Timeline to buy again after foreclosure & pending BK7

[DoOver]

Hello. Asking for some friends. Can anyone please tell us - what's the timeline to be able to purchase again if they're 4 years out from their foreclosure and are awaiting BK7 discharge (they had their 341 meeting at the end of May)? TIA!

[ValleYum]

Depends. I have read of anywhere from 2-5 years. What type of mortgage was foreclosed? There is a Federal loan database called CAIVRS that may affect their chances at obtaining a mortgage after a foreclosure and a bankruptcy as well.

Info about the database here: http://portal.hud.gov/hudportal/HUD?...rs/caivrs_faqs

Honestly, your friend needs to talk to a mortgage broker to find out the best way to "bounce back" from their foreclosure and BK so they can try to purchase a house again.

[BobMango]

Too many variables to consider giving a solid answer. In our case we had a rental property foreclosed just before we filed BK7. We kept our primary residence and converted it into a rental and were able to purchase a new home just over 3 years post bk discharge using a VA loan. There are lots of potentially mitigating factors in every case, but I usually would advise people that 2 years is the minimum, best case scenario for any kind of institutional lending options. Private financing and real estate contracts present other options that might be available sooner, but with higher cost or risk or both.

[DoOver]

Too many variables to consider giving a solid answer. In our case we had a rental property foreclosed just before we filed BK7. We kept our primary residence and converted it into a rental and were able to purchase a new home just over 3 years post bk discharge using a VA loan. There are lots of potentially mitigating factors in every case, but I usually would advise people that 2 years is the minimum, best case scenario for any kind of institutional lending options. Private financing and real estate contracts present other options that might be available sooner, but with higher cost or risk or both.

BobMango, thank you! So, will their timeline start after the bk discharge regardless of the fact that they foreclosed 4 years ago? What about those new programs like the Back to Work FHA program I read about? Do you know anything about those? Thanks again for the input.

[BobMango]

The answer to your question on the foreclosure depends on whether it was a government backed loan. If someone happens to be a defaulted Federal debtor (as in they show up in CAIVRS), that will impact their ability to participate in many of the government backed programs. As far as the timelines go, by the time they clear the bankruptcy seasoning time frame, that foreclosure will be 6-7 years old and mostly a non-factor in terms of their ability to get some sort of financing. I'm not familiar with the program you mentioned, sorry.

[DoOver]

Thank you BobMango! I'm pretty sure they didn't have a government backed loan but will have them check that list.

[holycowe]

FHA requirements for bk and foreclosure
12 mos after discharged (using back to work program) Or 24 mos for normal FHA
3 years after foreclosed on a house.

Remember, back to work program requires some classes, and need to show you lost at least 20% income bla bla bla.

Of course, very very good credit since bk.

[DoOver]

FHA requirements for bk and foreclosure
12 mos after discharged (using back to work program) Or 24 mos for normal FHA
3 years after foreclosed on a house.

Remember, back to work program requires some classes, and need to show you lost at least 20% income bla bla bla.

Of course, very very good credit since bk.

Thank you Holycowe. So does the timeline start with the BK even though the foreclosure has been over 3 years? What kind of credit score do they need? Would over 650 be sufficient? Thanks again!

[holycowe]

Yes, you can FHA 12 mos post discharged (must meet their requirements for back to work program). If you can't meet their back to work requirements, gotta wait til 24 mos.
For me, I did it with Wells Fargo 24 mos after discharged. According to my Wells Fargo LO, 600 score is ok for now. But I heard that the scores vary from lender to lender, larger banks usually require higher scores...

[DoOver]

Thanks for the info Holycowe!

[lostinnola]

Just got done with this process. It depends on the reason for your chapter 7. Worst case scenario is 3 years, as long as you get your credit score above 640 (which shouldn't be a big deal) and you don't have any late payments or collections after discharge. My mortgage lender said that if you do a FHA, RD or VA loan that there isn't a difference between a 640 credit score and a 800. Once you hit 640 you fall into the same bucket.

You should get an auto loan and a couple credit cards to help out your score. It will be easier to qualify if you have multiple lines of credit. Capital One and Barclays were the easiest places for me to start to rebuild my credit.

[DoOver]

Thank you Lostinnola. Hope all went well with your purchase etc