Home Buying in Atlanta>Question Details

Tristan, Home Buyer in Atlanta, GA

Question for an loan expert

Asked by Tristan, Atlanta, GA Thu Feb 16, 2012

I had a Chapter 7 three years ago. My previous mortgage was included in the paperwork, but it was NOT a foreclosure, nor a deed in lieu because I was a co-borrower and my ex-wife remained accountable. Does this still require me to wait 3 years on an FHA loan instead of 2?

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For a Chapter 7 BK, FHA requires that at least 24 months must have elapsed since the Discharge Date. If the mortgage debt was reaffirmed and someone is still making the mortgage payments, then everything should be ok after the 24 months. Unless you sell the house, that mortgage payment will need to be included into your debt to income ratio for a new purchase. If the ex-wife was awarded the house and the payment responsibility, then the debt might not have to be counted against you.

If mortgage payments have not been made or the account has been late in the last 12 months, then a waiting period will be required. FHA requires that at least 36 months from the foreclosure date must have elapsed before a new mortgage could be obtained.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle Renovation | VA | USDA | GA Dream | Jumbo Financing
Web Reference: http://www.rodneymason.com
1 vote Thank Flag Link Thu Feb 16, 2012
Sounds like a Rodney on the spot to me.
1 vote Thank Flag Link Thu Feb 16, 2012
It is possible to purchase a home after a bankruptcy under certain conditions. Here are FHA’s guidelines on bankruptcy:

“A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. Additionally, the borrower must have reestablished good credit or chosen not to incur new credit obligations

The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs. An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.

Additionally, the lender must document that the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time). In addition, the borrower must receive permission from the court to enter into the mortgage transaction.”

If a borrower has a bankruptcy that is less than 2 years but more than 12 months old and you want to try for the “extenuating circumstances” provision, keep in mind that many extenuating circumstances which would be acceptable to explain a few late payments will not be good enough to avoid waiting 2 years after a bankruptcy. The extenuating circumstance here must truly be a catastrophic experience, such as the death of a primary wage earner. It also cannot be a situation where the borrower filed a bankruptcy over a small amount of debt that the underwriter might feel they should have toughed out and paid.

For more details or questions please contact me at your convenience.
0 votes Thank Flag Link Sat Feb 18, 2012
In my shop the minimum waiting period where there was a foreclosure is 3 years from the date the property transferred, if you are trying to go FHA. But it isn’t really as simple as that, it also requires re-establishing credit, meeting the minimum FHA scorecard, getting an approval from AUS, etc. It is a lot more complicated than anyone in my business makes it sound. Loan officers are sales people, we try to encourage. Just hook up with a Realtor you trust and them have them introduce you to the lender they trust the most and ask the LO for guidance. The only way you can be sure is to look at the entire picture, not just one small slice like the waiting period. Working as a team will get you there ASAP. Good luck,
0 votes Thank Flag Link Sat Feb 18, 2012
FHA requires 36 months from the foreclosure date. Every lender has to adhere to that requirement. Based on a May 2010 foreclosure date, it will be at least May/June of next year before you meet that guideline.

Fannie Mae has a 3-7 year waiting period based on the circumstances. FHA is the most lenient.
Web Reference: http://www.rodnemason.com
0 votes Thank Flag Link Sat Feb 18, 2012
I just found out even though the bankruptcy was in 2008, the home did not go into foreclosure until May of 2010. If anyone can still help, let me know, but it appears I might not be able to purchase a new home until April of 2013.
0 votes Thank Flag Link Fri Feb 17, 2012
Privato. Call me at my office and we can talk further. 770-279-0222 ext. 718
0 votes Thank Flag Link Fri Feb 17, 2012

Your circumstance is a little unique. I suggest you speak to a mortgage lender who can ask you all the right questions to determine how long you have to wait. There is too much information to ask and process in this small amount of space on Trulia.

Sally W. Hamby
Senior Mortgage Banker
Fidelity Bank Mortgage
404 644 7696
0 votes Thank Flag Link Thu Feb 16, 2012
Thanks Michael. Busy day today.

If she has defaulted and it was an FHA mortgage, HUD has a 36 month waiting period from the date the claim was paid before a new FHA loan can be obtained. There are a lot of variables in this so seeing all of the documentation needed is the only way to give an accurate answer.
0 votes Thank Flag Link Thu Feb 16, 2012
You're a little late, Rodney, but as usual, a good reply.

Michael Hammond


0 votes Thank Flag Link Thu Feb 16, 2012
Based on what see here, I can help you, call me at 404.493.2288 or apply online at http://www.LoansByLarry.com
Web Reference: http://www.LoansByLarry.com
0 votes Thank Flag Link Thu Feb 16, 2012
1st question is did the house get foreclosed on? or did your ex manage to get back on track with the payments?(if your ex got caught up on the mortgage and is now keeping it in god standing this is probably not an issue)

Next, when did the late payments start? before your divorce was filed or finalized? Did you get a request for legal separation from the courts prior to? did you remove your name from the title in advance of the late payments? (Unless you can prove that all the above questions can be answered with a yes, then you will have to wait until 3 year past the time the bank transfered back the home to their books. In some cases there are many homes that have taken months to years to be returned to the bank after foreclosure has started.)

There are a lot of detailed questions that need to be reviewed before anyone could easily give you a straight yes or no on this question. I'd be happy to review your situation in more detail to inform you of what option you may have or what steps you need to take if you are currently unable to qualify. I just finished 5 other loans in your same situation since October.

I hope that this information has been somewhat helpful. Please call with any other questions.
Best Wishes,

Rob Robbins
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
Office 678-578-7613
Cell 404-932-5353
0 votes Thank Flag Link Thu Feb 16, 2012
kevin, I truly don't know what happened after my chapter 7 as my ex and i did no speak. I only know it has never shown up on any of my credit reports.
0 votes Thank Flag Link Thu Feb 16, 2012
The property does not show up on my credit report whatsoever. I know my ex-wife did not make payments on the house once she became the only person on the loan after my chapter 7.
0 votes Thank Flag Link Thu Feb 16, 2012
What your saying 2 would be fine BUT was your ex-wife FC'd too? Also, did your divorce decree state
she was sole responible for the mortgage?
0 votes Thank Flag Link Thu Feb 16, 2012
Sorry in advance for the subfective answer. Have you quit-claimed your interest in the property to your ex-wife, and if so, when? Also, do you know what is reflected on your credit report regarding the property? There may be some legwork on your part, however if there were no foreclosure and she is making the payments on time the 2 year wait after the bankruptcy discharge should be sufficient. Without knowing what is being reported on your credit report, I'm not sure what else might be entailed. Feel free to call me.
0 votes Thank Flag Link Thu Feb 16, 2012
What does that mean? Rodney on the spot?
0 votes Thank Flag Link Thu Feb 16, 2012
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