Chances of Being Added to Mortgage After Chapter 7

[kberly69]

I am awaiting my discharge from Chapter 7 (any second now). My parents bought the home I am living in and I pay the mortgage payment every month (rent). The taxes are horrible because it's non-homestead. Also, we haven't been at all happy with Huntington. My parents have other accounts with them and are pretty irritated with some things that have happened (extra charges, changing a payoff amount and trying to collect the difference with extra fees tacked on, taking FOREVER to post the mortgage payment) and they would like to sever their relationships with Huntington. This includes the mortgage for the house I am in and they want to see if they can get a mortgage somewhere else and add my name to it. This would be fantastic for me, since I could then claim the homestead exemption and lower my payment over $100 a month.
Does anyone know if this is even possible? Obviously, my credit is not great (it WAS pre-bankruptcy) and I have a foreclosure in addition to the bankruptcy as a result of divorce fallout. Will a bank/CU even consider this? Help!

[kberly69]

Foreclosure was in 2012 if that matters. Incidentally, I just looked for the exact date on my credit report and could not find the word "foreclosure" anywhere. The mortgage is listed as "paid and closed" and also says under status, "120+ days late". Shouldn't the F-word be in there somewhere?

[justbroke]

Unfortunately, mortgage companies generally underwrite loans based on the weakest signer to the mortgage and note. In other words, it is very likely that a creditor would not refinance the loan and allow you to be on the mortgage. Your credit scores are going to improve after your bankruptcy is discharged and closed.

Current underwriting guidelines for just about all loans (including FHA-backed loans) typically want some time between your (Chapter 7) bankruptcy and obtaining a loan; this is known as seasoning. From my own personal research on the subject, the 2016 FHA guidelines require 2 years from the discharge of a Chapter 7 bankruptcy. Additionally, the foreclosure (was it pre-bankruptcy?) could also negatively impact a creditor's ability to underwrite your loan under their guidelines.

I think that it's going to take some time for your bankruptcy, and foreclosure, to season before any creditor would allow you to co-sign on a mortgage. FHA did have a "Back To Work" program that I know nothing about. The program was designed to help people that suffered during the "great recession" and are trying to finance a home.

I hope that someone else comes along and can provide their experience. I'm still in one of my properties and have not needed to refinance or purchase a new home. I know that day is coming soon, but I just can't provide you with an exact experience.

Foreclosure was in 2012 if that matters. Incidentally, I just looked for the exact date on my credit report and could not find the word "foreclosure" anywhere. The mortgage is listed as "paid and closed" and also says under status, "120+ days late". Shouldn't the F-word be in there somewhere?

Well, that's "good" because it's certainly seasoned beyond 4 years. Paid and closed seems like a nice status even though you have 120+ days late. The question would be whether there is a public record showing the foreclosure.

kberly69, you may actually be able to do something under that "Back To Work" program if it's still available... I just don't know. You will still need halfway decent credit scored and maybe some equity.

[kberly69]

Thank you! You are like some kind of Bankruptcy Angel, sitting on my metaphorical shoulder and whispering good advice. I am going to go research that "Back to Work" program!

[kberly69]

HOLY MOLY- this is me!!!! I am over the moon-beyond excited right now! I'm going to have to settle down and read slowly....


From backtowork.org:

About the Program

Under the new federal program called “Back to Work – Extenuating Circumstances”, if you have had a foreclosure, short sale, deed-in-lieu of foreclosure, or have declared bankruptcy you may qualify for a new home loan if you are back to work and can document the extenuating circumstances. Credit.org is here to help you complete the program qualifications. Do You Qualify?

FHA will consider you for eligibility if you had a financial hardship in the past but can now document the following circumstances about yourself:

1. You meet FHA loan requirements
2. You can document the mortgage or credit problems resulted from a financial hardship
3. You have re-established a responsible credit history
4. You have completed HUD-approved housing counseling

A lender will first have to determine if you meet the FHA loan requirements before you can apply for a FHA loan under the Back to Work program. You will need to explain how the financial hardship was something beyond your control that reduced your income or caused you to lose employment. If your household income dropped by 20% or more for at least six months, it may count for this type of financial hardship.

To re-establish credit you must have a 12 month record of on-time rental housing payments with no delinquencies, and not have been 30 days late on more than one non-housing loan payment. If you still have any open collection or judgment accounts, then a “capacity analysis” will be done to see if you can repay those creditors. How to Get Started

To start an application with a FHA-lender you must first take a “Pre-Purchase Counseling” course with a HUD approved housing counseling agency 30 days before you start the application. A certified counselor will assess your debt, ability to afford the mortgage, features of the mortgage, explain mortgage insurance and the loan application process. Credit.org is a HUD-approved housing counseling agency, and can help you make sure you have done everything you need to do to access the “Back to Work–Extenuating Circumstances” program. You will need to complete your counseling at least 30 days before you apply for a new FHA mortgage. Your certificate is valid for 6 months.

[kberly69]

I am seeing on some sites that the program ended a few days ago (September 30). Crossing fingers it was extended...

[justbroke]

I hope you find some good news.

[kberly69]

Doesn't look like it But, I did find some state programs that might help a little.

[kberly69]

Confirmed that the Back to Work program has closed as of 9/30/16 and that there are no extensions.

[justbroke]

Yuck. It's truly sad because that was only 6 days ago.