New Mortgage with Lates on Current Mortgage?

[MBOhio2]

I have pretty good credit in low 700s with high income and a strong work history (been at the same company for 6.5 years). The only negatives on my credit report are a random CC late from last year (will work on getting that removed) and then my current mortgage.

Long story short, there was a string of lates on my current mortgage in Summer-Fall 2014 that got as bad as 120 days late. Then the most recent late is a 30 day from September 2015. So it's been 10 months since the last 30 day late but there are some really bad 60-90-120 lates (just one 120 day) from almost 2 years ago.

What are my chances of getting either a conventional or FHA loan in the near future? It isn't urgent and ideally we wouldn't need a new mortgage for another year or so, but we are looking for a unique property and it's hard to know when the right one will pop up, so I'm wondering if/when I'll even have a chance at a new mortgage. Is there a standard wait time, etc?

Thanks!

[Anonymous]

I think 90 days late is equivalent to foreclosure and Fannie Mae says the waiting time on foreclosure is 7 years. Or 3 years with extenuating circumstances. I think it's just 3 years for FHA but I'm not 100% sure on that.

[MBOhio2]

I thought a 90 day late was the same as a forclosure for credit scoring purposes, but I didn't think it was the same from a lending purpose. I thought the rules on getting a new mortgage after forclosure applied only to actual, formal forclosures.Does anyone know?

[StartingOver10]

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@MBOhio2 wrote:

I thought a 90 day late was the same as a forclosure for credit scoring purposes, but I didn't think it was the same from a lending purpose. I thought the rules on getting a new mortgage after forclosure applied only to actual, formal forclosures.Does anyone know?

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No, the guidelines for fannie, freddie and HUD apply to lates on existing mortgage.  120 days late is considered a foreclosure.

There are lenders that will finance you one day out of foreclosure - but those are sub-prime deals with low LTV's and high interest rates.

[MBOhio2]

Great, thanks for this information. It was a very frsutrating exeprience with our lender because we did unfortunately hit 60 days late, but when that happenned, our lender refused to accept any payment until we could pay the full amount (i.e. the full amount past due to bring it to current). We could have made a payment to prevent our loan ever getting to 90 or 120, but we had to wait until we could save the entire amount, so we sort of got forced into the 90 day and 120 day when we never needed to be that late. I may work with our lender to see if they're bring those lates down to 60 days, given the circumstances.

But regardless, we can wait the 3 years if that's what is required because that's still within our timeline for a new property.

[DallasLoanGuy]

i do believe that some lenders will not consider 120+ a foreclosure..... based on a conversation i had with shanemortgageman a while back.

i dont think i would be able to do it. but maybe someone can

[MBOhio2]

DallasLoanGuy - Out of curiosity, would the following factors impact your ability to get approval with an 120 late:

1) At the time we want to consider the new loan, the late will be about 2.5-2.75 year old, so really close to that 3 year mark;

2) The late was not because of inability to pay for 120 days - when we were at 60 days, we could have easily made a single payment, but the lender refused to accept any payment until we either a) paid the full amount due to bring current or b) entered into a payment plan to bring current. Because we were not able to pay the full amount due imemdiately, we had to go the payment plan route and it took the lender FOREVER to approve the payment plan, so we were left just waiting and watching the loan go 90 days, then 12 0 days. All of this is very clearly documented in emails with our lender.

3) Both my husband and I will have credit scores in the low-ish 700s.

4) We will have a 20% downpayment and a decent chunk in savings.

I'm just curious if the 3 years is a real deal breaker or if all of the above would be mitigating and mayeb allow us to get approval with decent interest rates.

[DallasLoanGuy]

see if you can work with a lender to run the file thru underwriting during the preapproval process so that issue is handled. 

would suck to get 2/3 thru the loan and this pop up.

also. have underwriter preapprove will make your pre-approval letter and offer stronger.

[Anonymous]

120 day late = foreclosure is a lender overlay, not Fannie/Freddie. I had someone with a 120 day late close yesterday. For the lenders that can do it, an automated underwiting approval may be all that is necessary.

[StartingOver10]

dpeezy, That's good to know. How old was that 120 day late?