FHA : "Ignore" Foreclosures, Bankruptcy, Short Sales?

[justbroke]

Just broke FHA does not need congress approval, it would not be a bubble , peole still need to quailfy, have a steady Job stable rent history Money to put down good debit ratio, reverves in the bank to cover for example 3-6 months emergenct fund, granted vast majority of CHapert 7 13 will not help or the 13-20 Million Unemployeed but for some where been dischard for a a few years and the back finally took the home back, have workd to get there credit back to in out case 700 Fico and can put down 10-20% that will give a smaill bounce,

Where would the money come from? Even though FHA is more an "insurer" of the underlying loan debt, they still need to be able to insure a bunch of loans. So, how does FHA not need Congressional approval to guarantee more loans (when they are inundated with bad loans anyhow)? (Even though FHA is trying to sell off a bunch of bad loans, they are doing to by actually paying out claims.) I think it's a problem and if Congressional oversight is not required, then FHA could put too many more risky loans back into the market which they (FHA) would be on the hook to guarantee.

I will say it here again. I predicted the bubble back in 2004 when I noticed all these Adjustable Rate Mortgages (ARMs), Option Pay, and other credit products (such as 80/20 loans) used to qualify people who wouldn't otherwise qualify. You are talking about the same thing... reducing the "qualifications" to allow more to own. The problem will be that you would create another bubble because people don't have what it really takes for conventional financing. What you listed is "conventional" financing. That is, scores above 680, "reserves", very low debt:income ratio, and down payments. Very few people meet the conventional financing rules. There are probably banks that would lend outside FHA if you had all the right numbers and high scores. The credit score alone would be the first and most difficult barrier to start with.

Even though I could certainly benefit from lowering underwriting guidelines, I think it would be a foolish move. I would think it would be done solely for political gain and purposes... not too unlike the prior bubble mess with the GSEs.

As for what you wrote in your last sentence, most banks would give you financing anyhow under Fannie/Freddie programs and/or non-traditional lending programs. A person who has been out of bankruptcy/foreclosure for 2-3 years, with a 700 median FICO, 10-20% down payment, 3-6 months in reserves, and a very low DTI ratio... is ideal anyhow!

[pathfinders]

Thanks for your thought. For conventional loan 4 years out of bk. period. FHA 2 years post discharge and 3 years with home out of your name period. I have called 20 banks countless realtors who put me in touch with seasoned veteran loan officers everyone has lay overs. Even with 20% down. Non existent debt ratio and 700 credit score. No go. Of course I have been calling around for info

[pathfinders]

Foreclosure : Must wait 3 years before eligible for FHA-insured financing
Short Sale In Default : Must wait 3 years before eligible for FHA-insured financing
Chapter 7 Bankruptcy : Must wait 2 years before eligible for FHA-insured financing


There would not be a Bubble it is not even close to 2004...... what are you talking about, you still have to Hard core quailfy for the Loan all they may do is just chacnge the waiting preiod, Not trying to be stand offish here but again just chaging the waiting period if YOU Qualify, And 2 years post discharge and 1 year DIL NO ONe will touch you period No FHA till 3 years title out of your name and 4 years 4 years Post diecharge, period, No prortfilio backs will touch you and no Crdit unions they all have over lays..... your last sentence to me seems like you rally do not understand the lending Guidlines yourself and you are spotteing off that you called the 2004 mess, Notheing to do with it. sorry you just act like they will never ever change the time requirment because you are an expert in the field

[pathfinders]

As for what you wrote in your last sentence, most banks would give you financing anyhow under Fannie/Freddie programs and/or non-traditional lending programs. A person who has been out of bankruptcy/foreclosure for 2-3 years, with a 700 median FICO, 10-20% down payment, 3-6 months in reserves, and a very low DTI ratio... is ideal anyhow!


If you can suggst a lender on the Planet let me know, you act like i am some type of fool......... like i have not spoken to a ton of people Just because you have 15,000 posts do not insult people , you assume and you do not know ny of the guidlines yet you post like you are 1000% sure of yourself

[justbroke]

I was writing outside the guidelines. Most larger lenders actually resell their loans or need them to comply with underwriting guidelines to enable to sell them to the secondary market (the GSEs in particular). I never mentioned that you were a fool or that you had not looked into anything since you do know the common language. What I was saying was that it's a bad idea to lower the standards. I did say that if you met the minimums you could get non-traditional financing. It is almost impossible to get "conventional" financing when you have a bankruptcy and/or foreclosure unless a bunch of time has elapsed (probably the whole 7-10 years).

In any event, I am not quoting anything and my distaste for the housing disaster has absolutely nothing to do with the ability to obtain conventional or non-conventional mortgages post a bankruptcy, foreclosure or a deed-in-lieu. I have been through a bankruptcy and a foreclosure. I have attempted refinancing through sources and understand the process from the "debtor" side as much as the next person.

In the end, it's just my opinion, and has absolutely nothing to do with 15,000 posts, my moderator status, or that I too am a homeowner. My comments were on how do you fix the problem without creating a new problem. As you can tell from your own experience, no one is lowering the guidelines. They are there for a reason.

Let me end with this. I used to think that Fair Isaac's scoring model, known as FICO, was all hogwash. However, from my own experience and watching others, the FICO model is a very good predictive analysis of the "likelihood" of default for a particular credit product. Even though you may not default on a credit product, are in the Poor category (580-619), and were never late, the model does in fact work and show that 1 in 3 will default. My point of my post is that the guidelines, where based on analytics, are certainly a way of reducing risk to the lender. I'm personally hurt by those guidelines from a credit perspective, but I've learned to not depend so heavily on such credit products following my personal bankruptcy.

[DC73]

This thread actually answered my post above that I deleted. Two years after ch7 discharge our mortage company Beneficial is finally starting the foreclosure process. Our home was included in the BK. Our credit was getting better every month, nearly 700 just before they filed the foreclosure last week, but haven't yet been back in. I'm sure it is down low 600 again. I think there should be a law against the banks slow to foreclose, especially if it was included in the bk and received notice that we moved out a year and a half ago. So now we will need to wait another 3 1/2 years before getting another mortgage, unless the rules do change soon. We do plan on placing a large down payment, but were hoping to start looking for a home next year. Now we have to wait until 2015 or 2016 - 6 years after discharge. We looked into quit claim and short sale, but our lawyer advised against it. Hindsight, maybe that would have gotten our name off a lot sooner, although who knows.

[df04527]

JB...you are spot on! I can't agree with you more!

[GettingGoing]

This thread actually answered my post above that I deleted. Two years after ch7 discharge our mortage company Beneficial is finally starting the foreclosure process. Our home was included in the BK. Our credit was getting better every month, nearly 700 just before they filed the foreclosure last week, but haven't yet been back in. I'm sure it is down low 600 again. I think there should be a law against the banks slow to foreclose, especially if it was included in the bk and received notice that we moved out a year and a half ago. So now we will need to wait another 3 1/2 years before getting another mortgage, unless the rules do change soon. We do plan on placing a large down payment, but were hoping to start looking for a home next year. Now we have to wait until 2015 or 2016 - 6 years after discharge. We looked into quit claim and short sale, but our lawyer advised against it. Hindsight, maybe that would have gotten our name off a lot sooner, although who knows.

Why would your credit score drop with the foreclosure? I didn't think Beneficial is allowed to report anything about the account now that it was bk7.

[pathfinders]

JB. No worries I do agree with and have . All I was saying is that I hope they change or hive you an Option Instead of 2 years BK chapter 7 I am fine with that the problem I have is like with Above DC73 when the bank takes for ever to take the house back, Never said if you can fog a mirror give a loan, they if anything I would think make a seperate catagory like 2 years BK, if home was included in BK, so if the house has not been fourclosed on than could quailry, say Min 15% percent down If it is 300k you want to buy than Pony up if yu can and put down the 45k + closing coast's keep under 28 Ratio, 6-12 months reserves, spotless credit sines Discharge, Minium 700 score Neve Implied to let anyone get a loan just for the the hell of it, just saying very Fruastrating coming up on 2.5 years from Discharge, and just over 1 year since the bank got off the Butt and did a DIL. under the current system we have to wait 2 more year FHA... No one I mean No one convertail back Credit Union will do anything no matter if you put down 50% until 4 years past discharge: hard money lender or Owner fianicing Not Interested in that route,



So If they change and the FHA Guidelins to make a little tight circe for some people that would be great: stay tuned:

[pathfinders]

Oh DC73 your home was IIB it wil not show up on your CR... your score will not drop. if the fourclouser was first and than IIB then it would be on your CR you are the othr way like me BK7 Home IIB only one bad remark on Public record.

[tradinglife]

Still finding little info online to verify this change is coming. You would think this proposed change would be all over the news. In one quick hit, it would for sure get the housing market to a new level if it does take place. At this time however I am still waiting for verification on the rumors!

[justbroke]

I think that they will relax "some" of the rules in order to purge the so-called shadow real estate inventory. You know, the homes that have not yet been foreclosed upon that the banks have refused to touch. Florida foreclosures have just restarted and you'll see a lot of inventory coming into the market. The only way to help the cities and towns is to get them sold.

[DC73]

I'm confused. So does FHA make you wait the 2 years after the ch 7 discharge or 3 years after the bankruptsy foreclosure?

Yeah, we were paid up to the deadline and decided to let it go just before discharge instead of reaffirming it. I just assumed I'd have both a ch7 AND foreclosure posted to our credit report since both are court proceedings. So I'm understanding this, they cannot report the foreclosure at all, even the court actions of foreclosure, if the house was current when we filed?

[justbroke]

I'm confused. So does FHA make you wait the 2 years after the ch 7 discharge or 3 years after the bankruptsy foreclosure?

The rules are, whichever is later. So, it's 2 year if it's only a Chapter 7 Bankruptcy discharge. It's 3 years if you had a foreclosure (regardless of whether it was done as part of a bankruptcy). In essence, the bankruptcy doesn't have any weight on the foreclosure guideline. I have read where some borrowers have received exceptions where the foreclosure was due to a hardship, so it is possible to beat the 3 years on a foreclosure in very limited circumstances.

[pathfinders]

JB is Correct, Only thing I will add it is 3 years after the bank takes title, so if the bank does nothing for 2 years for example and than Fourclousures your clock starts ticking so in this example it is or would be 5 years, The minute the bank take title it is 3 years from that point, that is the Bummer or Problem, that is why I hope they just chage the guidlines for the wating period or maybe 3 years total after chapter 7 Home IBB> something. The Hardship is about Impossible to get, I have spoke to a lot of lenders.