More Real Estate Home Mortgages Answers
Question Library
Ask a question about Real Estate Home Mortgages
Volunteer
Experts of the Month
Expert Login
Awards
About Us
Tell friends
Link to Us
Disclaimer
|
| |
|
|
| |
| | | |
About Jim Hoepf
Expertise
I have a diverse background that allows me to answer questions regarding underwriting, collections and industry changes.
Experience
I have 18 years of experience in the industry. I have an extensive underwriting background that allows me to have a greater understanding of how to properly structure a loan for approval. I have been cohost of the local radio show Real Estate Matters for the last four years. I have owned and operated my own brokerage firm for the last 10 years. Along with originating and underwriting I have also handled mortgage delinquency and the foreclosure process.
Education/Credentials
BS in Business Administration from Bluffton University. I have also participated in numerous underwriting workshops put on by Fannie Mae and lenders in the Phoenix area.
Awards and Honors
Broker of the year for Arizona with Homeside Lending.
| | |
| |
You are here: Experts > Shopping > Home Buying/Selling > Real Estate Home Mortgages > Refinancing - have default notice on record
Expert: Jim Hoepf - 10/17/2009
Question
Hello Jim -
You greatly assisted me this summer regarding questions I had regarding paying off my first and second mortgages at a discount and concerns I had in how these payoffs would be recorded (short sale, etc.)
Well, after a lot of work, both are paid off and recorded in a "normal"fashion as if I had paid the entire amount due. My credit scores were not damaged at all and have increased (just under 700). My relative is now the holder of the first and only mortgage and I've been working on re-financing and paying him back.
I was getting very close to approval on refinancing my home (FHA loan) and then the underwriter denied me because of a foreclosure on my record from 2/08 (I previously had filed chapter 7 bankruptcy in 2005, but 4 years have passed since the discharge date). I erroneously thought that I was O.K. in that I had received a Notice of Default and that our home was never actually sold at foreclosure. The lender told me that they are considered one in the same, and that with FHA, I need to wait for 3 years after the default in order to qualify. They also said that it would be a 5 year wait with a conventional loan. Is this correct? (my default is an entirely different topic (and long) as my lender actually told me not to make any payments since they were modifying my loan).
Are there legitimate lenders who do not require a waiting period, or a shorter period after a default notice and who offer competitive interest rates?
My loan officer is out of town but I did speak with his assistant about a possible option - since we did surrender our home when filing bankruptcy, I wondered if I could simply send the court documents to the credit bureaus (maybe a rapid re-score) and "others" in order to eliminate this default on my record. I don't know from what sources Underwriters gather their data.
The former mortgage holders have been paid off, are out of picture, and the deeds are recorded in a normal manner as mentioned. The former first and second mortgage holders do not and never have reported to the bureaus, so I have no payment history to show, for better or worse. My credit score maybe would go up if this default is eliminated. It's just a little under 700 now.
The loan officer's assistant essentially said that this idea would not work. I don't know how experienced she is but she has been quite helpful overall. She did say that the only way that it would work, is if I could get a letter from the former first mortgage holder stating that the default was incorrectly recorded. Of course, I will be speaking with the loan officer about this to confirm and get his opinion on this and other options when he returns. Up to this point in what I have described, do you believe that this is viable?
Finally, to add to the mix, once the first mortgage holder did finally modify my loan (6 months later, and 3 days before the auction date!), my wife and I signed the loan modification and made every payment on time until and after the loan was transferred to another lender. By signing this modification, did we potentially undo the surrendering of our home in our bankruptcy (even if this lender is out of the picture now)? I realize you do not have the loan modification in front of you to review, but I imagine that most lenders use similar language. Hopefully, it's irrelevant since they no longer have any claim to our home.
Any advice or suggestions you might have are greatly appreciated. If you need additional information, just let me know. I understand that you are not giving me legal advice.
Thanks Jeff!
Randy
Answer
Randy,
I think in one our conversations, I asked if there had ever been a Notice of Default filed, that document signifies a property is in Foreclosure. It doesn't matter if the loan was paid off the next day, Foreclosure was started and that is what the lenders/banks go by. The time frames being quoted by your lender are accurate and I have yet to see any of them bend. In fact, I had a client recently with an 820 fico score, 25% down and had a foreclosure started 59 months ago......they made him wait the extra month before they would consider it.
In regards to your credit, I'm not sure the lender that started the foreclosure is going to edit the wait it reports to the credit bureau. If they sent the Notice of Default and started the proceedings, its a Foreclosure and they are going to stand by that. I'm also not sure if it would truly affect your credit score that much. The credit bureaus have recently modified how the scoring system is done and from what I understand there is more focus on the current history as opposed to the past. I would ask one of the bureaus if it would actually increase the score before spending time and effort on trying to get the lender to change the way they report.
In regards to the surrendering of the home, its really irrelevant now because they have been paid off. The verbiage on modification agreements vary from lender to lender and can be very different.
Let me know if you have any other questions.
Add to this Answer Ask a Question
|
|
