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12/16/2015

Mortgage Credit Report

Mortgage details and things I'm seeing regarding credit:

Forgiveness of debt in a modification is treated the same as short sale.
Wait is four years for conventional loans and three for FHA


Mortgage Credit reports should be read and interpreted by an expert. The lady in the credit union that takes your papers to be processed for a loan can misinterpret or miss read. It is vital to view a mortgage credit report on day one  with regards to derogatory credit events and the proper calculation for seasoning.

·      Fannie Mae only – The foreclosure seasoning can be reduced from 7 years to 4 years if the property is surrendered in the Chapter 7 bankruptcy.  Make sure the property is listed on the Chapter 7 form Debtor’s Statement of Intention and marked as surrendered.  This reduced seasoning does not apply for foreclosures that
occurred prior to the filing of the bankruptcy in which only an unsecured deficiency balance is listed in the bankruptcy.


·         All loan types – A HELOC settled for less than full balance can occur even if there is no short sale or foreclosure.  Lien Holders can be approached with a request to reduce the balance, or the Lien Holder may initiate the settlement.  Determine the property address associated with the HELOC or 2nd mortgage. Even if the borrower still owns the property, sufficient seasoning will be required as the lender has taken a aloss.  This would be considered a pre-foreclosure situation requiring 4 year seasoing for Fannie or Freddie, 3 year seasoning for FHA or USDA, and 2 year seasoning for VA, from the date of the settlement/foregiveness.



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