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Banruptcy Question on Mortgage Applications

by Anonymous
(United States)

Mortgage application section VIII declarations

Mortgage application section VIII declarations

I was discharged from a chapter 13 bankruptcy. It has been over ten years and does not show up on my credit report. I have built my credit score up to the mid 700's. My questions are;

1) Do all mortgage applications ask about prior bankruptcy filings?

2) Do mortgage lenders check PACER (or sites like PACER) for past public records?

3) And for the big question.....if I have to answer a question (lie) about bankruptcy and it does not show up on my credit report, will the mortgage company investigate my past public records without a reason from the credit report?

=====ANSWERS=====

Hello,

Thank you for coming by my website and asking your questions. These are some very good questions I might add.

In answer to #1, yes they do ask for any past bankruptcy filings. However as you can see in my snapshot of the loan application they are only concerned about the past 7 years. So you could honestly answer "No" in the declarations section of the loan application. You will find this on page 3 of Fannie Mae form 1003.

Since it does not show on your credit report and you will be saying "No" about bankruptcy in the last 7 years, in answer to #2 & #3 I would say they will not research you in any public records.

I do want you to know that the lender reserves the right to do any background research they want to.

You just want to be honest on the application and only provide information as needed to the lender. They are more than capable of turning up any concerns they have and will be asking you questions if they have any problems.

My guess would be you should have no problems since your credit score is good. If you have income and are not carrying a lot of debt so it does not mess up your DTI (debt to income) ratio you should be fine everything will work out.

I hope you find this helpful. Please tell others about my website and help spread the word about this FREE resource.

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Senior Citizen With Judgment, How To Buy Condo

by M.L.
(WA)

My ex got a 300k judgment for fees against me in family court, non-dischargeable according to bankruptcy law. I have no way to pay but have a lifetime annuity he can't touch and court ordered spousal support he can't attach-ironic.

So how could I buy a small condo for myself in California with this sitting judgment? Do I need someone else to get the mortgage and I rent from them?

Can I transfer my homestead in WA state to a California residence after I sell that home-to pay off other debts secured by liens.

I am 62 and facing a real problem with how to provide housing for myself. Thank you.

M.L.

=====ANSWERS=====

Hello there M.L.,

You have a very difficult situation here. For one thing, I have never heard of a non dischargeable bankruptcy judgement. It's hard for me to believe you will be strapped with this for life.

You may want to talk with your BK lawyer about a better definition on this.

If you have a judgement against you, I do not think there would be any lenders that would give you a mortgage. So that must be cleared up first and then you need at least 3 years after it has been discharged before you can get a mortgage.

So, if you want to move to CA, you will need to rent because it is very unlikely you can get a mortgage.

As far as homestead transfer, I would not know exactly how that works. If you can get out of the BK lien, then I would think as you take up residency in California you should be able to establish a homestead in that state. It normally requires home ownership I believe, not too sure on this.

I hope this helps, please take good care of yourself.

Kind Regards,

Jeffrey Ragan

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Hey! I can't afford that!

by Wendy
(FL)

My mortgage was recently sold to a new company, Ocwen.

I got my first bill from them and on it are a bunch of fees they are charging me.

Prior service fees, Late Charge - Alt Payment Plan, Current Post-Petition, Post-Petition, the fees total $2,127.32, in addition to the fees, the normal cost, making the bill $3,334.92.

I just do not understand the added fees. Can you explain them to me and tell me if this is legal?

We are currently in bankruptcy, but our house was suppose to not be part of the bankruptcy. The loan company prior never had any added fees. Due date is coming, so please help fast. Thank you.

=====ANSWERS=====

Hello Wendy,

Thank you for swinging by my website and asking your questions.

First of all, if your mortgage has been sold, the new mortgage service company must abide by the terms of the contract you signed at the closing. So get your contract out and read it over.

If you are late on payments, then they can charge you according to the contract a late fee. This is normally 15 days after the due date.

As far as "Prior service fees, Late Charge - Alt Payment Plan, Current Post-Petition, Post-Petition, the fees total $2,127.32" I suspect these are related to your bankruptcy proceedings.

Did you make some kind of agreement when filing for bankruptcy regarding your mortgage payments? Have you held up your end of the agreement?

You need to go back to your bankruptcy lawyer with this paperwork right away to avoid them from starting foreclosure on you.

I'm really sorry you are experiencing such hardships. Many folks in the USA are going through similar hardships.

I hope you can get things worked out so you can stay in your home.

Kind Regards,

Jeffrey Ragan

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Buying a Home

by Jason
(Kentucky)

I filed bankruptcy a couple years ago and it was discharged. I went through a rough divorce that put me under financially.

Since then, I am remarried and we both have good incomes. My credit score is around 700 even with the bankruptcy. My wife's score is better.

Our yearly income is around $102,000. We only have 1 car payment for our debt. We are considering buying my grandmas old home. My parents are selling it for $30,000.

We planned to put a $6,000 down payment on it.

My question is if I would ever be approved for a mortgage since the economic crisis and with my bankruptcy??

=====ANSWER=====

Hello Jason,

Wow!! You have done a great job of explaining your situation and helping me to see the whole picture. Thank you for that!

You mentioned you filed your bankruptcy a couple of years ago and it was discharged. Well that is where the sticky point comes into this.

If it has been at least 2 years (24 months) since your bankruptcy has been discharged, then yes you should not have a problem qualifying for a mortgage based on what you are telling me.

The whole key to this the the time since the discharge. Some lenders may require it to be 3 years (36 months) but I know that FHA normally will do a mortgage after 2 years.

Now that you have good income and credit, this should really not be a problem if you meet the guidelines mentioned above.

However I do have another thought for you to consider. You say that you want to put $6000 down on a $30,000 purchase price. That is a 20% down payment which is great.

This should make so you avoid PMI insurance. However many lenders do not want to write such small mortgages. The paperwork is the same for the small mortgage as it is for a large one.

I suggest you check out your local credit union and see if they do mortgages. This may be your best chance. Or you can take a look at my webpage best FHA home loans for more details.

If I'm not mistaken, FHA has a minimum loan amount around $5000-$10000 I think. It has been awhile since I was in the business. I do know that FHA supports the Equal Opportunity Housing lenders. They cannot discriminate against you because of the small loan size.

I just wanted to warn you about this since it may surface as a problem.

Congratulations on getting your financial house in order. Also I think it is great you are looking at home ownership.

Please pay it forward for me and tell others about my website. I'm working very hard to make this a FREE resource for first time home buyers so they can understand the mortgage process and find the loan program that fits them best.

Best Regards,

Jeff Ragan

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Is Mortgage Possible With Co-Borrower Bankruptcy

by Anonymous
(USA)

I have found a house I really would like to buy but its out of my price range. My unmarried daughter said she loved it also and would love for us to move in together and share expenses. Our combined incomes would be more than sufficient to qualify for a mortgage loan. I am retired and have an excellent credit score. The problem is, she recently bankrupt.

Before I contact the real estate agent, I need the answers to these 2 questions:

Is her bankruptcy a deal killer?
If not, could both of us qualify for the first time home buyers tax credit to purchase the house together?

Thanks for your help.

Answer.....

Hello Ms. D;

Thank you for the great questions. Hopefully you have found my website helpful.

Your question was if your daughters bankruptcy will be a deal killer. Sadly, the answer is yes.

If you need her income to qualify to buy the house, she has to also qualify for the loan. With a recent bankruptcy it will be difficult for her to get a mortgage.

After 2 years, FHA would allow her to qualify for a mortgage providing she has cleared up her credit and does not have any outstanding collections left over after the BK.

So the tax credit will not work for the two of you, however it may work for you alone if you're the only one on a mortgage.

This means you may need to look for a house that your income alone will qualify for.

I hope this helps explain it for you.

Regards,

Jeff

Comments for Is Mortgage Possible With Co-Borrower Bankruptcy

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What a great question!
by: Anonymous

Hello;

I had a question much like that one. It's good to see I'm not alone out here.

My son wants to buy a house and I'm a widow. His credit is in the toilet. So if we went together I can now see it will not work.

I wish the best for you and your daughter.

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