So, my husband and I are currently trying to purchase a house and I have a question about something that has come up. We are approved for USDA Guaranteed loan up to 270,000 and are under contract for $244,000. We filed Ch 7 BK in 10/05, discharged in 2/06. Included in the BK was our previous home. We did not reaafirm our mortgage, so our personal responsiblity for the debt was discharged. In 2011 we stopped making payments on the property. It took the bank until fall of 2012 to start with foreclosure process. It was finalized April 2013. Now, the only derogatory item on our credit is the BK, which is scheduled to come off in one year. We have nothing about the foreclosure, but I know that it shows up when you pull county records. Our credit scores are both high 600's and out PITI and DTI are both within acceptable USDA limits.
Upon reading the new changes made to USDA in December 2014, my inderstanding is that since the home ws included in the BK, even though it was not foreclosured on until 2013, our obligation to pay ended with the BK. With that being said, the way i read the new info is that for negative credit they have to look at the BK discharge date, not the foreclosure. Is that correct?
We are providing everything to our lender, but they do not seem to be well versed in this new change. To be fair, it is new and not something that you come across every day.
Thanks so much!
