New loan with a foreclosure

[bleucheese38239]

Going forward, as foreclosures increase will it become harder or

easier to get a loan with prior foreclosure?

Any chance banks will be any more lenient???

[Amerikaner83]

harder one would think

I mean you've already got ONE foreclosure on your record, what bank will lend you the cash for (what they see as ) another one?

[unusualsuspect]

Being a former mortgage broker and keeping up with the biz... most lenders are not lending w/ foreclosures on your record. The 1 or 2 that will want at least 36 months aging after your last foreclosure w/ PERFECT credit in between.

Also, you need a minimum 620 FICO score to qualify for an FHA loan - minimum FICO of 700 to get conventional financing.

[2ndTimeAround]

Going forward, as foreclosures increase will it become harder or easier to get a loan with prior foreclosure?

Any chance banks will be any more lenient???

You think it's hell before a Foreclosure, it doesn't get any better after. I'm a legal assistant for a New York Attorney firm, plus worked in mortgages for ten years as a loan officer. Four words - Don't Let It Happen!!! You will have major financial consequences.

If you are looking for a loan, after a foreclosure has taken it's course. Your looking at 5 to 7 years before a new mortgage bank will look at your application. If you are qualified for a loan, chances are it's not going to be a good loan and the interest rate will be through the roof!!!!..... You can also be subject to a deficiency judgment, meaning years later the lender can come after you for $Xxxxxxx.Xx .

Many borrowers who lose their homes to foreclosure haven't tried to negotiate with their lenders. That's unfortunate, because lenders are usually willing to work with borrowers to avoid foreclosure, with the number of foreclosures on the horizon, lenders are going to be more willing to work with people, because it doesn't do anybody good to have a glut of foreclosed houses on the market.

The longer you wait, the fewer options you'll have. Once your loan is declared in default, typically after you've missed three or four payments, you're past the point of no return. At that point, most lenders won't accept a partial payment of what you owe. Unless you can come up with the money to cover all your missed payments, plus any late fees, your lender will start foreclosure.

If you're suffering a temporary financial setback, your lender may offer programs that will help you get back on track. They include:

Forbearance. This is an agreement that lets borrowers make a reduced payment, or none, for a specific period. You might have to make larger payments once the crisis has passed. To qualify, you might need to show that you're expecting a bonus, a tax refund or other income that will let you catch up.

Reinstatement. You agree to pay the full amount of your missed payments by a specific date. Reinstatement is sometimes combined with forbearance.

Modification. Your lender agrees to change the terms of the loan to make payments more affordable. Your lender may agree to add missed payments to your loan balance or extend the term of your loan, reducing the size of your payments.

Before asking for forbearance or loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. If you can demonstrate that you've reduced other expenses, the lender will be more inclined to negotiate.

Your ability to negotiate will also depend on which institution owns your loan. If your bank still has your loan in its portfolio, it can modify the terms or offer forbearance. But many lenders sell loans into the secondary market, where they're repackaged as mortgage-backed securities. In that case, the company that's servicing your loan might be unable to change the terms.

If you're in a home you can't afford, loan forbearance isn't going to solve your problem. But even if you have to move, you can take steps to avoid foreclosure:

Put your home up for sale. This may be the best choice, Walters says, if you've been in your home for several years and have built up some equity. If your local real estate market is strong, your lender may agree to forgo payments until the house is sold. The proceeds from the sale might cover your mortgage and selling costs.

If you have no equity or your local real estate market is depressed, ask your lender to consider a "short sale." In a short sale, the lender agrees to accept the proceeds from the sale of your home, even if they don't cover the amount you owe.

Ask your lender to accept a deed in lieu of foreclosure. If you can't sell, your lender may agree to take the deed to your home and cancel your debt.

There's one serious drawback to a short sale or a deed in lieu of foreclosure: You could find yourself stuck with a hefty tax bill. In most cases, debt forgiven by a lender is considered taxable income. Unless you have your debt eliminated in bankruptcy or can prove you're insolvent, you'll have to pay taxes on the canceled debt. Many people don't realize that canceled debt is taxable, Roth says, until they receive a Form 1099C from their lender; a copy goes to the IRS.

So why opt for a short sale or a title transfer instead of foreclosure? For one thing, foreclosure won't get you off the hook, either. If the lender sells your foreclosed house for less than you owe, it might sue you for the balance. And if the lender writes off the remaining debt, you could still end up with a tax bill, Roth says.

Though a short sale or a title transfer will hurt your credit report, you might still be able to work with your lender to reduce the damage — which isn't possible with a foreclosure. Foreclosure is really a bad thing to have to go through.

Did I say the longer you wait, the fewer options you'll have....

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Edited November 2, 2009 by 2ndTimeAround