More struggling homeowners turn to foreclosure alternative Louis Aguilar / The Detroit News Last Updated: June 05. 2010 6:07PM Read the Detroit News Article “The Pearson Group Realtors”, have helped many homeowners manuever the short sale process in North Oakland County. They agree, that the short sale alternative will continue as the economy remains grim throughout Michigan, particularly [...]
After Foreclosure: How long until you can buy again?
Local Mortgage Professional, Drew Sygit, has done much research and written several posts to provide consumers the opportunity to make informed decisions.
Drew Sygit
CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MMBA Instructor & Speaker
Recovering From a Short Sale, Deed-in-Lieu, Foreclosure & Bankruptcy
After one of these financial set backs, you must take two steps to rebuild your credit:
1. Have all of your accounts reported correctly on your credit report.
2. Establish new credit accounts to prove your creditworthiness.
Make sure all your accounts show zero balance and that they were included in your bankruptcy. Creditors are also required to no longer report any updates on the accounts included in bankruptcy.
Why is this important? Because many creditors do not follow the law and there’s really no one else that cares to monitor your credit. It’s all up to you. It’s also not uncommon for creditors to sell your debts included in bankruptcy to collection agencies. They’re referred to as “zombie debt” and although illegal the practice appears to be growing.
Also, you must reestablish new credit ASAP after a bankruptcy. Our society is now built on credit and if you don’t rebuild it, you’ll face challenges in the future.
Getting a new mortgage, is often the biggest challenge after a major financial set back. Credit cards and auto loans are relatively easy to get in comparison. Here are the current guidelines regarding getting a new mortgage after various situations.
FNMA: Click here to view guidelines as of 06/25/08.
(FNMA has also published a flowchart worksheet to help navigate options, click here to view)
- Short Sale: 24 months
- Deed-in-Lieu: 48 months with minimum 10% down. Can purchase primary residence, 2nd home or investment property.
- Foreclosure: 60 months with minimum 10% down, primary residence only (36 months with extenuating circumstances)
- Bankruptcy: 48 months for Chapter 7, 24 months after discharge of Chapter 13. NOTE: 48 months if Chapter 13 dismissed.
FHLMC: Click here to view guidelines as of April 2009
- Short Sale: 48 months
- Deed-in-Lieu: 48 months
- Foreclosure: 60 months with minimum 10% down, primary residence only (36 months with extenuating circumstances)
- Bankruptcy: 48 months for Chapter 7, 24 months after discharge of Chapter 13
FHA: Buried in their underwriting guidelines on page 4-C-9 thru 12, are the following timelines:
- Short Sale: immediately if there were no late payments on the previous mortgage, 36 months otherwise.
- Deed-in-Lieu: 36 months
- Foreclosure: 36 months
- Bankruptcy: 24 months for Chapter 7, only 12 months while still in a Chapter 13 with court approval.
VA: Click here to view VA guidelines, credit issues are on pages 4-44 & 4-45
- Short Sale: not specifically mentioned, assume 24 months to treat the same as bankruptcy
- Deed-in-Lieu: not specifically mentioned, assume 24 months to treat the same as bankruptcy
- Foreclosure: 24 months as guides treat the same as bankruptcy
- Bankruptcy: 24 months for Chapter 7, only 12 months while still in a Chapter 13 with court approval.
Drew Sygit,
CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MMBA Instructor & Speaker
The Lending Edge Team
@ First Michigan Bank
Business: 248-356-3739
Fax: 866-215-3755
2301 W Big Beaver, Ste 525
Troy, MI 48084
www.TheLendingEdge.com
How foreclosure impacts your credit score
By Les Christie, staff writerApril 22, 2010: 4:44 PM ET NEW YORK (CNNMoney.com) — If you’re delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much? Read the Entire Article Read more About Foreclosure and Short Sale Effects on Credit Score
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