Heloc after bankruptcy

[JennyB]

My husband filled bankruptcy over five year Ago. It was a bad decision because our house had gone into foreclosure when our house value plummeted while in Michgan, (our realtor told us to just foreclose instead o short said it) and the home equity line of credit would not forgive our second mortgage. However that was 5 1/2 years ago and we have never had a late payment before or after the bankruptcy. His credit has been reestablished he obtained a mortgage last November. My question though is is there a way for us to get a home equity line of credit. We are looking to put in a pool in our backyard and need a small line of credit loan. I've contacted several banks and they will not offer this to us, based only on his bankruptcy five years ago. Has anyone been in this situation? What bank did you use? Based on his credit, my credit, and our income it should be easy to obtain a home equity line of credit, but we are having a hard time. Finding a bank to work wit us. If anyone can help or has been in the situation it would be much appreciated. Thank you!!

[justbroke]

If you had a history of on-time payments prior to filing bankruptcy around 2011, then why did you file? Did your home go into foreclosure because you couldn't pay and you filed bankruptcy to save that home? I'm trying to figure out how you came to file bankruptcy. Did you file a Chapter 7 or a Chapter 13?

You just obtained a new mortgage in November 2016. I can't tell you exactly why certain creditors will not lend to you. If all your scores (FICO, Vantage, Beacon or whatever score the banks are using) are all over 740 you may not have a tough time. If every single one of your scores (under those scoring models) is over 740, then it could be the bankruptcy. You would need to look at the printed decline letter and look at the "reasons" that they declined. I know that for some places, I get a flat out decline because of the bankruptcy. (If you filed and received a Chapter 7 discharge, that probably won't fall off until 2019.)

Lenders are still a little stingy and they are bearish when giving out loans. If you were trying places like Lightstream (Suntrust) or others like that, they are super difficult to obtain. Have you tried a generic request through Lending Tree or have you been submitting them one at a time to varying "big-bank" creditors?

Maybe back to the basic questions. Do you even have any (significant) equity? What is the LTV values that the lender requires? What about the CLTV (since it's a "junior" mortgage)/ Have you seen their Rate Sheet (I just look at some and I did not see any that go above 90% CLTV/HCLTV. Many required a 760+ score to obtain an 80% HCLTV.)

I guess I'm saying that it may not be the bankruptcy itself (unless your discharge was less than 4 years ago).

[JennyB]

We had already purchased a new house and we were renting out our other house. The value was about $100,000 less than we had bought it originally so we could not sell it and pay out that 100,000. When our renters left and we couldn't get renters to cover the existing mortgage, our realtor told us to stop making payments and let it go into foreclosure. We had considered a short sale but he advised us wrong and said it wasn't a good idea. At that point we were forgiven our foreclosure on the first mortgage but the second equity line would not forgive us. We called them (Wells Fargo) and explained our hardships, asked to be on a payment plan, and also asked to settle at a lower amount which they all declined. That was all back in 2009, and then bankruptcy filed in 2011 basucally to free us from the second mortgage. 5 and a half years later, we purchased this new house November 2016 and put 20% down, but because it is so new don't have a lot of equity in it. We would need a home equity loan above 85%. And we have contacted SunTrust, a credit union, KeyBank, BB&T, and they are all a no. Debt to ratio is not bad, income is quite high, and credit is actually fairly good for a bankruptcy, around a 700 . Wondering if we would have better luck anywhere else at a different bank..., we're pretty desperate to put in the pool so any suggestions would help.

[justbroke]

I would try Lending Tree next as you appear to have gone through 4 lenders. The credit unions would have been a better place than the no-nonsense SunTrust, KeyBank and BB&T. Lending Tree will actually run the credit themselves and then send that credit profile to several lenders and you await responses. I have personally used SunTrust in the past for exactly what you want, a pool. However, that was when they let me get a third mortgage and go to 125% HCLTV on the HELOC (that home was sold years before I ever filed bankruptcy, and at a 50% profit/gain).

For HELOCs, you'll probably need to be at least at 720 middle and probably over 740. However, the Lending Tree route may work as they work with several different lenders. Without high scores, the loan-to-value rations will be quite low (CLTV/HCLTV less than 90%). You seem to be right at 85% and 80% may be your highest HCLTV you can get with the scores that you have.

[despritfreya]

Jenny,

I just feel the need to comment on this. I apologize in advance but, doing what I do for a living, I see a real problem here.

Why would anyone be “desperate to put in a pool”?

You are doing exactly what causes folks to end up in my office. . . putting the roof over your head at risk by increasing what you owe on it just so that you can add the luxury of a pool. Think about what is wrong with this picture.

You are having a tough time finding a lender. Maybe there is a good reason for that. Instead of running up debt why don’t you hold off putting in that pool until you have saved far in excess of the $30,000.00 or so that it will cost? Be smart with your money. Only buy what you can afford to pay for with cash, especially when dealing with a non-necessity.

Granted my words will most likely fall on deaf ears and may result in a negative response to this post but, such is the reason I make a very good living.

Des.

[bcohen]

Jenny,

I just feel the need to comment on this. I apologize in advance but, doing what I do for a living, I see a real problem here.

Why would anyone be “desperate to put in a pool”?.

Des.

I am glad someone came right out and said it. A pool is a LUXURY--it is not a necessity. If you cannot pay cash for such a luxury then you cannot afford it, plain and simple. Why would you put your home at risk to finance a pool, as well as incur ongoing pool maintenance costs, higher homeowner's insurance costs, etc, when there are such things as public pools? It just doesn't make sense.