This seems like this might be a great forum for some creative financing advice. My wife and I ended up having to file for a chapter 7 bankruptcy which was discharged 4 months ago. Our home which was included in the bankruptcy is waiting to be foreclosed on. But Countrywide/BofA doesn’t seem to care about and it just sits there month after month (over a year of no payments). Loan is for 356,000 and the house is worth $120,000 at best. Our town is usually in the top 5 lists for worse foreclosure areas.
Bankruptcy is over and we just want to get on with our lives. The bottom line is we want to get back into a home while the market is still near the bottom. I do understand that FHA loans require 2 years from your chapter 7 discharge and 3 years from the title transfer on a foreclosure/deed-in-lue/short sale. Conventional loans are 4 years from a chapter 7, foreclosure is 5 years, deed-in-lieu is 4 years, and short sale is 2 years. The time post bankruptcy isn’t really our issue. Waiting a year or so it’s a big deal. It’s this damn foreclosure that BofA is dragging their feet on. If it takes another year for them to foreclose it will start the new 3 year timer on our ability to get a loan even though we are 2 years out from the bankruptcy discharge. Are these underwriting guidelines all written in stone?
Just trying to figure out what our options are… so we can setup a game plan. We are looking to just buy a foreclosed home and fix it up. We’d be looking for a similar home to the one we are in now which is around $120,000. We can have a 40% to 50% down payment by the time we want to buy. Income is 100% verifiable at the same job for 16+ years with 95k a year gross income. We are working on getting our credit reestablished and our scores are in the low 600’s and slowly rising. Only debt we have is about 30k in student loans.
Are there any lending options out there that fall between conventional loans/FHA and hard money? Or are we pretty much screwed?
If your home was included in the BK then you should be okay. When you apply for a new mortgage they will ask to see copies of your BK paperwork. Make sure to point out the CW loan was included in the BK. With that being said you will need to have PRISTINE credit to get another mortgage after the minimum time has passed. I would suggest that you start rebuilding your credit now. Get a secured credit card that reports to all three bureaus. Go to google and do a search for “Public Savings Bank Visa” I refer a lot of my damaged credit customers here because they are very easy to work with and they do report to all three bureaus. Hope this helps.
And to answer your last question…there are only 3 games left in town. FHA/Conventional/VA.
Thanks for the reply. Funny that you recommend Public Savings Bank. I did a ton of research on all the different secured cards and I sent Public Savings 1k to open a secured card 2 weeks ago. They by far had the best deal for my needs. Also opened a secured installment loan with our credit union… 3k over 36 months @ 3.1% APR. Rolled the cash back into savings and have it setup for automatic payments. So I guess it’s just a matter of time to let things get better.
The home was included in the BK and it reports as IBB on our credit reports. I know that the foreclosure won’t show on our credit reports but I assume that the underwriter for any loan will find the public record of the foreclosure. So if FHA/Conventional are 100% strict on their waiting period after a foreclosure then we are probably screwed for 3 years from when CW/BofA finally decides to foreclose.
So I guess it's just a matter of time to let things get better
Absolutely. Do not get sucked in to any of those “Credit Repair” or other fix your credit quick schemes! i would take this opportunity to obtain a copy of your Credit report and review what items are on it. Make sure that all of the Creditors are aware of the BK and have it marked as such. Tidy up as much as you can and work on building new credit.
Ya I pulled our credit reports… going to keep an eye on stuff and dispute as needed. We both have 3 trade lines setup with automatic payments. So we should be good to go on credit. Just need some time.
It would just be nice to be able to get back into house since we have the down payment. Mortgage would about half of what rent would be. :banghead
Thanks so much for getting our Public Savings Bank secured credit card. And thank you Christopher W for referring people to us. Our secured credit card reports to all 3 credit bureaus so we are happy to help you rebuild your credit history.
Public Savings Bank
No problem. Thank you for taking care of your customers. Customer service has gone down the toilet in this country.
I had a BK discharged in October of 2005, due to being an idiot that piled up debt while in college and shortly after college, and within about 2-3 years my credit score was in the 700’s. About a year and a half ago we just refinanced our house and was able to get the best rate the bank was offering at the time, 5% without even using my wife’s credit at all(which is excellent—near 800). Last time I checked my score was still over 700, just make sure that you pay everything on time from the BK forward and lenders will take that into account strongly after a few years…
It still does follow you around regardless of how good you build up your credit tho. Have been denied for credit cards and have gotten ridiculous rates(20%+) on a personal loan I had to take out to help fund a business franchise purchase, which are directly due to the BK…overall tho, within a few years of establishing on time payments, many lenders have no problems giving you good rates…
If your looking for a different option to the FHA and Hard Money channels…what about owner financing, especially if your going to have that kind of down payment.
Another option would be to look up all the custodians of self directed ira’s in your area and propose the loan to them for one of their clients. You might get a taker at that low LTV and I suspect you can negotiate a slightly better deal than a hard money lender might want.
I believe that I would treat the foreclosure notice as a ‘contract offer’ under commercial laws and send them a conditional acceptance (to stay in honor) with many conditions such as producing evidence that their claim is valid with an original ‘wet ink’ signature and proof that they actually loaned you money, along with a list of other conditions and require the response to be via a sworn affidavit under penalty of perjury. They cannot prove their claim in the majority of cases. When they cannot prove their claim, send a fault notice to cure, a default notice, then get a judgment against the bank and take your house back, clean the title, and keep your house free and clear. If you need assistance, send your telephone number and I’ll call you. Hope that helps.
If you are going to have a 40-50% downpayment in cash, why not just start making low-ball all-cash offers on foreclosed homes as soon as possible?
Cash talks. Maybe you’ll get a home for $60,000 or so and have no housing debt whatsoever.
Rob in Atlanta,
You said the Countrywide/BofA need to PROVE that they made the mortgage loan?! If they don’t respond timely, breezin gets a judgment and a free and clear house?
That sounds like fraud to me. I bet BofA has way more lawyers and deep pockets to stomp that homeowner into the ground. If they made the loan, they made the loan.