifies as a first-time buyer, but BofA and WF informed him his loan will be considered a second home/investor property because it won't be his primary residence. Now we've got to come up with 20% down of the purchase price, luckily my parents have graciously decided to make up the shortfall.
The problem that we ran into with BofA was that my father's LO told him the underwriters would most certainly consider my mother's monthly mortgage payment as part of his DTI since we are in CA. We were in the process of purchasing a short sale for $255K and we had to let it go because BofA wanted my mother as co-signer on the loan and my parents didn't want to do the loan that way. Her current mortgage is in her name and my sister's name and that is how title is held. (Long story short my mother purchased a house with my sister and her husband, husband got relocated and they moved, now my parents live in the house and my mother makes the mortgage payment from her own income and from her individually-held accout.) It is documentable that it is solely her income that pays the mortgage. Their finances are separate, they only have one joint acct together.
Now we've got an offer in on a Fannie-Mae owned Homepath property. We're fairly confident we'll be the winning bid and this is the house we REALLY want, but now I am seriously worried we won't be able to perform given what happened with BofA. My father wants to go thru WF but I'm betting that we'll hit the same roadblock with them - the mortgage in my mother's name will count as part of his DTI.
Is there a lender out there that won't count my mother's mortgage as part of my father's DTI if they can provide documentation that it is not his debt and his income doesn't go toward paying it? How do we go about finding such a lender? They only want the loan in my father's name because they are worried about my husband losing his job (even tho my husband works for USPS and that isn't likely for his position) and that will impact our ability to pay the mortgage, and therefore my father's credit. They don't both want to stick their neck out, and I totally understand that. I am grateful that they are willing to do as much as they have thus far.
Here is the mortgage info and my father's info:
$220k purchase price, SFR, FannieMae owned Homepath approved, just needs appliances otherwise in excellent condition. Located in Beaumont, CA, Riverside county
We bid $10k over asking price of $210k and asked for $5k in closing costs. Comps in area are putting current house value at $230k, Fannie Mae original asking price was $262k
$176k mortgage - 80% LTV
Father's FICOs - EX-783, EQ-774, TU-783, sterling credit - no negatives, lates, or the like
DTI is zero
Income - $75k, W-2 documented, salaried, same employer last 10 years, in industry for 40 yrs
Down payment - $24k is coming from us, $20k from parents - however their documented assets cover full amount of downpayment
$50k in savings/CDs
My mother's income is $65k, she also has FICOs above 770, no negatives or lates, just the mortgage and a few credit cards. I don't have her details because she will not be a co-signer under any circumstances. All her finances can be proven to be separate from my father's.
I hope someone out there can point us in the right direction or give us some advice on our situation. I want to make sure we go with the right lender from the outset so we don't get fired from escrow for non-performance.
Thanks so much! =)
08-16-2010 10:01 AM
If you guys are using FHA or other gov't backed loans, then yes they will count the mortgage against his DTI (and any other debts she has). I believe that the community property state rules only apply to the gov't loans though, not conventional (and with decent scores and 20% down you should be able to go conventional). Alot has changed though so I may be off on that.
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