I have a couple who filed chapter 13 5 yrs ago, It ended 4/2013. In 2010 I owner financed a home and they have claimed interest on their taxes each year. I never recorded it as it was done on a land contract. They have been great at paying. How do they get a loan and then pay me off if reg. banks wont loan them money for 7 yrs as long as banctrupcy is on their credit. Please help, I dt know where else to go:banghead ??? Whats the best way you experts would go about getting paid off for this loan. One broker told them if it wasn’t recorded to say they were renting it for 4 yrs and apply for fha but I told them what about the interest they claimed each year?
Your best bet is find a local mortgage broker. He/she will have access to non-conforming lender options. The rate will probably be less than desirable, but it will give them the option to at least obtain a mortgage.
Did they pay you by check? If so you could possibly right it up as a Private mortgage and provide the cancelled checks as payment history.
That’s great advice. I would just add that this is why I use a note servicer to receive my buyer’s payments. They provide year-end tax statement to me and to the buyer. Also, the buyer needs to be thinking “refinance,” not “new purchase money mortgage.” That makes all the difference in the world when approaching a lender.
If you’ve got an installment contract with the buyer, he’ll show that installment contract, along with a certified payment history to the bank, and that should be plenty of qualifying proof of ownership and credit worthiness.
Back when I wasn’t using a note servicer, the mortgage broker asked my buyer to provide copies of canceled checks to prove a payment history. That works, too, but I like to have a note servicer’s statement. It’s much more elegant and professional.
FWIW
Could I get it recorded now after 4 yrs and that would work as showing they had a mortgage and they always pay me cash and I give them a rct. every mth
Nothing needs to be recorded first. Your buyer has a copy of the installment contract, which is documented to connect the real estate to the note, right? That’s all that’s really necessary.
The bank just needs a document connecting the borrower and his payments to the real estate he’s wanting to finance. It’s much like a bank wanting proof of ‘rent credits’ toward a lease/option purchase.
For example, I use am Installment Contract to finance buyers. I don’t record anything, and I don’t let my buyers record anything either.
When my buyers begin looking to refinance, they show the lender the Installment Note; proof of their payment history (issued by the note servicer); and that’s about all they need from me.
After that, it’s just a matter of the lender appraising the property, reviewing the borrower’s credit/income, and making a loan that reflects what they find.
As Mdhaas already suggested, send your buyer to a mortgage broker.
This is the “secret” shortcut in navigating around these special financing circumstances. MB’s already know who funds what situations; where; and for how much. And they’ll tell your buyer what hoops to jump, so you’re not guessing and hand-wringing.
From what I understand, a buyer does not have to wait 7 years after bankruptcy any longer to qualify for traditional financing. Typically a buyer must wait up to 2 years after a Chapter 7 or 13 bankruptcy is discharged before being able to qualify for a loan. Though there are loans out there that require less time, the loan terms (i.e. interest rate) could make the loan cost much more over the long term.
Once the 2 years has passed, the borrower will want to make sure that their credit score will not hold them back from being able to qualify for a loan. To qualify for a traditional loan, they are going to need a minimum credit score in the 620 - 640 range though most require 680. FHA loan approval requires a credit score of 580 though they have programs for scores above 500 though the terms are not very attractive.
To get a loan after bankruptcy, the borrower must make sure that the bankruptcy has been discharged.