Posted on: 16th Mar, 2010 10:54 am
Hi, I posted initially in the wrong spot- sorry everyone! About 5 years ago my daughter was born premature and in the whirlwind of it, We ended up making very late payments including the mortgage. Thanks to income tax return time we caught up before a sheriffs sale. In the past 4 1/2 years we have had no late payments at all and currently have a credit score of 693. I just received a call from the bank- we are looking to do new construction with roughly 25-30% down.- He said we are not elgible for a loan because of the foreclosure on our credit report-- 4 1/2 years ago-- We did not foreclose- We were very late, but have tried so hard since then and have done very well staying on time with payments and keeping balances fairly low- What now? Will anyone finance this loan? Any advice at all?
this is not an easy question to answer...i've seen other circumstances in which someone was that close to a foreclosure sale and found it next to impossible to get anyone else to listen to him. i don't know the end result yet, though i hope that person found a lender to help him.
you're going to need to document all that which took place back then, and one thing that you might be able to accomplish is to get any documentation from lawyers, the lender, and anyone else who may have been involved in that aborted action.
lenders are not charitable in considering the circumstances. they all use automated underwriting - in other words, the decisions made are driven by statistical data, not common sense. in your case, the underwriting has probably returned to the lender a finding of "refer" instead of "approve."
with lenders being as afraid to take a step as they are, that "refer" means that they'll be unwilling to consider extenuating circumstances in your case.
here's another option that may have escaped you - find a community-type lender in your area who isn't involved with fannie mae or freddie mac. hopefully, they'll be one who retains their mortgages for their own portfolio. they'll be far more likely to work with you. consider also a credit union, if one is in your area.
you're going to need to document all that which took place back then, and one thing that you might be able to accomplish is to get any documentation from lawyers, the lender, and anyone else who may have been involved in that aborted action.
lenders are not charitable in considering the circumstances. they all use automated underwriting - in other words, the decisions made are driven by statistical data, not common sense. in your case, the underwriting has probably returned to the lender a finding of "refer" instead of "approve."
with lenders being as afraid to take a step as they are, that "refer" means that they'll be unwilling to consider extenuating circumstances in your case.
here's another option that may have escaped you - find a community-type lender in your area who isn't involved with fannie mae or freddie mac. hopefully, they'll be one who retains their mortgages for their own portfolio. they'll be far more likely to work with you. consider also a credit union, if one is in your area.
When it comes to foreclosure, most people are concerned about how foreclosure affects on credit rating. This is because until and unless one is able to rebuild credit after foreclosure, he will not be able to get credit/loans at better rates of interest. If the financial markets are not good enough, one may not even be approved for any type of credit or mortgage.
Like any other negative item, a foreclosure stays on your credit report for 7 years. However, foreclosure affects your credit score predominantly for the first 2 years. But, once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest.
Like any other negative item, a foreclosure stays on your credit report for 7 years. However, foreclosure affects your credit score predominantly for the first 2 years. But, once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest.
So are you saying to some banks it is not the time that has passed that matters but the actual credit score? (mine is 693-- from what I was reading not too bad-- although not fabulous) When the bank got the credit score he felt that it was adaquate, but when the "foreclosure" came up, he balked- So would you think theres a chance for a loan at a different bank?
Also can we argue the foreclosure because we avoided it? Thank you so much for time and answers!
Also can we argue the foreclosure because we avoided it? Thank you so much for time and answers!
as i noted, it's a tough question to answer, and that's mainly because i'm quite sure that most lenders are far more conservative than you'd like them to be. as you noted, your lender balked. that's the normal reaction to the word "foreclosure."
passage of time, credit score...i don't know that they make a lick of difference to most institutional lenders. the reason i suggest a community bank or a credit union is that they're far more likely to be understanding, far more likely to offer a loan product that isn't going to be sold to the secondary market. the secondary market is what puts fear into the hearts of lenders. they don't want to make loans that will end up being "unsaleable." those lenders who keep loans in their own portfolios are always more likely to have a liberal interpretation of situations, especially when you can document what took place, as you can.
certainly it's in your best interest to "argue the foreclosure" since you were able to salvage the situation.
passage of time, credit score...i don't know that they make a lick of difference to most institutional lenders. the reason i suggest a community bank or a credit union is that they're far more likely to be understanding, far more likely to offer a loan product that isn't going to be sold to the secondary market. the secondary market is what puts fear into the hearts of lenders. they don't want to make loans that will end up being "unsaleable." those lenders who keep loans in their own portfolios are always more likely to have a liberal interpretation of situations, especially when you can document what took place, as you can.
certainly it's in your best interest to "argue the foreclosure" since you were able to salvage the situation.