jmw1212

What are our chances of ever qualifying again for a mortgage, after BK and FC?..long

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Ok we have a pretty grim situation. Rewind back 28 years, 18 years old bought my first car with my Dad co-signing. Then a year later sold it and my credit enabled me to buy another without a co-signer. Years would go by and I would continue to buy and sell cars, property never making any late payments. Several cc's with perfect credit. 780 beacon...Fast forward to 1998. Built my second home, and some property. A few years later bought some more property. Inherited some $ and paid some of the lots off. My husband and I were doing great financially. Both of our credit reports were perfect.

In 2002 we started our our company. By this time, we had even more property. All paid on time. Never late. We decided to move the business out of our home and bought a commercial building (personally), then rented it to our company (there were two other owners) The company needed a loan so we gave two of our (paid off) deeds to the bank as collateral. Beacon score still 780 and never a late payment on either report. The business was thriving, things were great. We had nice cars, we had money in the bank, we had my IRA from the company I used to work for. Savings bonds. Things were going great. We then had two children. Then the economy tanked.

Surprisingly our company was still signing up work and getting allot of government jobs. We had to start turning work away as we couldn't keep up and the overhead was killing us. The banks had stopped lending. We were on our own to keep the company going. So we took out my IRA to make payroll and went through all our savings, paying our own bills, making payroll and paying vendors. We stopped paying ourselves as owners. Finally after trying to collect hundreds of thousands of $ with no avail, we shut the company down in April of last year. Due to all the personal guarantees, loans, debt and harassing phone calls, we consulted several attorneys and decided to file chapter 7 bk personally. Our credit immediately tanked to 511. We also had to give up my car to a voluntary repo, we ended up selling my husbands truck later.

The banks filed a motion to relieve the automatic stay and foreclosed on four of our properties (two which had been paid prior to putting up as collateral for the company) One of the properties was our commercial building. We had two weeks to get everything out of this 4,000 s/f building and find a place to put all our tools and office equipment including 9 years of file boxes, etc. We were able to rent a storage trailer and get out in time. The bank sold it for 1/3 of what we owed after refusing to help us keep it but lowering the interest rate. Same thing with one of the other lots. The two other tracts are still for sale. The other large track was foreclosed on from another bank and we lost it this January. They have it listed for 1/2 of what we owed which was 1/2 of it's appraisal (Listed for $290 owed $500 and worth 1mil)

We now are trying to save our home, next week PNC will go to court to ask for relief of the stay to start foreclosing. We have been trying to do a loan mod since Oct 2010, but we were still paying our mortgage back then. They advised us to stop paying for two months, so reluctantly we did. Then when we tried to pay at least one payment, they would not accept it without all the arrears. We were not able to pay that so we are now 13 payments behind. Meanwhile, going back and forth trying to get the loan mod approved (HAMP) finally after a year of fighting, back and forth requiring updated documents, (we send everything required on time), they denied our mod, stating it was denied because we were active in BK and didn't reaffirm. (both which are not required according to HAMP regulations)

At the same time., they sent us a new package for an in home mod. The date to get the package in was Feb 7th, but the application was not included. I called and was told it was in the mail. The next day I received it and it had a new date Feb 22nd. I called to confirm this new date and was told that was correct. I even confirmed with a supervisor. Well on Feb 15th, I was sent a letter stating they had closed my case and would continue to with foreclosure once the stay was lifted. I was infuriated. So I wrote a letter to the comptroller of the currency reporting there illegal practices. Finally received a letter from the executive office of PNC stating they were reviewing our case and would reply in writing by March 22nd. (we were told by a friend who is a foreclosure realtor that two of her friends reported this way and got their mod approved within 3 days. That their executive office called them to approve it. They apparently don't like the heat from the OCC (Comptroller of the currency)...

Back to my score, it's looking better these days up to 648 and I haven't applied for new credit yet as we haven't been discharged as of yet. (myfico says it's due to my long great credit history prior to the bk) Sorry this is so long, but now for my question, what are the chances of us getting a mortgage later down the road? What time frame should I wait before attempting and what type of interest rate (based on today's rates) should I expect with a bk and several foreclosures on our credit file? (actually the foreclosues don't show up on the report, but they are public record) Also should we continue to modify the home or do a deed in lieu or short sale now and try and rent for the waiting period? Our home needs allot of cosmetic work, but we want to keep our kids in the school they are in and there are very few rentals around due to all the foreclosures. I've also considered trying to find a rent to own, but that doesn't look too promising either. Everyone just wants to sell. :( Any advice would be appreciated. Also if I should post this on other forums, let me know. thank you so much.

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First, very sorry to hear this story... you guys sound like you really have tried hard to keep things afloat.

If you hadn't mentioned Rent to Own, I probably wouldn't have responded as there are others more qualified to answer your other questions.

However - you said this, "I've also considered trying to find a rent to own, but that doesn't look too promising either. Everyone just wants to sell."

You see, looked at in another way, this *problem* could present itself as an opportunity. If EVERYONE is trying to sell, then you might be able to convince a seller to do a Rent to Own with you, rather than just have a property sit empty without a buyer for months on end.

I've detailed this more in this thread: http://www.creditinfocenter.com/forums/mortgages/312673-mortgage-loan-25%25-down.html

Don't know if it will work for you, but there is more information here as to how Rent to Own's work: Rent to Own Advantage - Using Lease Options

If you're savvy (and it sounds like you are) you may find a way to use the info there, (it's mostly for sellers), to entice a seller into doing a Rent to Own for you. It's a win-win situation.

Typically a Rent to Own is a 3 year lease option (see the other thread), which will give you time to do your BK and straighten out your credit issues.

-RD

Edited by RockDaddy

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To answer your original question, it might be a long time but everything eventually falls off your credit report, even what in your mind is just horrible, horrible negative marks on your report.

FYI, Negative info stays on for the following;

Chapter 7 BK 10 years.

Chapter 13 BK 7 years.

negative info in general (late payments, collections, charge offs) 7 years.

Generally speaking, negative info hurts you less and less as time goes by (as is with just about anything in life) even if on your report. In a few years of no new negative info you can start to get high interest loans and credit cards. In a few more years even though there are charge offs on the report, generally speaking, they will little to no impact and you can start to get into more of the "preferred" type credit.

Good luck !! I do happen to agree with Rock Daddy on the rent to own. I don't know a ton about it, but I agree you might not have been looking in the right area. Again, good luck.

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Rock Daddy,

Thank you, that's what I was hoping to hear. I have already approached a seller on one, but waiting to hear if they are interested. Your thoughts were exactly mine, but we will have to see if anyone is willing to let us even rent with our credit in such bad shape. The good thing is I did print out our "perfect" credit reports a week before filing bk and making any late payments so I have "proof" of our long term good payment history. Hope that helps something later for us. I thought it would be a good idea at the time. Not sure if it means anything to a creditor or a landlord though.

Coltfan1972,

Thanks, I've actually already got offers for credit cards. The best so far is 0% for 12 months, $39 annual fee (comes out of available credit) and then 16.99% thereafter. I am awaiting my discharge before applying. Right now my beacon is around 648, which is not bad considering all this mess. Husbands about the same. Everything shows zero debt and no new credit. I am really good at repairing credit, I just never had to do it for myself. I've helped others. Another thing I think I will do, which I had done with our company before and after reading it here, reminded me to try it again. Take out a CD and then a LOC (or loan) against it. Typically you make interest on the CD then the bank charges you interest on the loan against it, which offsets itself. They usually make about 1% on the difference. (with good credit) The CD becomes the collateral (cash) so there is no need to guarantee it. It is guaranteed. It's a win win and it can help boost your credit back up. I helped an old friend get her credit back with this method and it worked. Each time you pay it off, you go for a larger loan (with a larger cd as guarantee). It really is better for those that don't want tons of credit cards again. It's also a nice way to save your money and earn interest at a higher rate. Anyway, keep the comments coming in regards to my post as I am really in need of some advice on this "home" situation we are confronted with. I really hate to have to pack up and leave, but am not sure if staying will just delay the inevitable. :(

Edited by jmw1212

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Rock Daddy,

Thank you, that's what I was hoping to hear. I have already approached a seller on one, but waiting to hear if they are interested. Your thoughts were exactly mine, but we will have to see if anyone is willing to let us even rent with our credit in such bad shape. The good thing is I did print out our "perfect" credit reports a week before filing bk and making any late payments so I have "proof" of our long term good payment history. Hope that helps something later for us. I thought it would be a good idea at the time. Not sure if it means anything to a creditor or a landlord though.

Again, looking at it from a different perspective, if I were a seller with Rent to Own properties, I'd actually be *seeking* people with less than perfect scores. You see? You're actually the target market...

I'd overlook your recent BK, *especially* if you could present your *good* profile (good idea to print it all out), and explain your situation.

To be honest, sellers who employ the Rent to Own strategies I speak of specifically look for prospects with poor credit who have a genuine desire to:

1. Get back into home ownership.

2. Want to improve their credit scores.

That way, they can be reasonably assured of timely payments. Of course, the monthy *rental credit* that I speak of, being forfeited if you don't pay by the 1st of the month is a huge incentive to pay on time.

Also, if you stop paying rent, the seller can evict you, under normal landlord / tenant law, and you then forfeit not only the Ownership Option fees but also *all* rental credit monies that were going towards the sale price, another incentive for a tenant to pay ongoing. (or something to share with a prospective seller who you are trying to entice into this sort of agreement, yeah?)

It's a win / win, you just have to look at it AND present it the right way.

By the way, if you look around the board, you'll find that your Beacon scores in the mid-600's aren't too bad, comparatively to others here. You're actually doing good.

Go to Bankrate.com to find the absolute best credit card deals for your credit score. I bet you'll be surprised at what you can get with your score.

-RD

Edited by RockDaddy
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Your best bet is to never get a credit card that is sent to you through the mail. Their interest rates will be to high. Go to a credit union, open an account with them, show them the copy of your once perfect credit history. Bet they will be willing to work with you.

With the way everyone has been having problems in the past few years, they should understand. Good luck.

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If you're willing to use FHA, it will offer you the best and quickest chance to buy a home again.

Keep in mind the credit score is not all that matters.

There is a ton of misinformation out there about FHA - mostly because they keep changing the rules and you are likely to see many sites with outdated mortgage information.

See this site for a good overview:

FHA Loan Rules for Borrowers After Filing Bankruptcy

The borrower must always remember that FHA/HUD has its regulations, but the lender can overlay its own rules to make qualification easier or tougher.

Edited by Patz

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FHA requires only 3.5% down, but you must pay something extra called mortgage insurance. Closing ocsts will be a bit more. FHA loans are insured by HU so the lender cannot lose any money ny lending to you.

If you have any issues with credit, debt, foreclosures, down payments, etc., conventional loans are tough. Must have a great score and usually 20% down.

It's far too much detail to cover here. Just google for the difference. Just know the biggest difference is FHA is easier to qualify for.

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Thanks well as far as my score it's currently 630 and I haven't been discharged yet and have no new credit. How long do you have to pay PMI? Do you have to pay it with FHA even if you have 20% down? I know PMI can be expensive. Thanks again

FHA requires only 3.5% down, but you must pay something extra called mortgage insurance. Closing ocsts will be a bit more. FHA loans are insured by HU so the lender cannot lose any money ny lending to you.

If you have any issues with credit, debt, foreclosures, down payments, etc., conventional loans are tough. Must have a great score and usually 20% down.

It's far too much detail to cover here. Just google for the difference. Just know the biggest difference is FHA is easier to qualify for.

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Thanks well as far as my score it's currently 630 and I haven't been discharged yet and have no new credit. How long do you have to pay PMI? Do you have to pay it with FHA even if you have 20% down? I know PMI can be expensive. Thanks again

Effective with recent changes, the only time you don't pay monthly MIP is when you opt for a 15 yr loan and put down 20% minimum. This guideline used to be only 10% down for 15 yr loans.

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Clark Howard on his TV show today said that for a person in your position, "Owner finance was the best way to go" Look more into that or USDA and no money down.

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Becareful of the language in the RTO contract. Sometimes when you default you loose your right to obtain the option money back, in some cases buy not purchasing the home you can default.

We were bit buy that last one. We lived in a house for two years and discovered that the home needed about 50K in work to fix the problems: New roof all the way sown tot he ply wood, back yard will not grow grass due to being built an old land fill having toxic soil, foundation is sinking, upstairs bathroom leaks.. the list for the money pit rolls on.

Just becareful. there is a reason people pray on individuals in our situation

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I am not sure what to do right now, we are still fighting to save this home. I am now in foreclosure and still in the application process for HAMP, It's crazy. There are not many rentals here so I am hoping if we end up loosing our home we can get a lease to own or rent to own. I don't want to commit on something that doesn't work for us though. There is not much to choose from here:(

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My husband has perfect credit. When we bought our house should say he. For fha they made us pay our vehicle off. We put down 10.000 plus closing costs etc. it surely isn't like it used to be. They watched our bank records all the time wanted to know every deposit withdraw etc. In the end we got the house. But it was a headache! That was with perfect credit.

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My husband has perfect credit. When we bought our house should say he. For fha they made us pay our vehicle off. We put down 10.000 plus closing costs etc. it surely isn't like it used to be. They watched our bank records all the time wanted to know every deposit withdraw etc. In the end we got the house. But it was a headache! That was with perfect credit.

This was due to your total Debt to Income (DTI).

It has changed over the past five years to a lower maximum DTI. It is going back to the way it was ten years ago or so. Some of the lenders have a lower maximum ratio.

As to checking each and every deposit and withdrawal, yes: the underwriter has to know where all of your funds come from. Its called "sourcing funds". FHA has been doing it for decades.

Congratulations on your new home! Glad you were able to close successfully.

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Actually we had no debt just the car loan where we put down a significant downpayment and then paid double payments. But because my husband works fulltime and school fulltime. We were going to use the money we paid our vehicle off with to just put a larger amount down on the house. But the mortgage person told us to pay it off. Its definately cheaper then rent. We can fix it up anyway we want which is the best thing anything I can do myself or with hubby we do to save cash! I'm glad its done and we got our house!

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Not sure if this will help but we also had to file bankruptcy. In 2009 we had perfect credit (thanks to everyone here). But then I had a TIA and was unable to work. We were only two months behind on our mortgage and BOA would not take our payments unless we paid attorney fees ect. We filed a chap 13 but we were unable to pay the 700 monthly bankruptcy fees and the 900 mortgage due to my husband only getting 358 a week in unemployment. I had filed for SS but that is a long drawn out process. In Nov our chap 13 was dismissed. In Dec BOA asked for all those back payments or they would begin foreclosure after talking to our attorney we deceided a chap 7 was our only option. I have hospital bills that exceed 500 thousand dollars. We just did file a chapter 7 and we were lucky enough to find a person who was selling property and a modular home on land contract. The home is a 2007 and it has 5 acres of land. The best part is after a 7000 down payment our monthly payments are only 251 for 5 yrs. The home wasnt advertised as a land contract but my husband called and they agreed to do it. Bottom line never give up hope.

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