FHA credit guidelines

[StartingOver08]

Underwriting guidelines have changed since this original post.

[brokeNconfused]

do we know to what? how drastic? It was because of this that i filed a 13 instead of a 7. I would really like to get out from the adjustable rate by refi.

[Vanda]

I wonder if there will be any change in the next couple of years since there will be so, so many people with foreclosures on their records. Who is going to buy all those houses if they don't ease up? Then again, easing up lending standards is a big part of what caused this mess.

[sguerra923]

I want to get a FHA loan in about 3 years however I was curious can you assume a home loan using a FHA loan? I live in my parents home and I want to assume the loan will that be possible? If so, has anyone done it? Thanks in advance!

[Tom_Mi]

Here's what I have to say about FHA Guidelines and 3 year waiting periods.

Did the consumer ask the market in his neighborhood drop?

If the consumer would sell, but can't due to depreciation, how does that correspond to his creditworthiness?

If the above is true, but their lender finds it more lucrative to foreclose than to work with the consumer until the market rebounds...how does that correspond to his creditworthiness?

Post-foreclosure applicants with good credit should be approved immediately for loans SMALLER than the former one, if bank inaction and down market caused the foreclosure.


This would stimulate the economy, get the real estate market moving again, and get people quickly into homes they can afford.

[sguerra923]

I want to get a FHA loan in about 3 years however I was curious can you assume a home loan using a FHA loan? I live in my parents home and I want to assume the loan will that be possible? If so, has anyone done it? Thanks in advance!

Anyone have some advice/input?

[oldhack]

Anyone have some advice/input?

Probably.
Not sure I'm clear, however, on why you need an FHA loan to assume another loan. Generally, an assumption is a 'take-over-the-payments'-type transaction. Are you paying a premium above the loan balance? If not, why not simply buy out the seller (who would then pay off the original loan) with an FHA loan? That way, you only need to qualify for your lender.
If you are thinking assumption, you have two critical obstacles: you must satisfy both the holder of the assumed loan that you are credit-worthy, just as you would for an originating loan, and you and the home must meet FHA lending requirements for your new lender of any new loan.

[Logan]

Probably.
Not sure I'm clear, however, on why you need an FHA loan to assume another loan. Generally, an assumption is a 'take-over-the-payments'-type transaction. Are you paying a premium above the loan balance? If not, why not simply buy out the seller (who would then pay off the original loan) with an FHA loan? That way, you only need to qualify for your lender.
If you are thinking assumption, you have two critical obstacles: you must satisfy both the holder of the assumed loan that you are credit-worthy, just as you would for an originating loan, and you and the home must meet FHA lending requirements for your new lender of any new loan.

I think you need to do some research with the lender. If your parents have been making on-time payments the bank would be nuts to agree to let someone with a recent BK assume the loan.

You could possibly have your parents transfer the home in your name then have your parents gift you the equity to get a loan with a lower loan to value. I'm not sure if you're required to put 3.5% down out of your own pocket--I don't think so.

If you have reestablished credit and your income looks good you may be able to get this done but I suspect it would be difficult to find a loan officer who would know how to actually do it.

I probably called 25 different brokers looking for a loan with less than 2 years out of BK and only one guy said he could do it but when it was time to apply for the loan I lost all faith. Believe it or not my realtor had his 'loan guy' call me and we're in the process right now of getting approved and I've put in an offer on a home.

Good luck,

Logan

PS...What state are you in?

[sguerra923]

I think you need to do some research with the lender. If your parents have been making on-time payments the bank would be nuts to agree to let someone with a recent BK assume the loan.

You could possibly have your parents transfer the home in your name then have your parents gift you the equity to get a loan with a lower loan to value. I'm not sure if you're required to put 3.5% down out of your own pocket--I don't think so.

If you have reestablished credit and your income looks good you may be able to get this done but I suspect it would be difficult to find a loan officer who would know how to actually do it.

I probably called 25 different brokers looking for a loan with less than 2 years out of BK and only one guy said he could do it but when it was time to apply for the loan I lost all faith. Believe it or not my realtor had his 'loan guy' call me and we're in the process right now of getting approved and I've put in an offer on a home.

Good luck,

Logan

PS...What state are you in?

Hi Logan,

We my income would be good by then and I'm rebuilding my credit since I just got a credit card and been paying on time.. I'm waiting about 3 years until I try to get a home loan or assume my parents loan.. I live in California

[tam234]

Mortg after BK

Vital that everyone be familiar with ALL of the guidelines for aquiring an FHA loan after BK.

I applied and received a good faith estimate just prior to the 2yr anniversary of my BK and was told that I just had to wait beyond the 2yrs. Ok.

Found a house that was a short sale and due to a number of other bids, my boss put up cash and bought it with the agreement that I would buy it from him as soon as I could get my loan.

Bad news - because my boss is considered a "related party", I had to wait 6 months. Ok. I pay my boss a monthly sum and excitedly go for my loan after the 6 months and all is well.

Bad news - I'm excited that my boss will get his $ back and just as it looks like it's going through, I get word that during this 6 mo period, rules changed and because my old home was included in my BK, I have to wait 3yrs after BK or 3 yrs from the date of the BK trustee sale (mortg guy was unclear on this one). I mentioned extenuating circumstances in that my ex had run everything into the ground and then fled the country, but that didn't fly.

I'm pushing the mortgage guy for more definitive information - when did this change occur? Is it 3 yrs from discharge or 3 yrs from trustee sale of old home? I need this to sit down with my boss to let him know what's going on.

Additionally, I'm now again at risk for higher interest rates and unclear what an appraisal will be like then. 3 yrs from discharge is this Dec and 3 years from trustee sale of old home is April, 2010. Both of these push the time out AND I won't qualify for Home Buyer Credit.

Can you please confirm the guidelines and criteria that seems to keep popping up for me? Any suggestions?

Thank you

[hereforinfo]

Vital that everyone be familiar with ALL of the guidelines for aquiring an FHA loan after BK.

I applied and received a good faith estimate just prior to the 2yr anniversary of my BK and was told that I just had to wait beyond the 2yrs. Ok.

Found a house that was a short sale and due to a number of other bids, my boss put up cash and bought it with the agreement that I would buy it from him as soon as I could get my loan.

Bad news - because my boss is considered a "related party", I had to wait 6 months. Ok. I pay my boss a monthly sum and excitedly go for my loan after the 6 months and all is well.

Bad news - I'm excited that my boss will get his $ back and just as it looks like it's going through, I get word that during this 6 mo period, rules changed and because my old home was included in my BK, I have to wait 3yrs after BK or 3 yrs from the date of the BK trustee sale (mortg guy was unclear on this one). I mentioned extenuating circumstances in that my ex had run everything into the ground and then fled the country, but that didn't fly.

I'm pushing the mortgage guy for more definitive information - when did this change occur? Is it 3 yrs from discharge or 3 yrs from trustee sale of old home? I need this to sit down with my boss to let him know what's going on.

Additionally, I'm now again at risk for higher interest rates and unclear what an appraisal will be like then. 3 yrs from discharge is this Dec and 3 years from trustee sale of old home is April, 2010. Both of these push the time out AND I won't qualify for Home Buyer Credit.

Can you please confirm the guidelines and criteria that seems to keep popping up for me? Any suggestions?

Thank you

The newest FHA guidelines require 36 months from the foreclosure. The clock starts when the deed changed hands back to the bank, so that would generally be after the trustee sale.

[tam234]

Thank you. Clearly, there is misleading information out there. I had clearly stated to 2 different lenders that my house was included in the BK and that the trustee took over trying to sell it while other legal wranglings were going on.
So, I am clear now that even though the house was included in the BK and debt was discharged, that the 3 yr rule applies and that the clock starts from the date that the trustee put it up for auction.

[hereforinfo]

Wait a minute. Did the bank actually foreclose on the house? I understand that you included it in your bankruptcy, but the lender still has to go through the legal foreclosure process. Even though the home was part of the bankruptcy, it is still technically considered a foreclosure because that's what ultimately happens to it.

Or are you saying that it had equity and your bankruptcy trustee sold it to pay your other creditors?

[tam234]

You are correct in your initial insight. There were many "stays" by the court holding the lender at bay until after a year and another nagging lawsuit. I reliquished the house early in 07 after the Trustee gave up and the lender did, in fact, foreclose in March of that year.
I was confused and just bummed out when I found out that I had to use the auction date instead of the discharge date and that now it's 3 years instead of 2.
Thank you for your help.

[OneDay]

How can they use the auction date rather then a discharge date... that seems absolutely ludacris to me. We surrendered our condo in Feb 2007, due to our BK attorney being a little dumb we finally filed Oct 2007 and did not receive discharge until Feb 2008. Auction was not until May of 2008.

Local lender just told us we would qualify with 3.5% down after 2 years, if we wait until 3 years we could qualify for 100% financing.

So we have to wait until May 2011 to qualify for a FHA loan?