Monkey wrench in our plans - impending short sale hit on credit

[Anonymous]

I was so excited when it looked like my DHs credit score recently soared because a lender agreed to delete a baddie off his report.

This appears to be a shortlived high, however, because in speaking to a mortgage lender today, he warned that the short sale may not have hit his credit reports yet.  I had thought it was past the month reporting cycle, but it looks like it is due to come back any day now.

Short story for those that didn't follow other threads of mine - DHs ex was awarded house in divorce with agreement to refinance.  Never did, paid whenever she felt like it, eventually abandoned the house when DH told her he was taking her to court.  Court ordered that the house be sold, and having been trashed (she never took care of it) and then abandoned for a year, it was worth less than half the mortgage amount so forced into short sale.  Short sale was completed 10/20/14.

During the short sale process, the mortgage was sold to a second entity, so we have two companies to deal with.  We are already in contact with the first to ask for a GW deletion, offering court documentation to support the circumstances.  That lender is "reviewing" - DH has been in verbal as well as written contact to stay on top of it.  The second lender had the property for less than 5 months, we have not contacted them yet.  Hope was that the first lender would delete and we would then approach second lender and say "these guys worked with us, please do the same?"

Can anyone think of ANYTHING else we should be doing or can do in the near future that I should jump on?  We must look for a new place to live in about 6 months, are financially responsible in all other respects, have money for down payment etc.  Except for his ex, he would have pristine credit.  Any thoughts greatly appreciated.

[StartingOver10]

Are you trying to get the short sale off his record so you can get a new mortgage in 6 months?

You will still have to declare the short sale to the new lender because the mortgage application requires that he disclose. I know its awful that his ex caused these issues, but the entire sale is public record and he has to disclose the disposition of the property.

[Anonymous]

Yes, we are in contact with the original lender (Everhome) that sold the account to the second lender (Green Tree).  Everhome has the account in "review" right now, DH called last week to see if there was anything they would like for the review process i.e. court papers.

From my discussions I've had with the lenders, they seem to be more concerned with the actual credit scores rather than the circumstances, and we wouldn't have any problem telling a lender the truth - that he was involved with a short sale, as long as we can also explain that it was the result of the ex and that they would be willing to take into consideration that we have paid our rent to our landlords on time for the last 3.5+ years.  The truth is the truth.  Just hoping we can smooth things out.

[Anonymous]

Turns out we may have an ace in the hole.

Originally was going to overwhelm them with a RESPA QWR, but don't think that will be necessary.  In May, our attorney received a letter from Green Tree letting us know the account was transferred to them, and to let them know in writing whether we dispute part or all of the debt.  Our attorney immediately sent them a letter disputing it and demanding validation.  They had 30 days to respond.

We're past 30 days, obviously, so we are going to send a letter reminding them of this and demanding that the account be removed from all three credit bureaus immediately or we would file against them for violation of the Fair Debt Collection Practices Act, which can carry $1,000 fines, court fees, attorney fees and other compensation.

Fingers crossed they just delete it to save everyone the trouble.  That would solve a world of issues right there.

[DallasLoanGuy]

it is still an issue even if deleted.

likely show up in a public records search

[Anonymous]

As long as the credit score doesn't take a hit and cause up problems when trying to apply for a mortgage, that's fine.  We can show documentation to anyone that asks that it was due to his ex-wife.  But lenders I've spoken with don't care about the reason, they just want the score.

[StartingOver10]

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@Anonymous wrote:

As long as the credit score doesn't take a hit and cause up problems when trying to apply for a mortgage, that's fine.  We can show documentation to anyone that asks that it was due to his ex-wife.  But lenders I've spoken with don't care about the reason, they just want the score.

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I disagree. The score is just step one. Have you been through underwriting? The u/w is going to want to see the disposition of the property and there are wait times involved from the date of transfer to the new buyer before you can apply for a new mortgage - dispite the divorce.

BTW, I hope I am wrong and that you sail through, but be prepared for the u/w to say that you have a wait period of 4 years and a min down payment of 10% for a conventional loan.

[Anonymous]

This was the email I received from the one lender, am I misunderstanding something?

Unfortunately I cant do anything about what happens to [DH]’s credit scores.  His ability to be approved for the mortgage and what interest rates are available will still be based on the credit score, regardless of the circumstances leading to/causing the drop in scores.  The positive is that I can still allow him to be approved for a mortgage if the scores remain high enough, whereas many other lenders cannot overcome the fact that there is a short sale in his history.  FannieMae and FHA both give us at Caliber the ability to disregard the short sale when the home was not our client’s responsibility.

[StartingOver10]

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@Anonymous wrote:

This was the email I received from the one lender, am I misunderstanding something?

Unfortunately I cant do anything about what happens to [DH]’s credit scores.  His ability to be approved for the mortgage and what interest rates are available will still be based on the credit score, regardless of the circumstances leading to/causing the drop in scores.  The positive is that I can still allow him to be approved for a mortgage if the scores remain high enough, whereas many other lenders cannot overcome the fact that there is a short sale in his history.  FannieMae and FHA both give us at Caliber the ability to disregard the short sale when the home was not our client’s responsibility.

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I have seen this before in the case of divorce. My buyer had to supply the divorce decree and the PSA (Property Settlement Agreement) showing that the ex-husband was awarded the house and he was responsible for the payments. The house was subsequently f/c'ed twice: 1st by the HOA and then by the lender that had the mortgage.

I was able to bring her to a lender that did an FHA loan for her while the house was in f/c by the lender. She was able to prove everything with the divorce decree and the PSA.

Edit:  One more important thing, my buyer had had a Bk subsequent to the divorce and it had been 2 years since the bk was discharged before the new home was financed FHA. The u/w received copies of the bk petition and discharge showing she was not responsible for the mortgage deficiency.

Maybe you have similar documentation for the lender- or something that will work equally well.