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My question involves bankruptcy in the state of CA
I am at my two year anniversary of my discharge date for my BK7 (May 15 2009). as part of my BK7 my two homes were discharged and given back to the lenders. Both credit reports for my wife and I DO NOT show foreclosures only the BK7.
The underwriter for the HFA loan at Wells Fargo, says she might have to take into consideration that we foreclosed, even though its not on the credit reports, thereby, setting us back another year.
Our credit scores are 637,639, .22 debt to income, no judgements, alimonies, etc...
are otherwise a slam dunk for HFA according to the Loan Officer.
My lawyer said that they should treat it as just a BK7. What can I do, it almost seems like a judgement call by the Underwriter based on the assumption that we foreclosed even though its not reported on our credit.
What can I do?
It's treated as a foreclosure and the 3 years will go by the date when the lenders took back the homes (the most recent) - which is the foreclosure date. Only exception to that rule is if it was due to extenuating circumstance.
Bankruptcy attorney isn't a DE underwriter.
Any idea if congress is considering relaxing the guidelines for foreclosure to less years, especaily if you have good credit scores and low debt to income with proof of income?
They aren't considering doing that.
Did your loan go through with WF?
Hope it doesn't end up in a disaster... nothing about what you've posted makes me feel comfortable that Wells Fargo did a proper job pre-approving you for an FHA loan (I assume they let you answer "Have you ever had a property foreclosed upon in the last 7 years?" with "No."?).
Make sure you keep your financing contingency on your contract until the loan funds. It's typical here in California to need to have it removed at the 17 day mark, but as soon as you remove it, and if you can't close on the home because your financing fell apart, then you do not get your earnest money back.
After your BK discharge your low DTI probably helped you are correct, but more importantly the fact that a foreclosure was likely ommitted from your loan application helped you get the pre-approval.
I will look into the contingency point you mentioned. But I wasn't asked about foreclosure. I didn't lie about anything. They ran the desktop underwriting and after waiting 20 min, for the LO to finish running it, I got the pre-approval.
I know it will probably not get funded in the end, but I am tired of renting from landlords that default on their properties without notifying me and still collect rent. I have 80 K in reserves, and I have nothing to lose by seeing this through. Not funding for the loan has everything to do with me getting punished for my BK,a dn nothign to do with my ability to pay the loan.
The worst case is that I have to wait till next June, but I am so ready to own a home.
I wasn't saying you lied, I said the information was ommitted (not included, either intentionally or forgetfully) in the mortgage application. You were asked about a foreclosure if you completed a loan application though - if you have not completed a loan application then I am not sure how the lender pre-approved you.
There is a specific question on the loan application which asks, "Have you had property foreclosed upon or given titleor deed in lieu thereof in the last 7 years?"
https://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1003rev.pdf - page 3 at the top.
It's your time & money I no one can dictate how you spend it, but have you asked when your loan would actually be reviewed? Would it be after you paid for a home inspection & home appraisal?
With VA financing you just need 2 years from the foreclosure, I am not sure if you are a Veteran though.
I am in a similar situation.
My chapter 7 was discharged and is officially past the 2 year mark. However, I sold my home in a short sale November of 2008. However, the loan was reported on my credit as settled and so I have to officially wait for 3 years which is Nov 2011. All lenders I have spoken with have said it is treated like a foreclosure. I was also told that if the loan is not on your credit, there is a way for your new bank or underwriting to find it.
So now I have been approved because I have basically $0 DTI and have maintained good credit since bankruptcy. However, I have to wait that 3 year mark til November to close, but I will now qualifty as a first time homebuyer so that may help.
Good luck!