Foreclosure after bankruptcy, what time line am I on for new loan?

[adviceplease]

I put 1st and second into Chap 7, DC over a year ago. Foreclosed on with Sheriff Sale yesterday.

I read online:
For Conventional Loans:

•Chapter 7 Bankruptcy – 4 year waiting
•Foreclosure – 7 year waiting period from the completion date

For FHA or VA Loans:

•Chapter 7 Bankruptcy – 2 year waiting period from the discharge/dismissal date
•Foreclosure/Preforeclosure (Short Sale) – 3 year waiting period


Since I foreclosed after the bankruptcy am I considered under the foreclosure timeline or do I fit under the Chap 7 one since I did not reaffirm?

Also, Fannie Mae Backed Mortgages states:
For those who have gone through Chapter 7, there is a four year waiting period, which can be reduced to two years for extenuating circumstances.

The only reason we had to file BK and let the house foreclose was because of back to back disability. Do you think we could try for the Fannie Mae loan at the 2 year mark since the health issue has been resolved and is no longer an issue for lack of employment? Hubby returned back to work full time but it was too late to stop the foreclosure. Thanks!

[justbroke]

It's a foreclosure. So, you use the foreclosure guidelines. If you have a really good reason why you filed bankruptcy, some underwriters will take that into consideration. (A "good" reason would be military duty, injury/disability, or other serious incidents.)

[adviceplease]

My husband was disabled twice, once for 2.5 years (work related, income paid through work insurance) and that is why we filed BK and then again last year when he hurt himself. All health issues are now resolved and he is back to work at a good paying job. It was too late to stop foreclosure because they wanted way to much to get it back and the house isn't worth much. Do you think his resolved injury/disability would be a good reason? The BK will be D/C 2 years in May 2012 and we have till the end of June to get the house back in redemption. Do you think we should apply somewhere at the 2 year mark with the reasoning to see if anyone will bite? Or will they not even talk to us until the house is foreclosed and off our name? If not we are looking into rent to own or land contracts.

[BROKEDED]

It's a foreclosure. So, you use the foreclosure guidelines. If you have a really good reason why you filed bankruptcy, some underwriters will take that into consideration. (A "good" reason would be military duty, injury/disability, or other serious incidents.)

Are you sure about that? I thought I had read somewhere that confirmed 2 years if the mortgage(s) were IIB. And three years if the FC came first and then BK.

[justbroke]

Are you sure about that? I thought I had read somewhere that confirmed 2 years if the mortgage(s) were IIB. And three years if the FC came first and then BK.

Speak with an underwriter or a lender that brokers GSE loans. They will tell you that a foreclosure is a foreclosure is a foreclosure no matter if it was done in a Bankruptcy (via surrender) or not.

I would be very cautious of reading everything on the Internet. Always go to a source that is reliable. A lender is a reliable source and their underwriter is the best source. The problem is that it's too easy to read the FHA guidelines that reads "3 years after a foreclosure" and "2 years after a bankruptcy". However, the foreclosure is what's controlling! It should read;

The later of the following events;

• 2 years after you filed for bankruptcy; or,
• 3 years after a foreclosure upon your property has concluded, whether or not the underlying debt was discharged in a bankruptcy.

Now, there are exceptions and some people were able to get loans outside those parameters. Those exceptions are just that... exceptions.

[BROKEDED]

Hmmm, gonna have to check into this. It's not that I don't believe you. It's just that I don't want to believe you because that was a pretty big concern of mine. We had hoped that we could pay as you go on our new start but a short term loan (5 years) might be necessary.

[justbroke]

I don't want you to believe me. I want you to go into a Bank and ask to speak with a loan officer about obtaining a loan post bankruptcy and after a foreclosure.

[BROKEDED]

I don't want you to believe me. I want you to go into a Bank and ask to speak with a loan officer about obtaining a loan post bankruptcy and after a foreclosure.

Are we talking apples to apples here? I meant FHA loans.

Edit: After reading a little more it looks like almost everything else that has to do with BKs and FCs... it depends on the individual situation, bank, credit report, lender, loan officer, etc...

[justbroke]

Yes, any GSE-sponsored loan which includes FHA would be included in my general definition of the rules. There is always a factor where you can get an exception, but that is not based on lender, loan officer. The key thing is that for a bank to issue a loan that conforms to FHA (or Fannie or Freddie) underwriting standards (guidelines), then they must follow the rules or they can't resell the loan.

Now, a very specific reason for your plight might allow an underwriter to go outside the guidelines and it does happen. The only way to "truly" tell is to actually apply for or speak with an FHA lender.

[BROKEDED]

Do you know if a bank/CU uses any other records besides one's credit report to determine whether to go by the BK or to go by the FC to determine eligibility? It seems that most of the exceptions that I read last night were instances where the FC simply didn't show up on the applicant's credit report OR the loan officer's understanding was the the FC was part of/included in the BK.

[justbroke]

Again, this is outside the standard. Whether you, personally, can have it overlooked, is fact specific. In most cases, where there is a foreclosure, the underwriter requires a written reason as to why you ended up in foreclosure and/or bankruptcy. Many times, the people applying and that get approved, are approved because they had reasons beyond their control (military service, loss of income due to long term layoff, injury, disability, etc). It's easy to get past the loan officer. It's difficult to get past underwriting. If you dig deeper, you'll read about people getting "pre-approved" for the loan, but never making it through underwriting and close. A bankruptcy would need to not show up on all THREE credit reporting agencies (Trans Union, Experian, Equifax) since mortgage loans use all three reports. I know that on one of my reports, there is no bankruptcy... but it's on the other two.

I'm saying that you won't know until you personally apply.

I want you to leave with two things. First, it's not the loan officer that insures that the loan conforms to the GSE program; it is the underwriter. The underwriter insures that it meets the qualifications so that it can be "guaranteed" or resold (transferred) to the GSE (FHA, Fannie, Freddie). Second, the foreclosure rule is the rule for the GSEs and it was stated above. If there is an exception, it's because the individual person had some reason to allow the rule to be over-ridden.

I know of no rule that allows the underwriter to override the foreclosure rule simply because the person filed bankruptcy. There needs to be a mitigating factor... such as disability, military service, permanent or long-term loss of income, injury, etc.

I highly encourage you to go into a bank and ask these questions. Personally, I would not rely on what you're reading in Forums on the Internet. I want you to not believe me!

[HHM]

It's the foreclosure (I know, it sucks).

Understand, loan officers are primarily sales people. Some do understand how the process works, but keep in mind, they get paid a little something for just getting the loan application in, regardless if the person has any real shot at getting a mortgage.

[adviceplease]

I talked with one lender and they said 4 years after the foreclosure is off my name. Does this take a long time after Sheriff Sale? Also one person said that there may be a chance the current lender can come after me for a deficit because it has been a year after d/c when we are foreclosed on, is that true? I have been told several times that because the 1st and 2nd mortgage was d/c in Chap 7 I can walk away at any point in life and not be sued. Are they correct in anyway that they can come after me? Thanks.

[HHM]

As to the question, can the collect the deficiency, NO. It was discharged in your BK, it doesn't matter if the home was foreclosed 5 months or 5 years after the bankruptcy discharge. So long as you did not reaffirm the mortgage in your BK (you didn't) and so long as you did not refinance after the BK.

The other question is confusing (I think you just misworded it, but it is funny),

I talked with one lender and they said 4 years after the foreclosure is off my name. Does this take a long time after Sheriff Sale?

Umm, 4 years is 4 years.....

It is 4-5 years for conventional financing, it is 3 years for FHA.

[adviceplease]

lol....sorry about mis-wording it, my mind seems to have gone to mush lately. I meant to say how long after sheriff sale can I expect the new owner (lender, purchaser etc) to get the house off my name so I can start my 3-5 year count down? If my lender bought it back do they normally snatch it back quickly after the redemption period or do they just get around to removing my information from the deed when they feel like it.