Pre-approval shy of 3 years since foreclosure?

Anonymous · ‎10-24-2015

January will be my 3 year mark. Originally, it was thought to be September but the bank didn't transfer the deed for several months after the sale of the house. The way my loan officer (who I haven't been able to ask directly yet) explained it was the 3 year mark was for underwriting.

My question is, is it possible to get a pre-approval before that time limit has expired if everything else is in order? If it is, I'm thinking of trying for it in November.

StartingOver10 · ‎10-24-2015

The official mortgage application date has to be after your 3 year foreclosure anniversary. It can be the next day, but still after the date and not before.

Also your purchase and sale contract date has to be after your 3 year anniversary.

Technically you can get a pre-approval prior to your 3 year anniversary, but what if you find something quickly in November or December? If your anniversary is January, you can't write up your offer until after the anniversary date. It would be terribly frustrating for everyone, especially you.

My advice, don't start looking in person until you can pull the trigger on an offer (after the anniversary date). Look at properties online and get your financials together so when the anniversary date comes around you can start immediately. But I wouldn't start looking in person until you can follow through.

Sassy_Taurus · ‎10-24-2015

My bk discharged the 1st week of January 2014 so I'm waiting also. I wanted to go for the preapproval late December. This waiting is killing me but it's giving me time to try and get my scores as high as possible. I think I've become obsessed with Zillow, trulia, and Redfin.

Good luck to you.

Anonymous · ‎10-25-2015

@Sassy_Taurus wrote:
My bk discharged the 1st week of January 2014 so I'm waiting also. I wanted to go for the preapproval late December. This waiting is killing me but it's giving me time to try and get my scores as high as possible. I think I've become obsessed with Zillow, trulia, and Redfin.

Good luck to you.

Me, too. I have alerts set up from Realtor and Zillow. It's almost as addicting as credit repair...

I'm going to some open houses today for homes that have been on the market for what seems like forever. Since the plan is to move to a new area, I'd rather get an idea of what to expect in my price range. I can't get that from photos and descriptions, so open houses seem like a good opportunity to do some recon. I've only set up one showing so far, but that was when I thought I was in the clear to get pre-approved. After that showing, I got the bad news I would have to wait until January.

Anonymous · ‎10-25-2015

@StartingOver10 wrote:
The official mortgage application date has to be after your 3 year foreclosure anniversary. It can be the next day, but still after the date and not before.

Also your purchase and sale contract date has to be after your 3 year anniversary.

Technically you can get a pre-approval prior to your 3 year anniversary, but what if you find something quickly in November or December? If your anniversary is January, you can't write up your offer until after the anniversary date. It would be terribly frustrating for everyone, especially you.

My advice, don't start looking in person until you can pull the trigger on an offer (after the anniversary date). Look at properties online and get your financials together so when the anniversary date comes around you can start immediately. But I wouldn't start looking in person until you can follow through.

Thanks. So I wouldn't be able to put earnest money on a house until I could run a full application? When I purchased my first home, I put cash down then got pre-approved. That was many moons ago, though.

ezdriver · ‎10-25-2015

To OP: It depends on the builder.

I'm a sales counselor with a national builder. We sometimes preapprove a buyer to go ahead and sign a purchase agreement for a new home that will take 5 months to build. The loan officer issuing the preapproval provides statement of explanation to my management such as " This buyer need 15 points in their score but I see ways that they can achieve it in 2 to 3 months". That said, we will again revisit the preapproval when building permit is received and a go/no go decision is made on whether or not to start construction of the house. Another example is that the buyer does not have the full 3.5% on hand for the FHA minimum down payment so we tell them to have it saved by the time we receive the building permit.

Hope that helps. All the best.

StartingOver10 · ‎10-25-2015

@Anonymous wrote:
@StartingOver10 wrote:
The official mortgage application date has to be after your 3 year foreclosure anniversary. It can be the next day, but still after the date and not before.

Also your purchase and sale contract date has to be after your 3 year anniversary.

Technically you can get a pre-approval prior to your 3 year anniversary, but what if you find something quickly in November or December? If your anniversary is January, you can't write up your offer until after the anniversary date. It would be terribly frustrating for everyone, especially you.

My advice, don't start looking in person until you can pull the trigger on an offer (after the anniversary date). Look at properties online and get your financials together so when the anniversary date comes around you can start immediately. But I wouldn't start looking in person until you can follow through.

Thanks. So I wouldn't be able to put earnest money on a house until I could run a full application? When I purchased my first home, I put cash down then got pre-approved. That was many moons ago, though.

One of the elements to putting down your EMD is a signed contract and the date is critical when it comes to post foreclosure financing. Since FHA is insuring the loan, the date of the contract must be at least one day after the 3-yr anniversary date to meet the guidelines for FHA (not a lender overlay). FHA won't insure it if the minimum guidelines aren't met including the wait period after foreclosure.

I would never put up money with a builder without simultaneously having a contract in place, IMO its too risky for the buyer/borrower. To go into a contract that doesn't meet the guidelines means you would have to re-execute the contract after the anniversary date to satisfy that condition.

What's to say the builder doesn't want the new pricing in effect at the time of the new contract date? After all, the builder has your money and the previous contract and essentially has you over a barrel. I think you would be risking either your EMD or risking a price increase. It puts you in a disadvantageous position to negotiate with the builder.

It is a different thing with the two examples EZ gave because those items aren't tied to a specified date (like the time period after foreclosure). Those examples show the buyer needs to accomplish X within a time frame but there is flexibility.

BTW, I know this because I just had a client of mine close last week with the exact circumstances you describe.

ezdriver · ‎10-25-2015

To OP: I don't see it posted in this thread but if you can make a 20% down payment, then you can secure portfolio loan and buy now. Portfolio loans are kep by the lenders and so they make up their own rules.

Just spoke to my LO and here's what I was told.

We sometimes pre-approve a buyer and sign purchase agreement. The house construction starts. When the 3-yr anniversary arrives, the buyer simply reapp for the mortgage to meet the wait-time guideline. I believe that there are other builders that also do this but of course this does not work with our inventory homes or resale homes. Hope this helps.

Anonymous · ‎10-25-2015

Thanks, StartingOver. I'll keep all that in mind. Come January, hopefully my score will be where it needs to be.

My husband and I are unsure if we should buy a home this year or wait until 2017. Most of the negative items will have fallen off my report by then, I'll have an extra year at my job, a larger down payment, and (hopefully) better credit. We're just unhappy with our current rental - size and location.