How are homeowners who have foreclosed, and now have bad credit, qualifying to rent or buy another home?

Asked by Lisa H., Louisiana Fri Jul 25, 2008

We are facing a short sale, deed in lieu of or foreclosure and realize this will negatively affect our credit. I am concerned with our ability to pass a crdit check to rent or qualify for another place to live. SInce there are hundreds of thousands of people all facing this same situation what is everyone doing? We can't all end up homeless.

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Pacita Dimac…, Agent, Oakland, CA
Fri Jul 25, 2008
If you can do a short sale, try that first, and do it immediately if you have received your notice of default. This is the "lesser of two evils" than a foreclosure, bankruptcy or deed in lieu of foreclosure.

And yes, there are hundreds of thousands of people facing this dilemma, so you are not alone. To qualify for a short sale, you have to be facing one or more of these hardship reasons that a lender will accept:
_ Unemployment
_ Reduced income
_ Divorce
_ Separation
_ Medical bills
_ Too much debt
_ Death of spouse
_ Mortgage payment increases
_ Business failure
_ Job relocation
_ Illness
_ Damage to property
_ Military service
_ Incarceration

If you haven't already done so, engage a realtor who is experienced in short sales to list your property. When I say experienced, make sure it's someone who has already successfully represented sellers in a short sale for the reason that this is a time-consuming, energy-zapping, frustration-laden listing that will take a long time to process.

Here's an article on how to do a short sale; There are other articles related to this that you will see....but start with this…

And get yourself a good realtor! There is hope, but keep the faith!
2 votes
Dallas Texas, Agent, Dallas, TN
Fri Jul 25, 2008
The rental market will take off many families would need to put several months down for a deposit. GREAT QUESTION glad you see what I have talked about.
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1 vote
Jeff and Gin…, Agent, Vero Beach, FL
Fri Jul 25, 2008
Homeowners who have a home that may be foreclosed should consider a short sale instead for less damage to their credit. However, if they have already suffered a foreclosure, it may be because they bought a home beyond their means with a adjustable mortgage rate that is now too high for them to afford the payment. On the other hand when they apply to rent a home, their current income may well support the very reduced rental rates in many parts of the country now. In other words, the rent rates are about half the mortgage payment for the same home. Therefore, these previous home owners can qualify to rent at a lower payment rate. Many homeowners are willing to accept these tenants because there are many available homes for sale and rent.
1 vote
Celine F, , Louisiana
Sat May 23, 2009

It has been a while since you post this and I want to offer you an option to own a home again if you haven't find one yet.

I sell houses with owner financing. I have a program that is specially designed for people who have recent foreclosure, bankruptcy, judgment, collection, liens, etc. How you had credit issues now is not the main concern, we know that things happen and especially in this economy many people are experiencing financial challenges. However, we want to make sure the payments are comfortable for you and the house match your preference.

I may or may not already have a house that could match with you, but when you are willing to work with me on this no credit check program, I will be happy to find a house for you.


Celine Fang
Immi-Nest, LLC
I Sell Houses - Owner Financing Available for ALL Credit Types
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0 votes
Larry Lang, Agent, WEST PALM BEACH, FL
Thu Nov 27, 2008
During these hard times, I am doing a large amount of rentals. If the persons credit is otherwise good, I tend to overlook the foreclosure. We have to take in to consideration the current home market and economic conditions and base our decisions on that.
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Midnights In…, Both Buyer And Seller, Lake Orion, MI
Wed Nov 26, 2008
Please do not listen to anyone about a short sale. We were talked into a short sale by our realtor & the banks on our house in Michigan. We moved to another state after a job loss. Chase Home Finance told us to keep droping the price until we got an offer...5 month later we did - Appraised in 07 for $675K - Offer was $300K = The banks - 1st & 2nd negotaited back & forth, stateing they would not come back after us due to the sitiutation in Michigan...Guess what - 6 month later Chase is contacting us to repay the defiency...
If you do a short sale make sure you get everything in writing...followup in writing, record phone conversations if you can especially with Chase...they are ruthless ....
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Debt Free Da…, , 85260
Fri Nov 21, 2008
They are not. You need to wait 5 years if you have had a foreclosure if you want to buy a home.
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Robbeaux, , Lafayette, LA
Mon Jul 28, 2008
Great Question
Starting 8-1-08 for all FHA loans;
If you forclose you will be unable to get a goverment backed loan for at leat 5 years depending on wht else happens to your credit

If you short sale you can be back in as little as 2 years.

Short sale shows the lendor that despite your hardship you at least worked out a solution.

I have not had anyone I have helped with a pre foreclosure not be able to rent yet. I don't know your details but chances are you will be able to find a place.

Best of Luck
0 votes
Daniel, , Baton Rouge, LA
Sun Jul 27, 2008
Simply put, Once your credit shows that your actions caused the loss of tens of thousands of dollars of anothers cash, why would anyone else give you a chance? Save your money, try for a lease purchase /bond for deed, very risky for you, but possible
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Top Agent Re…, , Slidell, LA
Sat Jul 26, 2008
Hello Lisa, a couple of points on how bad credit can aquire good property

1. Remember, the owner can rent to anyone with bad credit.
2. There is a strategy called Lease Option to Purchase. In short, you write a contract to purchase from the owner on the basis of a lease with the option to purchase say 18 or 24 months later. This gives the purchaser enough time to fix credit before obtaining a loan. Basically, you rent the home with the option to buy at the agreed terms of the contract....
3. Seller financing is another way. Remember, all these techniques are conditioned that the owner of the property agrees to enter a contract.

In short, you can have bad credit, and still secure property....
0 votes
ian cockburn, Agent, New Orleans, LA
Fri Jul 25, 2008
First of are in not listen to the news unless you are personally being interviewed.

It is hard to really answer your question without having the hard facts such as:
1) Location of the property
2) Condition of the property
3) What other properties in the neighbourhood are selling for and how long they take to sell.

If I were in your shoes, I would take a deep breath, and write down all the facts as follows:
1) What do you owe?
2) What is your income?
3) Can you leverage your income to change the way the mortgage is structured?
4) NOW have a Realtor give you an idea/report from the MLS as to the options and risk associated with putting your home on the market
5) Look at selling with alternatives like owner financing, rent to own and so on.
6) Now take 1-5 and systematically look at each option.
7) Avoid at all costs foreclosure.

Email me if you have any further questions / need some more solutions.

...and NOT allow national news, nor the gloom and doom of the national market sway YOUR needs, desires and broadcasters do not make advertising revenues by producing positive news is the scare and dare tactic to get people to watch that electronic box.
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