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

[HHM]

The day of the sheriff that should happen. Once the sheriff sale happens (unless you live in a state with a poessesory right or redemption) one of two things will happen, either the bank will own the property, or the person who bought the property will own it. Generally, the bank takes ownership of the property and that occurs AT the sheriff sale.

[adviceplease]

I live in Michigan and I have 6 months in order to redeem my home, is that the poessesory right or redemption? If it is, does that mean that when this period ends my name will at that point of being taken off the deed? Sorry for all the questions, I am just anxious to move on and start looking forward to a future again.

[adviceplease]

Hi, just wanted to bump this up for an additional question. I contacted a lender to see what the actual date of applying for a new mortgage would be with them and they said that the would let us apply in May 2013 for an FHA loan (3 years after Chap 7) even though we are in foreclosure. Is this too good to be true or is it possible? We are considering getting a rent to own home but most of them what you to get a mortgage by 2 years. I would really hate to lose a home or break a contract because this is not correct information. Thanks!

[justbroke]

If you are in foreclosure it is highly unlikely that your FHA loan application will make it through underwriting. The rule for Chapter 7 discharges is if you are current on your mortgage or you didn't surrender a home. I suppose the rule would be more clear if they wrote "the later occurrence of..." two years after discharge in a Chapter7 or three years after a foreclosure. There are always exceptions if you can prove extenuating circumstances. Those circumstances may include military duty, severe illness, things beyond your immediate control (divorce, death), temporary disability, permanent disability, other circumstances at the discretion of underwriting.

When you asked the bank, did you tell them that you were in foreclosure? It would make a big difference.

[adviceplease]

Yes I told him. We ended up in foreclosure because my husband broke his foot and was off work. We were in BK7 because he was off of work because he had diabetes that was misdiagnosed if that makes any difference? He has a really good job, just bad luck and bad timing. He is also at a 612 credit score and he said we would need a 620 by then.

[justbroke]

I wouldn't get my hopes up on getting through underwriting. It is simple to be "approved" or "pre-approved" based on simple credit score screening. It's another thing when the underwriter has your package and sees an impending foreclosure.

[adviceplease]

Okay so I have another update. I found a realtor we really like. We approached her about helping us with a land contract and she found out it was a scam and saved our butts...lol.

Anyways she had me talk to a loan office at a well know FHA mortgage company, he is the branch manager and executive loan officer. He says that they will not hold the foreclosure against us because they do not believe in hitting someone down on their luck twice (also because of the situation behind it). They will honor the 3 years from BK discharge since the home was included, but... he says the main problem they have is that it looks bad that we have been living in the home for free so we will have to get into someplace and show on time payments for one year before they can accept us for a FHA loan (we foreclosed on conventional and credit score must be decent and steady employment). So what do you think about this?

[tradinglife]

Hope your lender is right, because we are in a similar situation and trying to decide if we wait it out the BK/FC timelines or look for a lease to own option. So far we haven't found any lease to own situations that look remotely attractive. It's frustrating to be paying more rent than we could own for, especially with real estate prices down like they are.

[justbroke]

... He says that they will not hold the foreclosure against us because they do not believe in hitting someone down on their luck twice (also because of the situation behind it). They will honor the 3 years from BK discharge since the home was included, but... he says the main problem they have is that it looks bad that we have been living in the home for free so we will have to get into someplace and show on time payments for one year before they can accept us for a FHA loan (we foreclosed on conventional and credit score must be decent and steady employment). So what do you think about this?

I think it's hogwash. It is not up to the bank to honor the discharge. It's up to FHA underwriting. What is telling is that the bank loan officer goes on to say "it looks bad that we have been living in the home for free".

If they want to push it through and see if it makes it through underwriting, that's fine. But I still don't like how the loan officer worded that. It was like... "I can approve you for the loan, but they won't like that you have a foreclosure." I think the loan officer intends to claim "special circumstnaces" and try to "convince" underwriting that you otherwise deserve a loan (recent on-time payments through rent, solid credit scores, steady and consistent employment, etc).

It reads as though the loan officer is trying to build a "reason" package rather than meet the base requirements.

[HHM]

I agree, sounds like a loan officer is simply trying to earn their "spiff" on getting so many loan apps past initial review and into underwriting. Underwriting will eventually say no. But who knows, maybe you will get the loan. But based on everything you have stated so far, I hate to say it, sounds like you are working with people that have no f'ing clue what they are doing.

[justbroke]

I do wish you luck. If you actually make it through underwriting, we here would certainly like to know what your loan officer did to push through your loan package.