Buying a house after Bankruptcy

[denisec]

I am thinking maybe....I need to see if I can get preapproved now, and if not very quickly get into a rental house...sorry for all the posts, but finally I found someone who has a clue.....:-)

[marcer]

Thanks Marcer, I wish I talked to you earlier, I have been so confused with all the different answers, i even talked to an FHA rep and a mortgage broker..anyway water under the bridge..so it looks like I could just be given a notice to vacate this house, since Bank of America doesn't have to go through the normal foreclosure process, talk about "ignorance is bliss', as I have been sitting in this house not knowing I could be kicked out at any time. I was thinking the process was NOD and then around 4 months but looks like that was not correct..yikes..would I get some kind of notice before that happens? Or would I get a sale date for the house? Now I am a bit worried...This was a Countrywide loan that went BoA, and you know the mess that has been, perhaps that is why the delay?

I don't know what FHA rep you spoke to or from what center. I've called in to question a guideline which was questionable and can tell you that a few of them just read from the 4155. And as mentioned earlier...some lenders do have overlays which limit their risk of buy backs by adding additional requirements to the guidelines. Couple this with the fact many loan officers have been in business less than 5-9 years, and are only familiar with FHA the last 4 years. Some un-educated loan officers actually call FHA the new subprime.

I would most certainly start the pre-approval process. It will at least give you a clearer idea than posting on this board and potentially receiving mis-information.

Just keep this in mind. It will not be easy, it will not be a walk in the park, you will get frustrated, you will feel like the lender is asking for two much, but you very well may be a home owner again.

I mentioned yesterday, that one of my recent clients was in a similiar situation. BK in 2010 with included 1st and 2nd included. Bk seasoned through 02/2012. Pre-approved 02/2012 with 635 midddle credit score. Offer made on new home 03/2012. Loan approval issued 03/2012 with 2% down----special program, also approved 203b with 3.5% down. Final Clear to Close issued 03/2012 and borrower will move in early 04/2012.

I don't tell the story above to boast or prove everyone wrong...I tell it because it's true and you have the potential to realize the same opportunity

[RainMoM]

Mercer.. I'd just like to say thank you for posting this information, not only was it very helpfull and in great detail, it gives me hope that maybe one day my family and I can own a home again. I'm currently in a rental been here going on three years I've paid my rent on time. After I lost my home, I said to myself I never want to own a home a again ! I'll just stick to renting, well as time goes by and healing begins, I realize that I'd like to own again someday .. Not tomorrow .. but someday With your thread, it gave me hope that "YES I CAN " own a home again !

Thank you !

[marcer]

Thank you for your comment

Mercer.. I'd just like to say thank you for posting this information, not only was it very helpfull and in great detail, it gives me hope that maybe one day my family and I can own a home again. I'm currently in a rental been here going on three years I've paid my rent on time. After I lost my home, I said to myself I never want to own a home a again ! I'll just stick to renting, well as time goes by and healing begins, I realize that I'd like to own again someday .. Not tomorrow .. but someday With your thread, it gave me hope that "YES I CAN " own a home again !

Thank you !

RainMom~

thank you so very much for your comment; I really appreciate it. If I can help one person with the information provided...I will feel absolutely great! I found this forum while I was looking for information regarding exceptions for the use of income, read a post which was incorrect, and felt I needed to join so that i could provide accurate and helpful information. Your comment has made my day....Thank you again YES YOU CAN!

[denisec]

I don't know what FHA rep you spoke to or from what center. I've called in to question a guideline which was questionable and can tell you that a few of them just read from the 4155. And as mentioned earlier...some lenders do have overlays which limit their risk of buy backs by adding additional requirements to the guidelines. Couple this with the fact many loan officers have been in business less than 5-9 years, and are only familiar with FHA the last 4 years. Some un-educated loan officers actually call FHA the new subprime.

I would most certainly start the pre-approval process. It will at least give you a clearer idea than posting on this board and potentially receiving mis-information.

Just keep this in mind. It will not be easy, it will not be a walk in the park, you will get frustrated, you will feel like the lender is asking for two much, but you very well may be a home owner again.

I mentioned yesterday, that one of my recent clients was in a similiar situation. BK in 2010 with included 1st and 2nd included. Bk seasoned through 02/2012. Pre-approved 02/2012 with 635 midddle credit score. Offer made on new home 03/2012. Loan approval issued 03/2012 with 2% down----special program, also approved 203b with 3.5% down. Final Clear to Close issued 03/2012 and borrower will move in early 04/2012.

I don't tell the story above to boast or prove everyone wrong...I tell it because it's true and you have the potential to realize the same opportunity

Thanks I will start the preapproval process. btw are you in WA state, and would you be potential someone to start the process with? I am in Kitsap County..

[marcer]

Thanks I will start the preapproval process. btw are you in WA state, and would you be potential someone to start the process with? I am in Kitsap County..

Awesome for you Denisec! I am in Washington state.

I would be more than happy to refer you to someone in your area. I am able to provide services nationwide, but due to your particular circumstances, I think it best if you worked with someone more local. My offices are in Federal Way.

I sent you a private message. Feel free to follow those instructions and I'll make certain to connect you with a person that will give you the right advise and who will fully understands your situation...more importantly, understands guidelines. I am a bit bias, so the person will come from my company :-)

[denisec]

Great thank you so much!

[marcer]

You are very welcome!! I will remain available if you any questions.. YES YOU CAN :-)

[denisec]

No hurry Marcer, but wasn't sure if you had already sent me a private message? I checked and there wasn't one there...just letting you know..thanks!

[Laurie77]

My husband and I filed Ch 7 in Jan. 2011 and we were discharged in April 2011. We are waiting for the 2 year mark before we buy a home because that is what two lenders told us we have to do. Also, from what I'm reading online, a large down payment would help if we wanted to buy sooner, but we won't have that. We'll do around 5-10% down. But our FICO scores never dropped below 600. I guess we are the lucky ones from what I'm seeing. Before the BK our scores were around 710. After the BK the lowest they went was around 605. Right now they are in the 640-650 range. I guess because we never had any late payments. We were able to make all of our minimum payments, but we had no money for much else. At that rate, it would have taken us forever to pay off the debt and it was over $40,000 total between the two of us just on credit cards. I spent 22 months unemployed and we were just barely staying afloat. We just needed a fresh start and to be free of that debt or we would not have been able to move forward with our lives for a very long time. We now have one credit card that has less than $2,000 on it and I have student loans that I have never been late on. After the BK, we also financed a car through our credit union with an 8% interest rate. I was expecting near 20% from the horror stories I had read. I know 8% is not the ideal rate, but pretty darn good after a BK. That's the rate I got on my first auto purchase when I was 22 years old and didn't have much credit at all. So I'm confident we'll be able to purchase a new home at the 2 year mark. We shall see.

[BrokeDan]

I have given up hope of purchasing a home after bankruptcy. I filed chapter 13 in Oct 2009 and have 19 months left in my plan. So it should be paid off approx April 2014. Then you can't even think about applying for a mortgage for 2 years. The way the banks are working these days you'll probably get the run around and be required to put down a 10-20% down payment. Personally, I've found it very difficult to save any money and if I'm lucky I can stash away a couple hundred bucks by the years end.
During chapter 13 your credit report is shot and will be for 7 years after the discharge date, so it's basically on my credit report for 12 years. I found it nearly impossible to get a secured credit card during bk and you really can't begin to rebuild it till after the discharge.

[sofarsogood2]

Mercer,

I hope you can help me out.

BK13 discharged 1/2010. Included investment house (IIB) in BK. Still living and paying on primary residence.

Long story, but due to a HAMP forgiveness of principle, would really like to get this house re-fied ASAP.

We have reestablished good credit. Hubby on the same gov't. job for 30 years.

Since BK discharge- bought 2 cars, paid one off, have several CC's, credit score in the lower to mid 700's last time we looked.

Every bank (I have tried many) we have talked to says 3 years after deed transfer, which didn't happen until 6/2011, when they sold the house to a new owner.

It seems, if I am understanding correctly, that you stated that is not the case. If I could get this done it would really save us a lot each month as the original interest rate is high compared to rates now.

Can you recommend anyone that you know in FL who sees the guidelines as you do, or could you do this with us?

Thank you sooo much for your time.

[tradinglife]

I hope this will help people understand my messages earlier and on another post here. BK and Foreclosure are two separate legal options. One is for the role of debtor and the other is for creditor. Ch. 7 allows a debtor to seek relief from his/her creditor. Once the BK has been accepted and discharged, the debtor is absolved against future damages the creditor may experience. Foreclosure is for the role of creditor. This allows the creditor to take back property and sale the asset to recoup any and all losses. Previously, any loss taken by the lender could be passed on to the debtor in the form of income for which he/she would be required to include to the IRS.

Additionally, the lender could seek relief from you for losses taken. In 2007,8, or 9, The foreclosure and short sale act allowed for a borrower to obtain relief from claiming lenders loss as income, and to have lenders seek additional damages in the future-------You can look it up on the IRS webpage..I may be leaving these out, but this is the basic premise. Now...with BK, there is no future damages, hence the date the lender sells the property is never a question. If you have received differently from a lender...run and don't look back.

To be fair, many brokers, also known as mortgage bankers, have additional overlays to the guidelines of the investor. Where FHA requires a minimum 500 credit score to obtain a loan ******with strong compensating factors***** many lenders will not allow for less than 640 and some are as high as 680. This is called an overlay. An overlay is where a lender will add additional qualifiers to mitigate any risk and make the loan more attractive for purchase. Soooooo....where FHA has clear guidance on BK vs.. Foreclosure, the lender to which you are speaking with may have their own overlay which lumps the two together or takes the worst case such as date of sale for property.

BTW: Mortgage brokers/bankers are not bad. I'm not suggesting in anyway that someone not use them just because they are not a banker. I've been on both ends and both sides have their pros and cons.

In closing.....BK seasoning is needed when mortgage is discharged through BK. Date of sale or for some lenders date of reconveyance is needed on foreclosure or short sale with adverse mortgage history. I have another post under FHA which goes into greater detail.

As for renting versus buying...depends. Seattle has an index of 21. This is high and would suggest renting. I disagree only because rates are low, home prices are low, and rents continue to increase. Good luck and happy hunting.

Marcer you where right, we just closed on a USDA loan 3.5% interest last month, our BK was discharged 2 yrs in Octoner 2012. Home finally out of our name JUly this year 2012. However it took some work and finding a mortgage broker who knew what you knew. At least 6 brokers told us we would have to wait another 1-3 years.

[LadyInTheRed]

I have given up hope of purchasing a home after bankruptcy. I filed chapter 13 in Oct 2009 and have 19 months left in my plan. So it should be paid off approx April 2014. Then you can't even think about applying for a mortgage for 2 years. The way the banks are working these days you'll probably get the run around and be required to put down a 10-20% down payment. Personally, I've found it very difficult to save any money and if I'm lucky I can stash away a couple hundred bucks by the years end. During chapter 13 your credit report is shot and will be for 7 years after the discharge date, so it's basically on my credit report for 12 years. I found it nearly impossible to get a secured credit card during bk and you really can't begin to rebuild it till after the discharge.

FHA guidelines allow loans to people in an active Chap 13 as long as they can document 1 year of timely plan payments and get court approval. The trick is finding a lender who will not add additional restrictions.

A Chap 13 remains on your credit report 7 years after filing, not discharge. Actually, by law it can remain for 10 years after filing, just like a Chap 7. But BKforum members who filed Chap 13 have reported it dropping off their report after 7 years. Most Chap 13 debtors are not allowed to incur debt during their plan, even if they could get credit. So, yes you have to wait until after discharge to start actively rebuilding. Many find their scores have improved during their Chap 13 simply because there are no recent delinquencies and their debt to income ratio is low.

But, if you can't save even a couple of hundred dollars in a year, you can't afford to own a home.

[metoo]

Can you post or PM me the Bank/Broker you used?