Mortgage Qualification Question

[Cheyenne Davis]

I have someone wanting to purchase one of our houses and they have a previous foreclosure. Can any of the mortgage experts on here tell me if it's realistic that they get financing? Here's their situation... Fell behind on their mortgage 5 or 6 yrs ago during market crash. LP was filed about 4 yrs ago. They filed a chapter 7 BK which was discharged approx 3 yrs ago. To date, they're still living in the house which is being foreclosed, but the debt was discharged in the 7. Can they qualify for a Fannie mortgage or any attractive mortgage? They have plenty of income and good DTI, but don't have a full 20% down payment.

[Bill Gulley]

If you're an investor/dealer you need to check on your Dodd-Frank issues putting a homeowner in there with any installment contract, they should still be qualified.

You will not be able to determine where these folks are in their ability to get a mortgage, unless you can finance it.

As mentioned, different loan products have different rules. Besides the rules, there are underwriting aspects, an underwriter may have discretion in approving any borrower based on prudent practices, not knowing the sins committed no one can say at what date they may qualify, and, you have to get to that point to access current credit and determine if they have reformed from their ways, if applicable.

While they may know they can't qualify, they need to get to a lender to determine where they sit, the lender can tell them what they must do to be considered at a later time.

They should not make a formal application because they are in a BK proceeding (someone can borrow and affirm a debt in BK, but should only do that with the knowledge and advice of their attorney as making an application may effect how other debts may be viewed as to their ability to pay, so it's not wise to ask for money during a BK). And, not making an application may not allow the bank to pull a credit report. So, they probably need to get a credit report and take it in for the lender to at least look at for an opinion, that report can not be used to obtain credit however.

You need to know where they sit before you do anything with them concerning a sale.

They also need to speak to their BK attorney prior to conducting any financial obligation, leasing included. They can lease, but the attorney needs to be aware of what they are doing entering into any significant financial obligation. :)