Silver Lining: Getting a Home Loan after Foreclosure

Paddleboarder heading out to find the silver lining in the fog this morning.

How long must I wait to get a standard loan after bankruptcy, foreclosure or short sale?
The answers are better than you think, BUT layered with the fact that you MUST rebuild and re-establish credit to be eligible for decent pricing.  FICO score determines market rate (more in another post).

SAVE all your Bankruptcy, Foreclosure, Short Sale paperwork for 8 years. BK docket summary and discharge paperwork is valuable and necessary.


Chapter 13 BK :                       4 years from dismissal, 2 from discharge

Chapter 7 or 11 BK                 4 years

More than one BK filing        5 years if more than one in 7 years

Foreclosure                             7 years unless you can prove special circumstances(more coming) then 3 years          * see me for what constitutes special

Deed in Lieu of Foreclosure  2 years  20% down required
Or Short Sale                           4 years   10% down   7 years 5% down


Chapter 7 BK                          2 years from Discharge
Chapter 13 BK                        1 year of payout and payment performance and court approval
Foreclosure                            3 years from final
Short Sale                               no time restriction IF all mortgage payments and installments were on time past 12 months  prior to application date
Or 3 years if in default at date of short sale

What hurts your credit the most?

Prolonging the number of late payments combined with foreclosure.

Caroline Gerardo copyright 2012 all rights reserved


Buying a Home To Do List

You are thinking of buying a home and applying for a loan.

Things You Must be Aware of During the Process:

1.       Stay on your same job until the deal is closed

2.       Keep the same bank accounts

3.       Keep paying your bills

4.       Do not transfer money in accounts or deposit more than $300 without keeping every shred of where it came from

5.       Do not shop for a car, furniture or give anyone your social security number to run your credit

6.       Do not give your landlord notice

7.       Do not apply for any other credit

8.       Do not pay collections- pay it at closing if necessary

9.       Do not use overdraft or have insufficient charges on bank statements

10.   Use your own money for anything related to purchase of the home, to avoid appearing as a gift


Homework List For a Loan

Homework List for your Loan Application

Documents You Will Need to Start Your Loan Application
We understand this is more paperwork than you ever were asked to
provide before. This is an initial list of items, and may lead to requests
for more paperwork.

IRS Form 4506-T — signed and dated
Pay stubs covering the last 30 days with year-to-date information included (all jobs and applicants)

W-2s for the past two years

Federal tax returns (1040s) for the past two years

Asset / Bank statements — Past two months' statements all accounts and all pages no online printouts

We will discuss explanations for late payments, collections, judgments documentation for any large deposits on asset statements

Driver's License and Social Security card — legible copies
Hazard (Homeowner's) insurance information including agent's name and phone number

Purchase contract — signed by all parties (fully executed)

 SELF EMPLOYED BORROWERS- a few more items

Federal tax returns (personal as well as business returns) — complete copies for the last 3 years

Content and information provided as a as to accuracy or completeness of information and assumes no liability for use of this information.

C G Barbeau
(949) 637-8190
NMLS 324982


Costco Mortgage

Start counting all the rocks in this pile to win a home loan with Costco

Closing a loan today is more intense than ever before. If Costco thinks they can close a mortgage by posting a sign in a store, they have lost their mind. A computer cannot give you automatic approval, not only is the concept now illegal, it is nonsense. Will Costco be doing in warehouse weddings and dispensing haircuts from a machine?

I can visit your home and pick up the necessary paperwork often in one visit, rather than have you make numerous trips to locate additional pieces of information. I recommend you ask your accountant to send you your tax returns as pdf attachments. Most often you have access to your bank statements as “print a statement” and we will help you put this together.

Thank you for considering me to help you achieve the best loan financing. As local mortgage professional twenty three years working in our community, I understand area lending guidelines, unique beach front or Orange County properties and draw on resources  lender.

My team works closely with you to help provide information so you can make informed decisions. We provide:
• Competitive rates and fees
• An extensive product line
• Prompt communication, feel free to call us anytime
• Service that continues after your loan closes

As your Loan Consultant I'll work with you every step of the way.


SAFE ACT California Study Guide Free

I'm studying to take the California component of the SAFE ACT Test
These questions and answers I have provided as a study guide.
I don't guarantee you will pass or these are the questions, but practice on the laws can't hurt.
Some where over the rainbow our values will come back?
Some where over the rainbow being in the mortgage business won't mean you are frowned upon in every circle.

  1. A compensation contract for a loan transaction must be retained for three years.
  2. MLO’s certificate for Continuing Education does not need to be retained.
  3. Grace period for a DRE license is two years after expiration
  4. Division of California Department of Corporations that handles violations of the California Financial Code is the Enforcement Division
  5. If a MLO is not in compliance with a DOC provision, his bond can be increased from $50000 to $100000
  6. If an advertisement has been disapproved, the MLO must discontinue the ad immediately.
  7. MLO who advertises on radio/ air waves must maintain a transcript of the ad for audit 90 days
  8. Regulators are concerned with improper production, not loan volume
  9. An administrative penalty is $2500 while civil court penalty is $25000
  10. Independent escrow agents are subject to regulations of the Department of Corporations
  11. MLO and certain fiduciaries are regulated by the operational arm of the California Department of Corporations known as the Financial Services Division
  12. Commissioner of DRE is a real estate broker with 5 years experience and is appointed by the Governor
  13. DRE audits a licensed real estate broker and charges cost if a violation is proven
  14. MLO can prove a particular interest rate was available by showing the rate sheet
  15. California Foreclosure Act guides borrowers in the pursuit of a modification
  16. Lenders and brokers may not add anything to the appraisal fee
  17. MLO files BK must notify commissioner in 5 days
  18. Covered loan can have a prepay for 3 years
  19. Loan denial record must be kept 3 years
  20. Prepay penalty is waived in a natural declared disaster
  21. MLO guilty of redlining license suspended
  22. Conversion is misappropriation of funds
  23. Fees on a covered loan can’t exceed $1000 or 6% of original balance
  24. Violation on covered loan is suspend 6 months to 3 years 2nd time permanent  and $2500+ civil liable $15000+++
  25. Broker must place $ for others in trust account in 3 business days
  26. Broker must withdraw any of his own funds from trust account (example property manager) as fees in 25 days
  27. Mortgage lender may no longer consider rising real estate prices as a mitigating factor against loan risks
  28. MLO continuing education on: 3 hours of Federal law and regulations;

  • 2 hours of ethics including training on fair lending, fraud, and consumer protection challenges;
  • 2 hours of lessons related to lending standards for the nontraditional mortgage product market; and 1 hour other

  1. Net worth and surety bond for California Residential Mortgage Lenders is: surety bond $50000 net worth $250000
  2. Net worth and surety bond for Finance Lenders License is: surety bond of $25000 and net worth $25000
  3. If Finance Lender employs more than one MLO net worth increases to $250000.
  4. Law October 2009 to ensure California complied with SAFE Act is SB 32
  5. January 2010 all licensed real estate brokers, salespersons and RE corporations who make arrange or service loans must submit to the DRE an online report called the RE-866.
  6. RE-866 if licensee is a real estate corporation, the name an license number of the officer will be provided
  7. Re-866 form due January 31, 2010 or 30 days of commencing Mortgage orginations
  8. Penalty to file RE—866 $50 day for first 30 and $100 a day up to $10000.
  9. B&PCode Section 10131 real estate broker is one who for compensation, solicits, negotiates or performs services for others
  10. B&P Code Section 10131 real estate broker engages n the making of loans, buying from. Selling to, or exchanging with the public real property sales contracts or secured promissory notes as a principal
  11. B&P Code “in the business” means acquiring for resale to the public real property sales contracts or secured promissory notes in the amount of 8 or more a year
  12. Cash, corporate capital, warehouse credit lines, other $ that are liability items on the person’s financial statements secured or unsecured are known as own funds
  13. To renew a California real estate license licensee must take
  14. Fees for a lock-in agreement are refunded if the agreement is executed and the loan is denied
  15. MLO activity can take place only at the address on license unless borrower requests otherwise
  16. MLO license should be placed prominently in office
  17. Renewal fees are due December 31 each year
  18. Change of ownership form is filed with Commissioner when mortgage co changes hands
  19. Print media must match business name and information registered with NMLS
  20. DOC commissioner inspects books and records of MLO every 2 years
  21. DOC commissioner may inspect as often as necessary
  22. Commissioner of DOC and DRE can issue a desist and refrain order
  23. Audits by DRE or Doc MLO Co pays costs
  24. Broker licensed under Consumer Finance Lending Laws may broker loans to Finance Lenders
  25. Delaying the closing of a loan to increase costs is predatory lending
  26. Compensation contract for a loan transaction must be retained for 3 years
  27. Residential mortgage loan is 1-4 units
  28. MU1- corporation or sole proprietor-business
  29. MU2 –each control persons
  30. MU3-license branch
  31. MU4 individual

  1. Mortgage bankers must have net worth $250000 and surety $50000
  2. Application fee for California Mortgage banker’s license is $900 CRMLA
  3. Maintenance annual fee DRE license MLO endorsement is $300
  4. Reporting requirements for brokers: list of licensees, advertising media, types loans serviced- how many covered loans…
  5. Maintain license classes: 8 hours continuing education+ 45 hours continuing education every 4 years
  6. Processors and Underwriters who work as independent contractors must be licensed
  7. Pre-licensed education is 20 hours
  8. Applicants who completed endorsement before August 31 2010 do not have to complete the 20 hours
  9. New applicants for Finance lender in CA file through NMLS is they intend to make or broker mortgage loans (they can finance cars and not do mortgages)
  10. Section2924.6 Civil Code due on sale clauses are not allowed for:transfer resulting from death of spouse, adding spouse on title, divorce decree- Dissolution, inter vivos trust transfer where they are beneficiaries,junior liens
  11. Section 50318 misleading public as to education, license … 12 months bar
  12. Unruh Civil rights act- sex race color religion ancestry national origin disability medical condition marital status sexual orientation
  13. Holden Act- redlining geographical discrimination 1-4  Section 35801, Borrower complains to Secretary of the California Department of Business, Transportation and Housing 30 days determination
  14. Holden Act is Secretary determines the violation desist and refrain – make the loan or pay $1000
  15. Holden Act Appeal to hearing 10 days – hearing happens in 20 days – decision in 45 days can be appealed in court
  16. Section2780 RE Commissioner Regulations: race color  sex religion ancestry physical handicap marital status national origin- panic selling block busting
  17. Mortgage broker agreements-cannot be for high cost per HOEPA
  18. Mortgage broker agreements can charge actual charges upfront and an application fee
  19. Advertising no no words: guaranteed, safe, bonded, sound, investment plan, growth plan, low doc, no income, no assets, stated, immediate approvals
  20. Loan modification scams cannot charge fees upfront, take a wage assignment, power of attorney,
  21. Loan modification scam fines $10000 plus one year county jail individual, $50000 for corporation 3X damages
  22. California Foreclosure Prevention Act- 90 days notice of default + 90 4 days before sale for reinstatement
  23. MLO can’t charge a fee for best efforts to find a loan- must deliver
  24. Loan servicers must pay interest of 2% on advance impound accounts
  25. Covered loan law California Civil Code 4970- 4979.8 High Cost Loans Any residential loan does not exceed Fannie Mae’s conforming loan limit- APR exceeds 8% over Treasuries of 15th day of month or total points and fees paid by consumer exceed 6% of loan amount or $1000– No prepayment 3 years, no balloon less than 5 except for bridge loans, neg am must be disclosed, 55% DTI, no loan flipping, must be a benefit
  26. Trust funds – must deposit in escrow or trust account 3 business days
  27. Trust fund record keeping: 3 years, reconcile monthly, no interest
  28. Covered loan is not a super jumbo
  29. Willful violation of Covered Loan Law $15000 or damages
  30. California Finance Lenders Law Commissioner Department Corporations can suspend a license not to exceed 12 months
  31. Maximum criminal penalty for violation of California Residential Mortgage Lending Act is $10000 and one year in jail
  32. DRE cannot file criminal charges
  33. Max payout to consumers from DRE Real Estate Recovery account  $250000
  34. California Administrative Procedures Act hearing final decision 100 days