For examples, an lo can have an approval in the system technically but say the dti is over 50% it is up to the underwriter to assess the file to have compensating factors.Or say someone is out of Chapter 13 bankruptcy - the system will deny the file - but a lo following guideline procedures would submit the file manually for underwriter approval if he/she felt the loan qualified.Banks operate under a deskwriting underwriting system that tells the LO whether or not the loan is approved - this is how pre approvals are done.

The people in control caused the problems and then got bail out money to keep them out of bankruptcy.

The bankruptcy trustee didn't deal with them, because the houses were ready to be torn down and that would have cost more than it was worth.

As I showed in my example, because Investor #2 didn't have enough savings early on when a large expense came up, he may have had to try to borrow 32k or sell a property (which he could take a hit on if the value of the property took a hit due to the housing market) or even have to declare bankruptcy.  

I'd still have questions like what if seller declares bankruptcy or doesn't pay income taxes and IRS seizes the asset, or the mortgage calls the loan with the due on sale clause.  

you could go either way. thats a significant amount of money she owes you and you shouldn't let her go on it. with that kind of track record, i don't see a judge not holding her responsible for what she owes you and giving you a judgement to collect. therein lies the problem. collecting. these people usually never pay that judgement. if she has a regular job, sure, you could garnish her wages, but then if she files bankruptcy, you are out anyway. if you do get to collect from her pay, that can take a while and then she may move on to a different job and you have to look for her again. lots of troubles collecting. then again, you could walk away and just let it be a lesson to you. sure, and expensive lesson, but then again education isn't usually cheap anyway. less negativity in your life breeds more positive in your life. its a tough call, personally, i could go either way. i had a similar deal a year ago. tenant left owing me $3000. he has a job, but i would imagine half of the world is standing in line waiting for their money from him too, so i just let it go. i have a tenant in that house now that has never been more than 2 days late in the year that she has been there and i am getting $175 more per month from her than i was from him anyway. good luck to you

There are many reasons why a tenant can't  qualify that have nothing to do with being a bad tenant.1 - Changing jobs2 - Short funds for Down Payment3 - Bankruptcy that is about to be cleared, and the tenant has shown a history of good credit and payments since.

“You know that’s a sign that the pressures aren’t just local in nature but they’re really more regional and connected to this larger regional economy,” University of the Pacific economist Jeff Michael said.Michael says Stockton’s No. 1 ranking is a sign the city if rebounding from bankruptcy.

Since making my investment, I am in the red due to the bankruptcy of a single retailer/renter.

Now, the seller worked with his bankruptcy attorney to released the house yesterday afternoon.