Currently I have a fico near 800. What is the best way to minimize the damage to my credit if the bank won't modify my FHA loan?

Asked by Hopeful, Rancho Cordova, CA Thu May 13, 2010

I'm going through a divorce and cannot make the mortgage on my salary alone. Our realestate agent informs us our home is currently valued @ $75K below what we owe. I invested $200K into the property-and really don't want to lose it. But, which is the best option to protect my credt, deed-in-lieu, short sale (comps have been on the market 300 days) foreclosure? If I can find a more affordable home, how soon can I qualify for a loan?

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, ,
Thu Aug 15, 2013
I was just looking through old post and I noticed yours. If you were not able to refinance at the time of the post, I can certainly help you out now. You can call me at 408-352-5147 or email me at You can check us out at I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
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Elisha La Cr…, , Rancho Cordova, CA
Wed May 19, 2010
HI Hopeful,
I would just like to inform you that I recently just went through a similar situation.

My condo just foreclosed last month after 14 months of trying to get a decent modification through my bank Countrywide. What they informed me is to do a deed-in-lieu if I was concerned about my trying to save my credit. Either way there will be a scar. You're best bet is to try and modify with your current lender to save your home and credit. FORECLOSURE is your last resort. As for qualifying on a more affordable home, I suggest you call a lender, you can try Austin at Hooah Loans 1-800-430-1184, if you don't know of anyone, he might be able to answer that question for you.

I wish you the best of luck if whatever decision you decide to make :)
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Joanna Jensen, Other Pro, Livermore, CA
Tue May 18, 2010
If you would like to keep your home here are your options,
1) If you still have good credit your in luck. We MAY be able to do a short refinance. We negotiatie with the lender if your underwater and try to get you a new loan based on the current market value. Upon lender approval you will get a new loan based on FICO, current market value, and income.
You will need to have income to support the new loan.

Have you been doing your loan mod your self? Sometimes it takes a new approach, are your financials too high. some people incorrectly thing the worse off they are the more the lender will modify, not so. You want to be accurate with your financials but dont overstate them. this should have the least impact on your credit if you dont have lates you may only end up with a ding on your credit that says settled for less than owed,. However then your debt to income will also go down so eventually your credit score will go back up as long as all other bills are current and you pay your mortgage on time.

You will most likely see every one tell you your only option is a Short Sale, that should be your last option before foreclosure because lenders do not want to take your hope. You have to realize that the first line of defense at the bank really isnt prepared to do anything but go by the books. Its the negotiator who can make exceptions. Getting your file there intact up to date is your best advantage.


First try a short refi, or if your going to go as far as a short sale then do a Secured Short Sale, where our investor buys your home, then upon your lender approval we rent back, lease option back or sell back to you as soon as allowed. This way you retain your home, not some one else waiting to buy your very unlucky financial hardship.

There are ways, I have stopped several foreclosures and modified plenty of homes. As a realtor my first concern is the home owner keeping them in their home and stopping foreclosures from happening.

When your credit really gets destroyed is when your missing payments which you dont have to do for this short refi.

Best of luck
JoAnna Jensen
Certified Debt Negotiators
925 699 5041
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Gita Bantwal, Agent, Jamison, PA
Tue May 18, 2010
You can go to and look up hud approved credit counselors and other resources. Talk to an attorney .
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Bob Movin-On, , Hartford, CT
Tue May 18, 2010
Here you go, here are the ramifications of foreclosure and be advised short sale, deed-in-lieu-of are forms of foreclosure.

Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.

Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.

Good Luck,
Bob Patrick
Buy a home after foreclosure
0 votes
Joanna Jensen, Other Pro, Livermore, CA
Thu May 13, 2010
Hi Hopefull,
If you dont want to lose your home I would consider another shot at a loan mod. i work for an attorney and we may have a different view that was not looked at for you.

Also, if you want to keep the home the next two steps to try would be a short refinance, then as a last resort a Secured Short Sale.

It is very important to know a lot of agents will tell you your only option is a Short Sale to save your home from foreclosure, that may not be accurate.

If you want to keep your home you do have options.

As a Realtor / Legal Assistant my first goal is to keep you in your home. My attorney works with investors who may be able to help. I also work with invesors who do Short Refi's and Secured Short Sales. We try hard to help you.

JoAnna Jensen
Realtor Legal Assistant
Account Executive
Legal Realty - Volo Law Group
925 699 5041
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Anna Boyd, Agent, El Dorado Hills, CA
Thu May 13, 2010
I have to disagree with Joanna. Short sale is not last resort. Foreclosure is.

But most definitely talk with attorney, CPA. There's ways to minimize the hit on your credit and there needs to be a plan of action based on the advise of attorney, CPA and market advise from real estate agent.
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Ruth and Per…, Agent, Los Gatos, CA
Thu May 13, 2010
Hi Hopefully

If you are going through a divorce I trust you are used to hiring a lawyer.

You now need a Real Estate lawyer to help you minimize the impeding damage to your credit.
Better to do a Short Sale, and then work on improving your credit.

But definitely not a foreclosure. Keep making your payments but get a good Short Sale agent.

Good luck
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Joanna Jensen, Other Pro, Livermore, CA
Thu May 13, 2010
Hi Hopefull,

You may have a couple options.
Remember all of them are based on lender approval. I specialize in keeping home owners IN THEIR HOME!!
Did the lender say why you dont qualify for the mod?
Are you doing it yourself?
Who is the lender?
What is your gross income?
Is your first loan, principal interest taxes and insurance more than 31% of your gross income?
did you buy before Jan 09?
How much money do you have left after paying ALL BILLS>
You may qualify for a Short Refinance. If your upside down more than 20% we may be able to buy your note from current lender and restructure the loan to 90 - 95% of the current market value. Then you would get a new loan based on your credit. If your current with good credit you have a good chance of this happening.

Short Sale is always the last resort. Please before you do anyof the above contact someone who specializes in Short Refinances, Secured Short Sales, or Modifications.

If you do a Deed in Lieu that is the same as a foreclosure. Dont do that or a foreclosure.

I am happy to talk to you about your options. This is what I would recommend.

1) by a competent company Attorney
2) Short Refinance
3) Secured Short Sale
I work with investors who can buy your home then with lender approval either rent back to you, lease with option to sell back to you or lender carry right away with approval from your lender.

Free Consultation before you short sale.

JoAnna Jensen
Realtor Legal Assistant
Account Executive Short Refinance Secured Short Sale
925 699 5041
0 votes
Steve Roake, Agent, Naperville, IL
Thu May 13, 2010
Keep making your payments. You qualify for a short sale with your divorce being your hardship. As long as you keep making payments you may be able to find a lender willing to give you a loan right away. If you're not able to keep making payments, 2 years would be a general guideline for when you would be able to buy again. Start contacting lenders to see if you would qualify once the short sale would be completed. I would avoid deed-in-lieu as that would ding your credit.

Check out the foreclosure resource page on my website for additional info.
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