Client had a foreclosure 4 yrs ago. Line of credit is still revolving late. If he pays the line can he qualify for loan? What the seasoning time?

Asked by Tony Norohian, Los Angeles, CA Sat Mar 30, 2013

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Mon Apr 1, 2013
Well they are saying to talk to a banker / lender, I am that.
First I would need to understand what you mean by this. It sounds like your client had a line of credit that was secured by the home that they had foreclosed on. If that is the case, then the 2nd became personal debt and yes they still owe it. This would have truly messed up your credit unless they made payments. If that is true then your only hope is to negotiate a settlement with the current owner of the 2nd.
So first realize that it sounds like you are past the statute of limitations. That means the debt is still valid, they just cannot take your customers to court and sue them. This gives you a lot of leverage and they are hoping you do not know this.
The customers have come at them like this: They can wait for another 3 years when it is completely gone from the credit and buy then. On the other hand if the lender will agree to take a lesser amount ($5000 seems to be the magic number by the way.) and are willing to remove the derogatory credit from the account, then at least they can have that lesser amount. Otherwise you will need to wait and give them nothing.
Be prepared to hear the current holder claim they cannot do this. They can at least remove the derogatory credit they put on, and the original lender's derogatory may be old enough to do the mortgage anyway. Be prepared for some tough negotiations. Make your offer in writing and if you get a counter, then counter back.
Now i have told you the right way to do it, I should also point out the wrong way. You can get this cleaned from the credit. Then their loan would be approved but at closing this thing could come back up again and kill the deal. Of course the title companies wait to the last second to do this which ensures that a lot of people will be very angry that your deal will not close.
1 vote
Spirit Messi…, Agent, Tucson, AZ
Sun Mar 31, 2013
Please call a local lender, have them walk you thru your credit scores (FICO) and where you are at and what you can do to improve your chances of obtaining a loan. The foreclosure should not be that big of a hurdle, I recently closed on a property for a couple that bought a property exactly 2 years after they lost their last home to foreclosure. Talk with a local lender, see where you are at, and get pre-approved. Next, find a local Realtor, start a relationship and review your search criteria with them.

Best of luck.

0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Sun Mar 31, 2013

You will likely get a variety of answers on this question, but I feel your biggest hurdle, regardless of loan program, will be convincing an underwriter that the ongoing lates do not reestablish a deragotary pattern. Even if the line is paid, typically a lender will want to see no lates on any mortgage in the last year. If I can be of service, let me know and I'd be happy to look at this closer.

Rob Spinosa
RPM Mortgage
0 votes
Brad Korb, Agent, Burbank, CA
Sat Mar 30, 2013
I would speak with a lender,they can best look at your credit history . They may refer you to a credit repair company .
Good luck !
0 votes
carlos parra…, Other Pro, Monrovia, CA
Sat Mar 30, 2013
Best bet is to talk to a Banker.
0 votes
Actually just called. Probably what I should have done to begin with but figured I would give the Trulia Community a try. Thanks!
Flag Sat Mar 30, 2013
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