How to secure a mortgage after a Recent Credit Event

Foreclosure, Short Sale, Bankruptcy You have passed through a negative credit event that ended with a foreclosure, short sale, bankruptcy and you think that there are a three, four or seven years waiting periods before you can get a mortgage. This is true if the financial event we are talking about is going through the normal channels of Fannie Mae, Freddie Mac, FHA or VA. We now have portfolio products that do not have to conform to Fannie Mae, Freddie Mac or government standards even if you have a foreclosure, short sale, bankruptcy. This product below was designed to help borrowers that have a negative credit event & wish to get back into homeownership. Those who faced negative credit events must also meet the following criteria:

• The event occurred just once, so is not recurring
• Will allow a single housing event within the last 0-3 years
• The look back on the seasoning start date becomes effective the date of discharge (if BK), property resolution or property completion date (if sold or foreclosed) & modification as of its inception date.
• Minimum loan amount = $100,000 for primary home
• Minimum loan amount = $150,000 for 2nd homes
• Maximum Loan amount = $1.5 Million
• Maximum Debt Ratio = 43%
• May consider higher debt ratio's with additional requirements
• May not purchase a flipped property.  As a result, the seller must own property for a minimum of 6 months.

Score Requirements & Down Payments following foreclosure, short sale, bankruptcy

The following minimum credit score has associated down payments with each.  Likewise, the score levels below are for full documentation loans only using a 30 Yr fixed rate. For both Conforming & Jumbo Loan Amounts:

• 680 Score to 85% Loan = 15% down payment
• 640 Score to 80% Loan = 20% down payment
• 580 Score to 75% Loan = 25% down payment

All of the three above apply to primary residences.  This is allowed for 2nd homes/vacation homes as well.  For a 2nd home, add an additional 10% down payment requirement for each level of credit score.  This particular recent credit event program does not work on investment properties (rentals).  Also, please note that rates will be higher for this program.  Please do not expect traditional rock bottom rates that you may see har on the radio or see on billboards.  Those offers are for A+ credit borrowers.  Please do not compare a person with a rock bottom rate with this program.  The lender is allowing these serious credit events as early as 1 day out from completion.

Most Noteworthy, the following are all the housing event types allowed:

1. Foreclosure
2. Short Sale
3. Deed in Lieu
4. Default Modification
5. or 120+ days delinquent
6. Permit only one housing event
7. Can combine with bankruptcy so long as the bankruptcy is 12 months out from the date of discharge (multiple BK filings not permitted)

Foreclosure, Short Sale, Bankruptcy: Additional various requirements include:

• Borrowers may NOT be currently enrolled in credit counseling or debt management plans
• All judgments or liens on credit affecting title must be paid
• Nontitle chargeoffs and collections on credit greater than $5000 (individual or aggregate) within the last 3 years must be paid
• Medical collections less than $15,000 do not need to be paid
• A borrower must have a minimum of 2 tradelines on credit within the last 24 months showing 12 months of on-time payment history.  If combined credit between a borrower & co-borrower can show a minimum of 3 tradelines on credit

In conclusion, if you think you may not qualify for a QM loan through Fannie Mae, Freddie Mac, FHA or VA, don’t wait years to apply. Above all, try it now by providing the documents that prove that your short sale, foreclosure or bankruptcy along with the other standard documents for income, assets, and credit.  Become a homeowner once again!!!

Contact Casey Moseman

to find out the most current interest rates

702-271-1274