VA Guarantee Possible While Still in IIB Home?

[Snax]

I'm having trouble finding a good answer to this anywhere, but should I hold my breath on getting approved for a VA guaranteed loan 2 years post discharge since we are still living in the IIB house, with no NOD or foreclosure pending - that we have NOT been making payments on?

VA Underwriting guidelines don't appear to rule it out, but how realistic is it to expect to find a lender that agrees?

We meet every other qualification with a current credit score bouncing from 650-675.

[tobee43]

i saw one got through on the VA just a month or two ago on this forum, but i can't find the thread.

shoot, it's worth a shot, i would call and find out. never hurts to ask, all they can do is say no.

also, there is no exact science to who are getting the far and few loans out there. even those with excellent credit are getting refused ...even with perfect credit, while i have seen on this forum a few go USDA as well as VA and be successful.

we found owner financing and jumped on the rare opportunity, and while it may be difficult to find a situation such as ours, they do happen. but i worked very hard to find something for us. and that is what it takes. it will happen for you as well! best of luck!

[Snax]

Thanks. It may all be irrelevant for us if Citimortgage actually comes through with an offer to setup a new note at market value.

They asked us 7 weeks ago if we were interested in new terms but had not heard anything until today. A different rep confirmed for me today that the file is still open and they are working on a package.

<fingers crossed>

[HHM]

As long as you have income and reserves to support both mortgage payments (at least on paper, even if you are not actually paying the mortgage on your current home), then yes. Otherwise, I doubt it. Keep in mind, the VA (or any guarantee agency) only sets the "minimum" requirements for underwriting. The actual lender can have other requirements.

I am not aware of any VA program that allows a buy and bail scenario.

[Snax]

Well the income issue actually gives us some hope on that then, as my wife has been a stay at home mom for the last decade. We could easily bump our combined income enough to float both, but as you suggest, underwriters may disagree.

I really wish Citi would just get off their butts and do SOMETHING!

[Snax]

Ok, intriguing new wrinkle here: We have been discussing our options with a mortgage broker friend who is all fired up to help us out, and today she did a title history on the home, but the bank isn't on it! THERE IS NO LIEN ON THE TITLE! In fact, an inquiry of the MERS database shows that it has been inactive since 4/06 when our loan was modified. It was not underwritten by anybody but the bank.

So no lien, no note, no problem? I am skeptical that it is really so simple, as there is documentation that the bank no doubt has a copy of, for the discharged mortgage, but am I wrong to think our options for moving on have improved significantly with this discovery?

I may be wrong, but I'm thinking that they may still have recourse to exercise their interest, so we have no intention of selling or refinancing the home, but keeping it as a rental after finding a new place seems like a relatively safe and viable option.

[downsized]

You said in your first post that you have not been making payments on the home? That could be a huge issue. We're in the process of wrapping up a similar situation. Had to jump through many hoops and went through several lenders who wouldn't take a look at us because we had an home IIB, not reaffirmed, and we're still living in the home. No NOD or foreclosure. Our payments are current. Finally found a lender who was willing to give us a look and one of the first things they requested was 3 years of mortgage payment history because they are unable to get that from the credit bureaus. If I wasn't able to show them that I have been paying, and paying on time, they'd have denied our loan. If I read wrong and you are current with no lates in recent years, you might just be in good shape.

[Snax]

A valid point, however, a title without 'perfected' lien is clear of encumbrance on which to make payment. We think this is the reason the bank has not initiated foreclosure after 18 months of non-payment. Local average days to foreclosure is about 6 months. I don't think they have any leverage here since they dropped the ball in 2006. They wrote a modification without securing their interest! Crazy . .

[downsized]

Ah, ok, I get that. If it looks like you don't have a note attached on the title check, it should look to the new lender as if you own the home free and clear in some way other than bk? You might just be in good shape. They may ask questions when they see your mortgage company on your credit report as IIB though. I'd be prepared for that. Press on! If it's one thing I've learned in the last 6 months it's that where there's a will, there's a way. We've seen a few very difficult "beyond the odds" situations get mortgage loans in the last year. Good luck!!

[Snax]

UPDATE: I honestly thought it was too good to be true, but we are back in the NOD/pending foreclosure boat. My understanding is that while no formal encumbrance of title exists on file at the county, the original note filing is proof enough - and was not formally released of lien, even though it has changed hands with intermediary releases of title. There was also apparently a pending case in the Oregon Supreme Court regarding MERS title and foreclosure rights which has recently settled.

In the interim, Citibank has sold the lien to PennyMac who we are now dealing with on a DIL action. Frankly, I think we are about done playing the waiting game here, even if we are not paying rent. We really just want to be able to move on. That said, DIL is no guarantee and significantly shortens our prospects for move-out, however it provides the primary advantage of more favorable conventional loan opportunities later on. I'm not sure that is really important however, as with a VA guarantee in our back pocket, that point is irrelevant.

[tobee43]

not really, the DIL is just about as negative on your credit report as the foreclosure. by the way we have the same situation about the lien not be perfected, it really makes no difference generally, the bank or lender wins the position on that point, however, if you or i were or did that, we'd lose.

it's going to be hard to tell you what the time period is, again, these lenders are sporadic at best, following their own rules, which they are perfectly allowed to do no matter what the FHA or VA may say, the lender can add or subtract any provision they choose.