Is this problematic in terms of "Equal Lending"?

[mhman]

I have contacted a mortgage company (i.e., broker) through Zillow.com. They have had a very good and many customer reviews in Zillow.

After I provided "full documents", they gave me a pre-approval for FHA loans and a great rate without any problem.
My bk was discharged 3 years ago but my property was foreclosed about 2.5 years ago. I explained all these but they said that 3-year after discharge is enough to get an approval for a loan.

Fortunately, my offer to a short-sale was accepted and I am waiting for a short-sale approval from the seller's bank.
The mortgage broker even provided "Desktop Underwriting (DU) Finding" which is reviewed by their underwriter.

However, I was informed that they can't proceed the loan anymore because their loan criteria for a post-BK has been changed such as minimum 7-year seasoning period. This 7-year rule should apply to "Conventional Loan" not "FHA Loan".

The FHA mortgage is insured by "HUD" so I should pay a 1.75% upfront mortgage insurance fee as well as monthly MIP (Mortgage Insurance Premium).

Is this a kind of violation against "Equal Lending"? How can they apply the different criteria for FHA loan?

I should contact other mortgage companies but I thought that it is good to share with other folks here.

Any advice or suggestions would be highly appreciated.

Thanks!

[tobee43]

unfortunately, not. a lender has a right to refuse anyone for any reason. you may be out of bk 5 years and the brokers helping you with your financing say oh yes we can help. i have so many not go through. but do not give up!! there has been some that actually got a mortgage, it wasn't easy, but they did it.

it's just going to be a bumpy road, but, i'm sure something hopefully will come up for you. best of luck

[LadyInTheRed]

Well, not for any reason. They can't discriminate against people in protected classes. Having a bankruptcy doesn't put you in a protected class.

The FHA prohibits discrimination in residential real estate–related transactions based on...
•Race or color
•National origin
•Religion
•Sex
•Familial status
•Handicap

http://www.occ.gov/topics/consumer-protection/fair-lending/index-fair-lending.html

FHA guidelines are only minimum guidelines that must be followed in order for the loan to be FHA insured. A lender can impose whatever additional requirements they want (as long as they don't discriminate), whether or not it is an FHA loan.

mhman, your post reads as if a mortgage company and a broker are the same thing. The aren't. If you are working with a broker that only works with one lender, find another broker. Ask your real estate agent for a referral.

[mhman]

Thanks Tobee43 and LadyInTheRed,

Time flies...over 3 years after the BK discharge. But I am still struggling to find the right seasoning year based on discharge date (March 2010) or foreclosure date (September 2010).
Some lenders say September 2010, others (not many though) say March 2010 for a FHA 3-year requirement. Very confused.....

I should start it from scratch again because the broker who approved the FHA loan changed their rule, i.e., 7-year seasoning period.

Although a foreclosure is not shown in my credit report, can a lender regard the 3-year rule based on the foreclosure date which is shown in the county recorder website?

I have been "very" confused since some lenders still say that a 3-year rule applies to the discharge date (March 2010) regardless of the foreclosure date (Sep. 2010). Even "underwriters" answer differently.


When I make this through eventually, I will post what I experienced for all other folks. All details!

Thanks again and have a good day!

[justbroke]

The thing about FHA loans, is that you just have to SHOP them. Do not rely on just one broker/lender. The guidelines are just that, and many lenders require more seasoning than what the FHA guidelines suggest!

[mhman]

Justbroke,

I shopped FHA loans through Zillow.com

As you mentioned, I found that some lenders require 10-year after BK, 7-year, or 3-year. "All" are different. They all have different criteria on BK & foreclosure (FC).

BOA approved my FHA loan with full documents but I requested a broker to double check with their underwriter who can confirm the seasoning issue, e.g., 3-yr after BK discharge or 3-yr after FC. When I started a pre-approval process, the broker with BOA told me that the criteria for BK will be "2-yr after BK discharge without mortgages" or "3-yr after BK discharge with mortgages". Their underwriter might say differently that's why I requested another confirmation!

I just found another lender who confirmed that there should be no problem to get an FHA loan approval as long as the mortgages were included in BK and discharged.
There is only 6-month gap between BK and FC for my case. However, I should purchase a house within a couple of months since my short-sale offer was accepted by the seller.

I researched a lot about this seasoning issue as most folks did here. It looks that 90% lenders stick to "3-yr after FC" rule" no matter when mortgages were discharged. However, about 10% regards the BK discharge as a foreclosure so the 3-yr seasoning period starts one day after the official discharge date. I think it's all about their criteria and policies on their loan programs.

As promised, I will post the results!

Thanks for all your nice comments