Financing in Phoenix>Question Details

ltshi4, Home Buyer in Phoenix, AZ

Spouse had foreclosure. Loan was approved now cant get mortgage insurance...how?

Asked by ltshi4, Phoenix, AZ Mon Jul 2, 2012

I had a foreclosure which we disclosed to the banker. We opted for a conventional loan since we live in a community property state. after the prequal we found a home. We were told the loan was approved. A day before closing we found out that even though the loan was approved they were having a hard time finding someone to insure the loan since we only put 10% down we needed PMI. How could the loan be approve without MI certificate?

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Brian Cardenas’ answer
BEST ANSWER
The lender approval and MI Certificate approval are two separate things. It never should have happened that you get to the day before closing and have this be an issue. Your loan should have been underwritten well before that and sent for an MI approval about the same time. Most MI companies are only taking 24 - 48 hours to underwrite the loan. The only reason I can figure that you are in this situation is that your loan officer didn't check the MI company guidelines to verify that your foreclosure history was acceptable.

One important date that can come up to haunt you is the actual date that the foreclosure auction took place and the property was sold. Often, homeowners will vacate the home when the sale date is approaching, but then the sale gets postponed for whatever reason. This can push the sale out months and the homeowner thinks the property was sold at auction when it may have actually been sold much later. Once they are out of the home, their attention goes away from what happens to the house. Having said that, all of these things should have been investigated up front by your loan officer and you should have been aware of whatever challenges that you faced.

It does really boil down to the fact that your loan officer didn't do their job up front. Your reasoning for going conventional is also something that is unclear to me. Conventional loans have the longest waiting period after foreclosure. With FHA, even in a community property state, if you are leaving the spouse off the loan their credit history is NOT considered as a part of the approval. Their debts are included in your debt-to-income ratios so you do have to contend with that, but if you were leaving them off due to their differing foreclosure history it is not necessary on FHA. You also don't have the separate mortgage insurance underwriting to contend with on an FHA loan.

Your situation sounds a little complicated to address in this forum, but you really need to talk with a knowledgeable, experienced loan officer to get the right answers. I would be happy to review your situation and give you the right answers. Let me know if you'd like my help.

Regards,
Brian Cardenas, Sr. Mortgage Banker
AmeriFirst Financial, Inc.
Mobile: 480.233.7897
2 votes Thank Flag Link Tue Jul 3, 2012
BTW, I have the forclosure loan will be in hubby name. So carring most of the debt and being the spouse with the higher income really hurts our FHA option.
Flag Tue Jul 3, 2012
Using my debts and not my income would have hurt his DTI. I carry most of the family debt and have the higher income. FHA was not a good option.
Flag Tue Jul 3, 2012
12 months after a Foreclosure you're now eligible for a new HUD program for an FHA loan, as long as you have reestablished positive payment history.

The U.S. Department of Housing and Urban Development (HUD) recently announced the “Back to Work – Extenuating Circumstances” program, aimed to help people who have lost their home through foreclosure, short sale or bankruptcy. HUD has reduced the previously required minimum of 36 months to 12 months before they may be able to finance another home, given that they meet HUD’s minimum eligibility requirements.
2 votes Thank Flag Link Thu Oct 24, 2013
I had a short sale last year and my Realtor recommend http://www.cfs-mortgage.com/flex for a home loan. I am very happy to be able to purchase again.
CFS Mortgage assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
1 vote Thank Flag Link Sun Jun 2, 2013
I had a client who wanted to buy a home in Arizona, but he had a foreclosure. After researching the web I found a loan program at http://www.cfsflex.com, they allow a mortgage after a foreclosure. There is no waiting period. Good to see lending options coming back.
1 vote Thank Flag Link Sun Apr 21, 2013
The key question is did you get a loan approval in writing and was there a condition that the aproval was contiongent on MI approval? If you received it verbally, it is not an approval, only what is in writing counts with banks. This question should go to your loan officer and if they are no help, ask for their manager. good luck working things out.
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Sun Jul 8, 2012
I agree with what has already been stated. It sounds like your loan officer didn't do what they should have.

If you need further assistance we can give you the names of some great lenders. Maybe switching to an FHA loan would be a good option for you.

Best Regards,

Brenda

Ron & Brenda Cunningham
West USA Realty
602-980-3133
Ron: 602-499-0694

** Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley" **

Search the Official FlexMLS for free through our website: http://www.CunninghamHomesAZ.com
1 vote Thank Flag Link Tue Jul 3, 2012
Who was the lender and loan officer?
Something sounds like they did not do their job in the Pre-Qualification/early stages of underwriting. I see this where the loan officer does not do his paperwork correctly or in a timely manor.

You will probably need 15-20 days to find a different lender. Have your agent ask for an extension on the COE.
Call me for a recommendation for a lender that has solved this type of problem before.

Loren Hoboy
623-297-3537
1 vote Thank Flag Link Tue Jul 3, 2012
Randy Roberts stop spamming Trulia. The Lendersnetwork is a scam buyers beware. They hire people to creat fake profiles and spam Truila.

Look at Randy Roberts profile he has 100s of spam comments left on blogs. This company uses companies overseas to create fake profiles to leave comments all over the internet to promote their company.
0 votes Thank Flag Link Thu Oct 31, 2013
I work with several mortgage loan officers that I can refer you to. Feel free to give me a call or shoot me an email and I can send you their contact information. At the 11th hour, there should not be any surprises. My number is 480 382 9681.
0 votes Thank Flag Link Tue Jul 3, 2012
Did the Loan Officer try FHA for you?
0 votes Thank Flag Link Tue Jul 3, 2012
We did not try FHA because Arizona is a community property state and FHA requires me to report my credit history even if I'm not on the loan. They would overlook the foreclosure, but include all of my debts and not my income which would ruin our DTI.
Flag Tue Jul 3, 2012
It is two different companies and two different underwriters. Can you try Fha?
0 votes Thank Flag Link Mon Jul 2, 2012
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