Possible FHA tightening casualty-UPDATE

[XAVIERSMAMA]

I am 2 years post BK, with a 648 mid score, no lates since discharge and no open collections and I can't find a lender  What is going on?

Message Edited by XAVIERSMAMA on 12-14-2009 07:35 A

Message Edited by XAVIERSMAMA on 12-14-2009 07:36 AM

[Jazzzy]

What reasons are they giving you for denial?

[Anonymous]

Although I know FHA minimum is 2 years, I have heard some lenders are requiring 3 years.  On top of that, alot of lenders are moving to 640 and 660 minimum scores.  Have you re-established credit since BK?  How many tradelines?  Was there a mortgage lost in the BK?

Anytime you have a BK or foreclosure in the past (especially just 2 years old), just hitting the minimums may not cut it.  Do you have some strong reserves?  Was there a legitimate reason for the BK?  How much are you putting down?  Do you have some credit card balances you could pay down to get the score up a bit more?

Message Edited by mickie08 on 12-01-2009 01:24 PM

[XAVIERSMAMA]

I haven't even gotten to the application process, I've just been getting the stock "you have to wait 36 months after discharge date."

[XAVIERSMAMA]

I didn't have a foreclosure in the BK. Since BK I have my auto loan, student loan, a mastercard and a walmart card all with a perfect history since 6 months prior to my BK filing. I have $4500 in savings after I put in my 1% towards the purchase price, and I qualify for local down payment assistance in my area, so only the 1% of the purchase price and miscellaneous expenses would I be responsible for, i.e. home inspections, appraisal fees etc. I've been playing around with my CC balances and my scores are no different if I carry 10% or 1% so no where to really move there. I'm going to keep looking, but it's frustrating. Nothing will change within a year for me credit wise except for the passage of time. Even the FICO simulator doesn't give me any extra points for having another 12 months of ontime payments.

[Anonymous]

I think the 3 year post BK is going to become alot more common.  Also, alot of times with BK in recent history, they are going to be very leary of a buyer using a down payment program and putting that little of their own cash into the deal. 

[XAVIERSMAMA]

As usual I seem to get caught in a catch 22.  I thought the whole point of FHA was to make mortgages available without having to come up with a large down payment.  If I use the DP assistance, it's frowned upon because it's not my money.  If I don't use the DP assistance and put a larger down payment using my own funds, it brings my reserves down from 4-6 months to 2-3 months which is also frowned upon. 

[Anonymous]

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@XAVIERSMAMA wrote:
As usual I seem to get caught in a catch 22.  I thought the whole point of FHA was to make mortgages available without having to come up with a large down payment.  If I use the DP assistance, it's frowned upon because it's not my money.  If I don't use the DP assistance and put a larger down payment using my own funds, it brings my reserves down from 4-6 months to 2-3 months which is also frowned upon. 

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The problem you could be running into is that banks don't frown on dp assistance they frown on people only using it for their downpayment and not saving their own money.  I understand you have reserves but in the banks mind who's to say those arn't your reserves just money to say buy a new car after you close.

I used dp assistance grants myself when I bought my house.  I had scores at around 780 for all 3 and this was before the credit crunching/mortgage mess.  I also had good amount of reserves even though the conventional loan program I did didn't require any and I was still required to put down 3% of my own funds to close even though the assistance alone was around 12-14% and I got seller concessions as well.  Most banks/brokers dont frown on having 2/3 months reserves its most likely the bk being only 2 years old

[Anonymous]

no matter the situation, when you are using a DP program and not putting much money into the equation, lenders are leary.  When you add in a BK 24 months ago there is plenty of reason for them to question it.

BTW, FHA's job is to make loans to people have issue swith down payment but have shown the credit worthiness to be able to buy and upkeep a house, not to make risky loans. Nothing personal as I don't know you and am not judging you at all....but historically, lending to someone with a BK in recent history and minimal down payment invested into the house is a very risky loan that has a much higher chance of default.  The lenders see that and are very leary of loaning money to that profile.  Again, not trying to get personal, just clarifying what FHA's role is.

[XAVIERSMAMA]

No offense taken.  FHA doesn't consider me risky.  FHA only requires 3.5% down and 24 months clean post BK history, so I do qualify under FHA, it's the lenders that I have a problem with.