Reviving Your Credit?

Question

Back in 2005, I had just purchased a set of properties, some to make into to rentals, some to flip, some personal issues came up, then of couse, the crash!  I have several foreclosures sitting on my credit now.

In the future, I will use  a business entity for my investments, and I am man enough to say that even though I was being drained by so-called "family", I also bit off more than I could chew.

Moral of the story:  I have about 8 foreclosures sitting on my credit right now that were foreclosed around '07-'08.

Question 1: How long will these affect me given the state of the market at the time?  My credit from '98-'06 is almost spotless (in '06 my FICO was at 760). When I have been able to meet face to face with someone and explain the reason for the foreclosures, they're usually forgiving, but when it's a computerized credit check,  I look horrible.

Question 2:  I have heard some lenders are being forgiving if your foreclosures happened during the Recession only and they are more/less 3 years old.  How true is this?

Question 3:  I have received settlements (pennies compared to what I poured in, just moral vindication) on 2 of the foreclosed properties from class action lawsuits.  Can I go back to the credit bureaus with those documents and have the foreclosures deleted, or at least modified in some way?

Question 4:I have never used a hard money lender before.  How would they view my current credit profile?  Is it even realistic to go to a hard $ lender if I stumbled across a deal?

Question 5:  I have a "zombie" foreclosure right now.  As far as I knew, the property went to foreclosure in Feb '09.  In July'11, I went to apply for a car loan, denied at first but the manager approved once I could speak with her face to face.  I have tried to short sale the property, and deed-in-lieu.  Both were rejected by BofA.  It currently shows on my credit as 40+ payments behind with no sale date. I just relisted the property yesterday.  Once sold, are there any arguments I can make that this property should have gone out of my possession in '09?

Question 6: I have a credit card showing on my report that charged off in '07-08. My grandmother filed BK in '11, and claimed it as her debt (I am named after my grandfather). I contacted the creditor, and their legal department has relinqushed the debt. I have provided the credit bureaus twice with this information, but they still refuse to remove it, instead sending me nasty, smarmy letters about clarifying my name. What recourse do I have?

William Hall · Answer

First of all, thanks for your response.  You gave me some good food for thought.  The credit counselor sounds like a good idea, too.  More than not, I would be looking in Las Vegas to turn a property.  I started in LA, and I’m just not interested in the LA metro area again unless it was a steal.  I’m really only here in Long Beach with family recuperating from back surgery.  
I’m brainstorming on a project with my doctor to build a clinic in San Bernardino on land I already own free and clear.  As to why I couldn’t rent it before, it was in the family but the legal description was screwed up and showed the parcel as landlocked; in ’08, I figured it out, had it re-surveyed and located the previously missing easement.
I’m glad you asked those questions:  It wasn’t the LA rentals I had the problem with.  It was Vegas and Atlanta.  In Vegas, it was great at first, then my tenants started losing their jobs one by one, and then I ran into a scam artist, which now I know to do a criminal background too on a prospective tenant.  In Atlanta, I had just stretched my resources and personal energy too thin.  I also had a cousin who is a doctor there; she was supposed to go in with me, then backed out on me once I got there.  There was a divorce, and I was also providing support to my father and grandmother, which those personal issues are behind me now.  This is good to help me clarify my thoughts; like I said, when I’ve been able to sit down with a lender, they usually can see some major event(s) took place; before that I was golden.  
On the flipside, we can’t necessarily say the economy has improved much, but now that I have an inside track with the military, I can get properties rented quickly and steadily through the military housing departments, and that’s where I would focus.   I don’t really know if it would help, but as I stated before, all I could do is man up and say I took on more projects than I could handle, I’ve matured from the experience, but also had a wife, father and grandmom to support.  I now know my boundaries, and in another post, I would be much more cautious doing business with family.

Karen Margrave · Answer

William Hall Welcome to BP. You obviously have been involved in the real estate business before, so you know the process.

As for your credit, the best thing would probably be for you to go to a credit counselor and figure out how best to proceed in re-establishing credit. It may be possible to get loans with your record, but it would be very difficult, and expensive, plus finding a house that would have a high enough profit potential to justify the expense would be difficult, and I'm not seeing those types of properties in Long Beach.

In addition, with the number of foreclosures you have had, a lender is going to ask what has changed in the local economy that it is worth risking money now? Why weren't you able to rent your houses out and cover the debt before, with southern California being one of the strongest markets in California?

Most of the questions you ask are best left for an attorney or professional credit counselor. The situation is much to complex for anyone on here to be able to give you any specific advice. It's not an impossible situation, but it will take work and dedication to work through getting all the details ironed out. Good luck!