Hello everyone! I just signed up and I need some advice,experience and opinions. So here's the situation. My wifie and I decided we would try to purchase a new home. As everyone knows, this is a buyers market and there are so many incentive's to buying a new home before November. With a very shaky, nearly terrible credit history (that I created due to many poor business decisions) we agreed that we should apply for a loan before getting attached to a particular home.
Knowing that we were a long shot with a CR that included bankruptcy and a foreclosure we decided to make an attempt at it. I made a call to a bank that was suggested by a friend. I explained to the banker that I did not want to waste her time and elaborated to her my credit history before we went any further than talking. She told me that she believed it could be done and we began the process for pre-approval this past Monday. Within 24 hr's ,the banker called and said we were approved with an even higher amount than we expect to borrow!
Excited we were! As well as very happy!
Wenesday afternoon we met with the banker and began to sign the pre-approval loan documents. She showed us our credit scores (which are now in the 630's) as well as the " accepted/approved" stamped loan application. We were in shock over our credit scores because we figured we were still well below 600. As shocking to me was the 1 and 1/2 page CR. The last time I had seen my credit report, it looked like a small phone book with no less than fourteen pages of unsatisfactory debt( pre bankrupt). She told us that we have essentially done great since the bankruptcy and foreclosure and that our debt to income ratio was way above were we needed to be.
Of course the bankruptcy being only 7 yrs old it was still on the report and she said it was viewed as acceptable. Here's the problem. The two mortgages that we foreclosed on, they were also on the report. However, neither of those had any activity since early '05. In fact we hadn't had any contact with either company since the end of 2005. But, she would have to have the underwriter confirm a zero balance on both before proceeding with an actual approval letter to present to a builder. Suddenly we grew nervous and began to ask "What if, what if there is a balance, are we still approved"? She explained that since it had been such a lengthy time period since the phone calls and activity on the credit report it was her belief that both mortgage company's had dismissed the balance. She assured us that it wouldn't be an issue and that we would know for sure by today or Monday.
Today at work I got a phone call where the caller asked my associate to speak with me using my first name. She said to the caller " speak to WHO"? ( most people can not pronounce my god given name so I go by John, therefore my coworkers only know me as John) Thinkin " it must be the banker with good news" I grabbed the phone and excitedly answered. "Yes, this is Uriah". The caller responded with " this is Sally Mae with the 1st mortgage company of the home you foreclosed on in 2004 and you owe us some money Sir"! I must admit my heart feel to the floor. After she explained my options to me on how to get her company paid I questioned her to as why I hadnt been contacted in the past five years over this balance which I am being told I owe. It appears that the underwriter checked with the credit bureau to confirm the zero balance which in fact per the mortgage company's phone call to me, there is a balance.
I called my banker immediately to let her know about the call I had just recieved. She explained to me that I shouldn't worry as of yet. At least not until she here's from the underwriter which will now be no earlier than Monday. I asked again if this was the case, was this the end of the road for the loan. She told me she was unable to give me a definite answer to that question without running the application with the stipulation of having an actual balance on the first mortgage's loan. First on her agenda Monday morning, she will create a new application with that scenario.
My question is, in the event that we assume not only does the first mortgage have a balance due, but the second as well, is there still a possibility that we in fact will be approved? What are the statute of limitations for the balance's due from the foreclosure's? Are we done with the possible purchase of our new home or do we still have a chance?
Other important facts:
1. Per the phone call today from the mortgage co., I was told immediately, they would accept less than 1/3 of the balance.
( unfortunately this is still a lot of money that I would use for my down payment towards the new home)
2. I contacted the county deeds dept. this afternoon and was given a web address where I could find what the home was sold for after the foreclosure. As best I understand all the legal jumbo, the home actually sold for $13,000 
more than I owed on the remainder of the loan when it was foreclosed!
Sorry for such a long post. Let me thank you in advance for your time! Hope you have a great day! Sincerely, BIGJOHN
edited to add some white space in there; whew. I'll get out of the way for the comments. --hauling