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Mortgage question - post foreclosure in 2015

Frequent Contributor

Mortgage question - post foreclosure in 2015

Hi all!  We are actively rebuilding to prepare for a mortgage.  My spouse received an FHA home loan in 2008 that foreclosed in 2015.  After just speaking with a potential lender last year, it was discovered that both DH and I appeared on CAIVRS until Oct 2018.  I was young when we purchased that home, and not knowledgeable whatsoever about credit at that time.  My credit was really bad, so DH was approved on his own for that home and I was on the deed only.  So it makes sense why I appeared on CAIVRS after foreclosure.

My question is, now that we are rebuilding, will FHA be our only option until we pass the 7 year mark after foreclosure?  I don't know how it works for conventional since I was not on the FHA mortgage, but I was on the deed.  The foreclosure does appear on his credit report but not mine.  Will the 7 year post-foreclosure timeline prohibit me from getting a conventional loan by myself?

2nd Credit Journey
New Starting Score: 12/21/2018
Fico 8: EQ 583 EX 586 TU 593
Mortgage: EX 489 EQ 550 TU 558

Current Score: 01/13/2019
Fico 8: EQ 619 EX 641 TU 650
Mortgage: EQ 627 EX 640 TU 650

Goal Score #1: 700 Club & Mortgage approval
7 REPLIES
Established Contributor

Re: Mortgage question - post foreclosure

Hi Radfam,

 

Since you were not on the note, you 100% should not be in CAIVRS as result of the FHA foreclosure regardless of whether or not you were on the deed.

If you are in the CAIVRS system for that mortgage, we should be able to have your SSN suppressed in the system because you're in the system by mistake.

 

The other option would be to wait a little longer. You & your husband will drop out of CAIVRS 36 months after FHA paid the claim which should have occurred within 6 months of the foreclosure.

 

As far as getting approved for a conventional loan goes, it depends.

I have had underwriters deny loans in scenarios just like this. This was several years ago & the underwriter's "logic" was that even though you were not on the note, you were on the deed & you lived in the home so you had a "responsibility" to pay the mortgage. 

 

I think FHA is going to be your best bet.

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 2 of 8
Frequent Contributor

Re: Mortgage question - post foreclosure

I concur with the VALoanMaster

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 3 of 8
Frequent Contributor

Re: Mortgage question - post foreclosure

Thanks to you both!  I have one additional question in the same context.  I ask about conventional as an option because we are in a community property state.  My DTI is fine, even calculating in DH's debts with only my salary.  However, he has had two recent lates (11/18 and 12/18) on 17 federal student loan TLs that came out of in school deferrment with no notification from the lender prior to that.  We have resolved that and no additional lates will be added for 01/19. 

 

I know that I cannot have any lates in the last year for FHA.  However, what does this mean under FHA for a nonpurchasing spouse in a community property state?  Obviously, we are rebuilding.  We aren't running out to purchase a new home today.  It has taken significant effort to come as far as we have already and we don't intent to slow down, as we eventually want to purchase again.  I am mostly curious right now on what late notations on the report of a nonpurchasing spouse mean for a purchasing spouse in a community property state under FHA.

2nd Credit Journey
New Starting Score: 12/21/2018
Fico 8: EQ 583 EX 586 TU 593
Mortgage: EX 489 EQ 550 TU 558

Current Score: 01/13/2019
Fico 8: EQ 619 EX 641 TU 650
Mortgage: EQ 627 EX 640 TU 650

Goal Score #1: 700 Club & Mortgage approval
Message 4 of 8
Established Contributor

Re: Mortgage question - post foreclosure


@radfam wrote:

Thanks to you both!  I have one additional question in the same context.  I ask about conventional as an option because we are in a community property state.  My DTI is fine, even calculating in DH's debts with only my salary.  However, he has had two recent lates (11/18 and 12/18) on 17 federal student loan TLs that came out of in school deferrment with no notification from the lender prior to that.  We have resolved that and no additional lates will be added for 01/19. 

 

I know that I cannot have any lates in the last year for FHA.  However, what does this mean under FHA for a nonpurchasing spouse in a community property state?  Obviously, we are rebuilding.  We aren't running out to purchase a new home today.  It has taken significant effort to come as far as we have already and we don't intent to slow down, as we eventually want to purchase again.  I am mostly curious right now on what late notations on the report of a nonpurchasing spouse mean for a purchasing spouse in a community property state under FHA.


Hi Radfam,

The payment history of the non-purchasing spouse (NPS) does not come into play. 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 8
Frequent Contributor

Re: Mortgage question - post foreclosure

Thank you for your quick response, VALoanMaster

2nd Credit Journey
New Starting Score: 12/21/2018
Fico 8: EQ 583 EX 586 TU 593
Mortgage: EX 489 EQ 550 TU 558

Current Score: 01/13/2019
Fico 8: EQ 619 EX 641 TU 650
Mortgage: EQ 627 EX 640 TU 650

Goal Score #1: 700 Club & Mortgage approval
Message 6 of 8
Established Contributor

Re: Mortgage question - post foreclosure

You're welcome.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 7 of 8
Frequent Contributor

Re: Mortgage question - post foreclosure

So here is my/our info below.  We really think we our best option will be to go FHA on my income alone, if DTI supports it, once my mid score is a little higher.  I said in an earlier post on this thread that my salary would cover DTI for DHs debts.  Now I'm not so sure.  Can I get a pulse check on where we are what we need to do?  *IF* we include DH, the earliest we would even be eligible would be 01/20 because of the two late notations from his student loans in Nov and Dec 2018.  If we do not include DH on the mortgage, I really don't know if my DTI actually does support it.  I know its messy and we are cleaning it up.  I guess I'm hoping for guidance without judgment on what to do from here.  We currently throw $2300 a month to the wind by renting, so we want to get to a better credit state with the ultimate goal to get another mortgage.  We moved states in Dec 2014 for work and couldn't pay rent & a mortgage.  The house was listed for sale but didn't sell until well after foreclosure.  No deficiency judgment was filed at the time of foreclosure processing.  That home was mortgaged by DH only, but it was also a community property state so I had to sign at closing as well.
1. Mortgage Credit Scores:  
    • TU 650, EX 640, EQ 627, as of 1/14/19 for Me
    • EQ 576, TU 527, EX 477, as of 12/21/18 for DH
2. Credit Negatives: If you have any, what negatives are on your credit reports. For each negative, please provide:
Me:
    • 1 Medical Collection (1 unpaid - $200) - 2013
    • Lates - None in past 2 years
    • 1 paid charge off auto loan (DOFD 11/2014)
    • Some SL tradelines reports as Paid Collection (federal student loans reconsolidated into one.  Didn't know to rehab instead.)  
    • No TLs at all that are closed are reporting a balance of any type.

For DH:

  • 1 Medical Collection, currently unpaid, $421.  Working on PFD.
  • 1 Charge Off, educational but not student loan, $2200.  Currently unpaid but can pay within a few months.
  • 17 lates, 30d - Nov 2018 (Fed Student Loan, before we realized they had come due)
  • 17 lates, 60d - Dec 2018 (same as above)
  • 1 foreclosure - (DOFD 03/2015) - Potential lender said not in caivrs after 10/2018.
3. Gross Income.  Gross income (before witholdings, medical/dental, 401k contributions), per your IRS tax returns, is what is important when qualifying, not net income. 
    • ~100k annual salary
    • ~15k bonus (15%)
    • $5700 child support 
    • DH information:  $75k salary, 25k bonus
4. Source of income.  Where is the income coming from? List each source.
    • FTE 
    • bonus
    • child support
5. Monthly debt payments
    • Auto loan 1 ($556/mo; $13k remaining)
    • Auto loan 2 ($400/mo; $17k remaining, only on DH's reports but will impact my debts for FHA)
    • Credit Card (current bal $2117/$3800 reporting 69% utl but this will refresh after 2/2 to be at 55% utl as of balances today) *3 total cards.  Actively paying down the balance to 8% on one card for AZEO, should be within 1-2 months.
    • Student Loan 1 (Me - $417 on IBR; $117k total, $607 if I switch to Extended Graduated should amortize the loan from what I can tell)
    • Student Loan 2 (DH - $634 not on IBR; $55k total)
    • Current Rent - $2300 (does not report to CRAs but 100% perfect rental history 4 years)
6. Employment (for those who are employed). 
    • Type of employment: Full Time in the career field of degree
    • How long 4 Yrs at this company for me, 1.5 yrs for DH at current company &15 yrs total in industry
7. Assets/Reserves
    • $35k in 401k
    • $10k bank
    • $12k pending deposit
    • preferably looking at $10-20k down payment
8. Location:  North Houston, TX
9. Property Description: 
    • Single Family Home
10. Property Value
    • ~200-300k
11. Occupancy
    • Primary residence
      • 7 occupants (2 adults, 5 children) *Spouse will likely not be included on mortgage, though he will live in the home.  TX is a Community Property state.
12. Transaction Type.  Purchase
2nd Credit Journey
New Starting Score: 12/21/2018
Fico 8: EQ 583 EX 586 TU 593
Mortgage: EX 489 EQ 550 TU 558

Current Score: 01/13/2019
Fico 8: EQ 619 EX 641 TU 650
Mortgage: EQ 627 EX 640 TU 650

Goal Score #1: 700 Club & Mortgage approval
Message 8 of 8