House included in BK still considered foreclosed?

[Ugh07]

Except that in that scenario you will not be able to get a new loan because the underwriters will know you are letting the old house go into foreclosure.

[sharksfan]

Except that in that scenario you will not be able to get a new loan because the underwriters will know you are letting the old house go into foreclosure.

What if you tell them you are selling it, and actually put it on the market?

[MrsDixon]

This was a really good thread!

[GettingGoing]

What if you tell them you are selling it, and actually put it on the market?

I am not a legal or home loan expert in any way however I am pretty sure that FHA guidelines do not allow you to buy a second home with an FHA loan. I guess you could try a conventional loan but I think the requirements are much higher for a second home also and your income would have to be able to support both homes.

This is interesting however because my FHA mortgage will be discharged with my bk7 but I plan to stay in my home for 2-3 years and then buy another house. Hopefully the guidelines to allow me to get another fha loan or if I am really lucky I will be able to sell my house and break even.

[newbie2]

I am not a legal or home loan expert in any way however I am pretty sure that FHA guidelines do not allow you to buy a second home with an FHA loan. .

You are absolutely correct. FHA loans are for primary residences. One of the checks & balances used by FHA to insure that the loan isn't used for investment purposes (rentals, etc) is by not allowing more than one FHA mortgage to someone.

FHA can be used more than once however the previous loan must be paid off before closing on the next..and so on and so on.

[newbie2]

What if you tell them you are selling it, and actually put it on the market?

They don't fall for that anymore. It's also called "buy and bail" to the mortgage lenders and they do watch out for that.

[Ugh07]

They don't fall for that anymore. It's also called "buy and bail" to the mortgage lenders and they do watch out for that.

Exactly correct. One would have to not only put the house up for sale but actually sell it before they could qualify for a new loan.

[denisec]

zxrider, I was wondering if you pursued this any further. Mortgage Brokers are not the most intelligent beings I've ever talked to..one just told me after a bankrupty FHA guidelines is 3 years after discharge and 2 with extenuating circumstances. Wrong! It's 2, and 1, I had to send her the FHA guidelines. I would guess this is quite typical. Most have absolutely no clue.

[denisec]

No it won't, not if loans were discharged.

[denisec]

No Bk attorneys have absolutely no clue.

[edub]

At this point in time that is the exception not the norm. Manual underwrites are all but gone from the Big lenders; B of A, Wells, Citi, Chase. Automated underwriting is followed 99% of the time.

I am an a conventional underwriter for one of the large lenders you mentioned.... and ALL FHA files are manually underwritten... at our bank anyway. Also, the guidelines are silent regarding foreclosed home included in BK... which is why i'm researching on the internet. The most relevant advice that i can give and follow myself... is that if there's a published guideline specific to this scenario, then that's the answer. If not... then it is up to the underwriter. In my underwriting group, 90% of the time when it's a toss up on what to decide, it's common practice to choose the "most conservative" answer.... unfortunately

[denisec]

Thanks EDUB, that's really helpful...I have researched this to death, and I am hearing that if your credit report doesn't show a foreclosure they go from the last reported late date on your mortgage, which often is the same as the BK discharge date....I have checked with FHA and a lender, and they say 3 years from discharge...but of course the proof is in the pudding...when you actually apply for a loan. it's all different if you had a FHA loan. Thank for looking into this. I really think they need to make a call on this officially, and make it 3 years after discharge. This would be prudent for both the lender and the buyer. I don't see the point in making it longer, with all the homes on the market, all the buyers who are going to be in this situation....etc.

[RJR2]

I recently spoke with an underwriter with US Bank and he said that FHA guidelines were 2 years from file date, 620 credit score, and at least 2 established tradelines with no 0x30 within last 12 months.

I then spoke to a mortgage originator friend of mine and he told me the exact same thing. He has done several FHA loans for people still within Chapter 13 over the last year.

[RJR2]

Mortgage Brokers are not the most intelligent beings I've ever talked to.

Hey now, dont lump everyone together. I was a mortgage broker for 3 years and like to think of myself as somewhat intelligent. ;)

In all seriousness, there are some great and knowledgeable mortgage brokers out there that know there stuff. However, as with any profession, there are lots of bad apples just chasing a quick buck.

In defense of the mortgage broker you spoke to, guidelines change all the time and it is almost impossible to keep up with all of them. However, he never should have said something without confirming the answer first.

[denisec]

Sorry RJR2, I agree there are good and bad ones, just like in any line of work. No offense intended. It's just frustrating, because you get so many answers. I have never heard of it being 2 years from 'file' date because understandably the lenders want to know that the debts have been discharged. FHA guidelines - from the FHA website say from the discharge date.