Mortgage after Foreclosure

A couple of people asked me about buying a home after foreclosure or short sale. We have a loan that a yea r after the event even a Bankruptcy we can offer a mortgage. You must demonstrate you paid your rents on time past twelve months. With 12 months reserves we can loan up to 85%. OR eight percent with three months reserves

Home Again product is a great loan for Borrowers to get into the market now. 

Usual waiting periods are as follows:

Foreclosure: 7 years conventional loan, 3 years FHA 2 Years VA and 3 years USDA. 

Short Sale: 4 years conventional, 3 years FHA, no wait VA, 3 years USDA

Rates are higher on this product than government loans.

The investor expects as soon as the “waiting period” ends the loan is running off hence the higher rates. DON’T LET THIS SCARE YOU AWAY.

Sometimes paying a higher rate for THE RIGHT PROPERTY (kitchen, backyard, pool, sunset etc…) TODAY beats buying the JUST OK one in the future. Limited supply means you have to buy when the RIGHT PROPERTY comes on the market. Yes you might pay $18,000 in higher interest for 12 months (which is tax deductible). So what, it beats buying an inferior property in 12 months and having to improve it $45,000 because there is nothing on the market. 

There are more people in the penalty box than you think. Just because your borrower didn’t lose their primary residence doesn’t mean that pesky foreclosure on that vacation home in the desert, mountains or lake  isn’t hindering their ability to upsize or downsize.

1 Year After Bankruptcy Jumbo Loan

Seeing Our Customers Home Again

The Light is what guides you Home.
The warmth is what keeps you there.

Our new Home Again program is a great option
 to help borrowers who may have a
few bumps and bruises on their credit.

 


Highlights
•Fixed and ARM (Adjustable Rate Mortgage) options
•No prepayment penalty
•Gifts allowed from family members or
relative only toward down payment or closing
 (Borrowers must have 5% of purchase price.
Program available for purchase only.)
•Gift of equity from seller
•85% LTV (first time home buyers eligible)
•12 month seasoning period required
 after major derogatory event
(e.g., bankruptcy, foreclosure, deed in lieu of foreclosure or short sale)
•Primary residence only
Call for Jumbo terms
Call today for additional information about this great new program.
We offer complimentary mortgage reviews and preapprovals!

C G Barbeau  Caroline Gerardo NMLS: 324982, CA #CA-DBO324982

Senior Loan Officer Eagle Home Mortgage
Office: 949-784-9699 Fax: 855-833-4303
Contact Me My Website http://eaglehomemortgage.com/carolinegerardo/

Universal American Mortgage Company of California, dba Eagle Home Mortgage of California. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. RMLA #4130383, NMLS #252392, Branch NMLS #849059, CA #813I609, NV #3244. Certain restrictions apply.
This is not a commitment to lend.
 Applicants must qualify.
Equal Housing Lender
This message was sent from Caroline Gerardo to as a result of an existing business relationship.
  It was sent from:
Eagle Home Mortgage, a Lennar Homes Company
100 Spectrum Center Drive Suite 500 Irvine CA 92618

Mortgages Fast After BK Foreclosure and Short Sale

Purchase Mortgages without Fannie Freddie FHA waiting periods!!

Buy a house after credit problems - Loan program after Foreclosure BK Short Sale Modification with  one year and two year waits

Close on your purchase then wait for the conventional 4 years or 7 years to refinance

You will need funds for down payment and reserves

Borrowers provide two years federal taxes, past sixty days bank statements, paycheck stubs past 30 days, two forms of ID and anything particular to your credit profile

Notable Program highlights include;

·         1 year seasoning for major derogatory credit events (short sales, foreclosures, and bankruptcies)

·         85% LTV to $500,000, 660 credit score, 24 months satisfactory housing

·         80% LTV to $750,000, 620 credit score, 12 months satisfactory housing

·         75% LTV to $1,250,000, 640 credit score, 24 months satisfactory housing

·         First Time Home Buyer allowed with restrictions

Hi I’m C G with Eagle Home Mortgage, A Lennar Homes Company

I want to share with you the advantages of a new conventional product we have for Borrowers with prior credit “challenges,” such as bankruptcy, short sale, or foreclosure.

In the past, if a Borrower had a foreclosure, you would need to wait three years to get a FHA loan with a list of ins and outs. FHA product is also limited by the county ceiling. For single family that might mean a loan maximum of $272,050 in Tulare County and $625,500 in Orange County.

This new program allows

85% loan to value up to $500000 loan amount

80% to $750000

And 75% to $1,250,000

There are requirements which would be best if you call me to discuss your specific situation such as:

Reserve requirements, minimum FICO score and excellent credit 12 months after the event. Terms and conditions apply, this is not a commitment to lend.

This is great news because the loan is not priced like hard money, it is a tool Borrowers can use to

Purchase a home and own during the usual waiting periods to refinance conventional when either the seven year or four year (as applies to your situation) ends. No prepayment penalties, no giant upfront costs

Call me at 949 784 9699 any day from 7AM to 7 PM Pacific time

Other credit restrictions apply and the guidelines should be reviewed carefully.  There are minimum credit standards and title to the home may not be impacted by credit items still pending.

Call me for the rules and terms

C G

(949) 784- 9699
NMLS 324982

Mortgage After Short Sale

Conventional Loan after Short Sale

Fannie Mae is unlike FHA, VA, and USDA where they have different mortgage lending guidelines on getting a conventional loan after short sale and deed in lieu of foreclosure. The Federal Housing Administration, FHA, looks at foreclosure and short sale the same as a regular foreclosure and the waiting period after short sale, deed in lieu of foreclosure, foreclosure is all the same. FHA guidelines on waiting period after short sale, deed in lieu of foreclosure, foreclosure is all three years to qualify for a FHA Loan: Three year mandatory waiting period after the recorded date of a foreclosure and deed in lieu of foreclosure and three year waiting period after the date of the short sale. There is a two year waiting period to qualify for a FHA Loan after bankruptcy. The waiting period starts from the discharge date of the bankruptcy.

PRICKLY SUBJECT  - BUY A HOME AFTER THE CRASH

With Fannie Mae, there is a 7 year waiting period after foreclosure to qualify for a conventional loan. However, to qualify for a conventional loan after short sale or deed in lieu of foreclosure, the waiting period drops to a 4 year waiting period and only a 5% down payment is required. Unlike FHA, VA, USDA, short sale and deed in lieu of foreclosure is treated much differently with Fannie Mae and those who have a short sale or deed in lieu of foreclosure are greatly rewarded than those who have a standard foreclosure.

What happened to 2 year waiting period after short sale with 20% down payment to qualify for Conventional Loan?

If you Google ” Waiting Period to qualify for conventional loan after short sale or deed in lieu of foreclosure”, you will get dozens and dozens of articles the first few pages that highlights that there is a 2 year waiting period to qualify for a conventional loan with 20% down payment. Unfortunately, all of those articles are now not accurate because Google has not updated the correct information or updated blogs from mortgage writers and bloggers. Just this past August, 2014, Fannie Mae has eliminated the 2 year waiting period after short sale and/or deed in lieu of foreclosure to qualify for a conventional loan with 20% down. Many home buyers who were nearing the 2 year waiting period mark after short sale or deed in lieu of foreclosure or trying to save the 20% down payment were just absolutely devastated since Fannie Mae came up with new mortgage lending guidelines on waiting periods after short sale and deed in lieu of foreclosure to qualify for a conventional loan.

FANNIE MAE Guidelines on waiting period after short sale, deed in lieu of foreclosure, foreclosure, bankruptcy

2015 FANNIE MAE guidelines with regards to waiting periods after short sale, deed in lieu of foreclosure, foreclosure, and bankruptcy to qualify for a conventional loan.

WAITING PERIOD AFTER SHORT SALE AND DEED IN LIEU OF FORECLOSURE TO QUALIFY FOR CONVENTIONAL LOAN: 

There is a 4 year mandatory waiting period after short sale and foreclosure to qualify for a conventional loan with 5% down payment and re-established credit after the short sale or deed in lieu of foreclosure with no late payments in the past 12 months. Most mortgage lenders do not want to see any late payments after the short sale or deed in lieu of foreclosure.

WAITING PERIOD AFTER FORECLOSURE: There is a mandatory waiting period of 7 years after foreclosure to qualify for a conventional loan from the recorded date of foreclosure with re-established credit after foreclosure and no late payments in the past 12 months. Most mortgage lenders have investor overlays that require no late payments after the foreclosure.

WAITING PERIOD AFTER BANKRUPTCY TO QUALIFY FOR CONVENTIONAL LOAN: There is a 4 year mandatory waiting period after bankruptcy to qualify for a conventional loan with re-established credit and no late payments in the past 12 months. Most mortgage lenders will have investor overlays where no late payments after bankruptcy will be necessary.

MORTGAGE PART OF BANKRUPTCY: If you had a mortgage part of your bankruptcy or foreclosure part of bankruptcy, there is a 4 year waiting period to qualify for a conventional loan with re-established credit and no late payments in the past 12 months. Many mortgage lenders will have internal mortgage lender overlays where they will require no late payments after your bankruptcy.

Fannie Makes Credit Rules Tougher

Dive in the Water's Fine
Fannie Mae is tightening up on foreclosure and short sale
rules.
Worsening? Yes

Fannie Mae announced changes to seasoning requirements for major derogatory credit events. 

 

•             Effective immediately - If a mortgage debt was discharged through bankruptcy, borrower is held to the bankruptcy seasoning requirement and not a foreclosure seasoning requirement.  The lender must obtain appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy.  FYI - Chapter 7 bankruptcy seasoning without extenuating circumstance is 4 years.  This is an improvement to the previous 7 year wait period for a foreclosure within a bankruptcy.

EXTENUATING CIRCUMSTANCES IS HARD TO PROOVE

Docket summary (they will check what you wrote off) , proof of job loss, death certificate, proof of decline in value... about 40 pieces of paper

 

•             Effective with applications dated on or after August 16, 2014  - The seasoning for a short sale without extenuating circumstance is 4 years.  This has been worsened from what was a 2 year wait period for loans with LTVs at or below 80%, is no change for 80.1-90% LTV, and improves the waiting period for 90.1-95% LTV. 

 

•             Effective with applications dated on or after August 16, 2014 - A charged-off mortgage account occurs when a creditor has determined that there is little (or no) likelihood that the mortgage debt will be collected. A charge-off is typically reported after an account reaches a certain delinquency status, and is identified on the credit report with a manner of payment (MOP) code of “9.”  Fannie will require a 4 year seasoning for charged-off mortgage accounts.  This is new Fannie policy.

 Translation :  Mine Government is getting out of doing credit risk loans

Tougher to get a loan after short sale now...

Come on in the water's fine

Derogatory Event	Waiting Period Requirements	Waiting Period with Extenuating Circumstances Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.  These circumstances must be documented within the loan file.
Bankruptcy — Chapter 7 or 11	4 years	2 years
Bankruptcy — Chapter 13	·         2 years from discharge date (payments made as agreed) ·         4 years from dismissal date (noncompliance with BK repayment plan)	·         2 years from discharge date ·         2 years from dismissal date
Multiple Bankruptcy Filings	5 years if more than one filing within the past 7 years	3 years from the most recent discharge or dismissal date
Foreclosure1	7 years	3 years Additional requirements after 3 years up to 7 years: ·         90% maximum LTV ratios2 ·         Purchase, principal residence ·         Limited cash-out refinance, all occupancy types
Deed-in-Lieu of Foreclosure, Preforeclosure Sale, or Charge-Off of Mortgage Account	4 years	2 years

1 When both a bankruptcy and foreclosure are disclosed on the loan application, or when both appear on the credit report, the lender may apply the bankruptcy waiting period if the lender obtains the appropriate documentation to verify that the mortgage loan in question was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting period must be applied.

2 References to LTV ratios include LTV, CLTV, and HCLTV ratios. The maximum LTV ratios permitted are the lesser of the LTV ratios in this table or the maximum LTV ratios for the transaction per the Eligibility Matrix.

 

Short Sale ? Fannie Mae Owes You Money?

FHFA Oversight of Fannie Mae’s
Remediation Plan to Refund
Contributions to Borrowers
for the Short Sale of Properties

 January 15, 2014
Federal Housing Finance Agency Office of Inspector General

 
FHFA Oversight of Fannie Mae’s Remediation Plan to Refund
Contributions to Borrowers for the Short Sale of Properties


Short sales, also known as preforeclosure sales, are a part of Fannie Mae’s foreclosure alternative strategy that can minimize the severity of losses it incurs as a result of loan defaults. In a short sale, the borrower sells the residence for less than the balance remaining on the loan and uses the proceeds to help satisfy the mortgage obligation. The proceeds received from a short sale are less than the amount of debt secured by liens against the property, which most often results in a loss to the Enterprise. In certain short sale transactions, depending on the borrower’s financial condition, the borrower may be required to make a contribution toward the short sale, which in turn reduces the Enterprise’s loss on the sale.

Through their Seller/Servicer Guides, Fannie Mae and Freddie Mac provide guidance on a large number of matters, including delinquency management and default prevention. Servicers are required to comply with the guidance through their contractual agreements with the Enterprises. The Enterprises have quality control processes that are designed to identify and address servicer noncompliance and the contracts include remedial tools, such as financial penalties. Pursuant to its delinquency management and default prevention guidance, Fannie Mae expects servicers to identify borrowers who are having difficulty making mortgage payments due to a financial hardship and offer appropriate workout options, such as a short sale. Fannie Mae also depends on its servicers to evaluate borrowers for contributions unless they are required to request approval from Fannie Mae for the contribution amount. Furthermore, Fannie Mae relies on its servicers to collect borrower contributions with the net proceeds from the short sale closing.
 
Before Fannie Mae clarified the requirements for borrower contributions, there was little guidance for servicers to follow with respect to requesting contributions and collecting them. On August 22, 2012, Fannie Mae issued Servicing Guide Announcement SVC-2012-19 that introduced new requirements to simplify and streamline the short sale process.
1 This announcement provided specific guidance for evaluating a borrower for a contribution and reminded servicers that they must not request cash contributions and/or promissory notes where applicable law prohibited borrower contributions; however, it did not state that borrower contributions were prohibited in California.

1
Servicing Guide Announcement SVC-2012-19 is entitled, "Standard Short Sale/HAFA II and Deed-in-Lieu of Foreclosure Requirements."

2
This law, Section 580e of the California Code of Civil Procedure, provides that a deficiency judgment shall not be rendered for any note secured by a first lien where the property is sold for less than the amount of the indebtedness with the written consent of the mortgagee, if certain conditions are satisfied. CAL. CIV. PROC. § 580e(a)(1).

3
Section 610.02.01 of Fannie Mae’s 2012 Servicing Guide prohibits borrower contributions for HAFA short sales. The guide states that "Cash contributions or promissory notes are not permitted under HAFA; therefore, if a servicer or mortgage insurer determines that a borrower has an ability to contribute meaningfully to reducing the potential loss on the mortgage loan, the borrower is not eligible for HAFA and may only obtain a preforeclosure sale or deed-in-lieu under the requirements of other Fannie Mae preforeclosure sale or deed-in-lieu alternatives." See Fannie Mae Single Family 2012 Servicing Guide Part VII, § 610.02.01.

4 The SAI establishes consistent policies and processes for the servicing of delinquent loans owned or guaranteed by Fannie Mae and Freddie Mac (the Enterprises).


Although Fannie Mae issued guidance to its servicers informing them of the requirements for evaluating borrower contributions, Fannie Mae and its servicers did not always have the option to collect them. On September 30, 2010, the state of California enacted a law which went into effect on January 1, 2011, that prohibited a deficiency judgment for any note where the property sold for less than the indebtedness.
2 According to Fannie Mae, the language of this new law was unclear and did not expressly prohibit borrower contributions in short sale transactions.

On July 11, 2011, the state of California amended Section 580e on an emergency basis to provide clarity in connection with borrower contributions on short sale transactions. The amendment, which went into effect four days later on July 15, clarified the law to include an express prohibition against any type of borrower contribution in connection with a short sale. Specifically, Section 580e subsection (b) forbids "A holder of a note" from requiring the borrower "to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale."

Fannie Mae and its servicers were also prohibited from collecting contributions for short sales completed through Fannie Mae’s Home Affordable Foreclosure Alternatives (HAFA) Program that went into effect on August 1, 2010.
3 Fannie Mae’s HAFA Program was discontinued with the implementation of the Standard Short Sale Program on November 1, 2012, which was created as part of FHFA’s Servicing Alignment Initiative (SAI).4 Federal Housing Finance Agency Office of Inspector General •AUD-2014-004 •January 15, 2014 3

Finding: FHFA Should Oversee Fannie Mae’s Remediation Plan to Refund Contributions to Borrowers for the Short Sale of Properties


Through its review of closed short sale transactions in a recently completed audit on short sale borrower eligibility,
5 OIG found that Fannie Mae and its servicers may have improperly collected borrower contributions for short sales of properties on two fronts—in the state of California and under the HAFA Program, which was available in all states. The collection of these borrower contributions prompted Fannie Mae to initiate a remediation plan to return up to $3,173,249 to borrowers who may have been impacted from the short sale of properties located in California and up to $53,000 for HAFA short sales.

5
See OIG, Fannie Mae’s Controls Over Short Sale Eligibility Determinations Should be Strengthened, AUD-2014-003 (November 20, 2013), available at http://www.fhfaoig.gov/Content/Files/AUD-2014-003.pdf.

As of July 15, 2011, the state of California expressly prohibited the holder of a note from requiring the borrower to pay any additional compensation in exchange for the written consent to a sale other than the sale’s proceeds. This would include the collection of borrower contributions as a condition of a short sale. Nonetheless, based on a review of short sale data provided by Fannie Mae, it appeared that Fannie Mae’s servicers collected borrower contributions for 124 short sales completed during 2012 that would be contrary to the amended California law. Upon identifying this issue, OIG followed up with Fannie Mae to identify all short sales of California properties where borrower contributions were collected since the law became effective on January 1, 2011.

As reflected in Figure 1, Fannie Mae provided the OIG with data showing that 1,222 borrower contributions may have been improperly collected for the short sale of California properties closed between January 1, 2011 and June 30, 2013. The contributions were either cash or promissory notes executed by borrowers to pay the contribution over time. However, Fannie Mae has advised that there are significant data accuracy issues and has identified a number of short sales where the data reported to Fannie Mae by its servicers erroneously reflects the collection of a borrower contribution. Therefore, the total number and amount of borrower contributions improperly collected may be substantially less than the data supplied by Fannie Mae.
Federal Housing Finance Agency Office of Inspector General •AUD-2014-004 •January 15, 2014 4

FIGURE 1. Borrower Contributions for California Short Sales Contribution Type	No. of Contributions	Total Amount Collected
Cash – Delegated 6	900	$1,903,880
Cash – Non-delegated	288	$897,311
Promissory Note 7	34	$372,058
Total Contributions for Properties Located in California	1,222	$3,173,249

painting by Caroline Gerardo   "Underwater Homes"

Succulents floating on driftwood

Mortgage One Year After Disaster

The waiting period after a bankruptcy, foreclosure, or short sale has been reduced to just one year from the event!

Back To Work FHA Program Requirements:

• Purchase Transactions Only.

• Housing counseling must be completed 30 days prior to loan application.

• The bankruptcy, foreclosure or short sale MUST be related directly to the loss of job or 20% income reduction for at least 6 months. This hardship needs paperwork documentation. 

• Credit must have been satisfactory before the bankruptcy, foreclosure or short sale and be satisfactory for a minimum of 12 months after the event.

Mortgage After Foreclosure

FHA Loan ONE Year After Bankruptcy, Short Sale ...

A new ruling is coming down the pipeline that will pave the way for once-struggling homeowners to qualify for an FHA mortgage.
The Federal Housing Administration has announced in a letter to mortgagees that it will reduce the time homebuyers must wait after a bankruptcy, foreclosure or short sale before qualifying for an FHA loan.  Before the wait time was two years following the discharge of a bankruptcy, and three years following a foreclosure or short sale in addition to establishing new credit and having no late payments after the event.

The agency will reduce the wait period to one year.
"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," per FHA Commissioner Carol J. Galante this week.

But fulfilling the new, more lenient waiting period won't automatically qualify borrowers for an FHA-backed loan. Borrowers will have to show that they experienced an "economic event" whereby their household income fell by 20% or more for a period of at least six months.

 

 

Applicants must also show and explain how they have fully recovered from the event, and agree to complete housing counseling prior to closing.

Carol J. Galante began her service as the Assistant Secretary for Housing/Federal Housing Commissioner on December 30, 2012. Prior to confirmation, Galante was Acting Assistant Secretary for Housing/FHA Commissioner.

As FHA Commissioner, Ms. Galante watches over and manages the FHA’s trillion dollar insurance portfolio, which includes single family and multifamily housing.

Caroline Gerardo, NMLS # 324982  phone (949) 637-8190

 

 

 

Chase Bank Mortgage Foreclosure Cases to Follow

Stodgy Bankers?

CHASE Bank Recent Court Cases Regarding Mortgage Foreclosures

Bakenie v. JPMorgan Chase, Case No. SACV12-0060 JVS

U.S. District Court, Central District of California (Santa Ana) 1/13/2012
Joseph Arthur Roberts, Newport Beach, CA, attorney for Ernest Bakenie

Plaintiff alleges that J P Morgan Chase is engaged in the business practice of deceiving bankruptcy judges, creditors, debtors, and attorneys as to Chase's status as a secured creditor in thousands of bankruptcy cases filed nationwide.

Through fabricated assignments, endorsements and affidavits that purport to transfer Deeds of Trust, notes and the rights to money due under thousands of non-negotiable promissory notes, Chase is playing "hide-and-seek" with debtors and judges.

Where are the wet signed notes and deeds that are stored in numerous locations? How many were tossed in the trash?

The complaint seeks an order vacating all Bankruptcy orders, claims and awards granted based on Chase's misrepresentations and deceptive business practices. A case to follow, anxious to learn the outcome? Is Jamie Dimon unfairly gaming the courts?

Naranjo v. SBMC Mortgage, 2012 U.S. Dist. LEXIS 103735, Case No. 11-cv-2229-L(WVG)  July 2012

M. James Lorenz, District Judge, U.S. District Court, Southern District of California
Penelope Bergman, Deborah Gutierrez, Los Angeles, CA, attorneys for Carmen Naranjo

"The allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. This reason alone is sufficient to deny Defendants' motion with respect to this issue."

Settled on June 21, 2013.

Other legal mortgage issues continue to haunt the banks:

Banks took short cuts to foreclose on owner occupants in cases still pending in California.

 Notice of default did not include a declaration required by Cal. Civil Code §2923.5

 MERS cases still churning in the court system

Time lines increased for lenders to make work outs

Values have increased perhaps getting some homeowners back into the black
Will Orange County's recovery be enough to stop foreclosures? The numbers of notice of defaults in Orange County, California have greatly reduced. This is due to values climbing.

USDA Mortgage Takes Weaker Credit

Begonia in my yard blooming in blue pot

 

 

 

 

 

 

USDA Mortgage can help you buy an owner occupied home with no down payment!

Cash reserves are not required

The minimum FICO score requirement 640.

This mortgage loan is also easy on the credit items:

·          Foreclosure or deed-in-lieu of foreclosure allowed after three years from completion

 

·         Outstanding tax liens or delinquent government debt with no satisfactory arrangements

·         No court-created or affirmed obligation (judgment) caused by nonpayment that is currently outstanding or has been outstanding within the last 12 months.

·         Two or more rent payments paid 30 days or more past due within the last 3 years

·         Accounts which have been converted to collections within the last 12 months (utility

·         bills, hospitals bills, etc.)

·         Collection accounts outstanding, with no satisfactory arrangements for payments, no

·         matter what their age as long as they are currently delinquent and/or due and payable.

·         The lender is responsible to determine what collection accounts, if any, should be paid

·         in full by the applicant prior to or at closing based upon the strength of the credit profile.

·         Evidence of meaningful financial reserves and if the accounts have the potential to

·         affect the lien position or diminish the borrower’s equity must be considered.

·         Any debts written off within the last 36 months.

·          

·         A bankruptcy in which applicant was discharged more than 36 months before

·         application

·         A satisfied judgment completed more than 12 months before the date of mortgage application

·         _ The lender may consider mitigating circumstances to establish the borrower’s intent for

·        USDA mortgages accept weaker credit than FHA and case by case  when the applicant provides documentation that:

·         The circumstances were of a temporary nature, were beyond the applicant’s control,

·         and have been removed (e.g., loss of job; delay or reduction in government benefits or

·         other loss of income; increased expenses due to illness, death, etc.); or

·         The adverse action or delinquency was the result of a refusal to make full payment

·         because of defective goods or services or as a result of some other justifiable dispute

·         relating to the goods or services purchased or contracted for.

·         _ A 24-month history of residency is required on all files.

·         _ Non-purchasing spouse in Community Property States: Except for obligations specifically

·         excluded by state law, the debts of NPS must be included in the applicant’s qualifying ratios when

·         the applicant resides in a community property state or the property guaranteed is located in a

·         community property state. The NPS credit history is not considered a reason to deny a loan

·         application. However, the NPS obligations must be considered in the debt-to-income ratio unless

·         excluded by state law. A credit report must be obtained for the NPS in order to accurately

·         determine the debts that must be counted in the total debt ratio.

·         _ Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New

·         Mexico, Texas, Washington and Wisconsin.

·         _ If borrower is legally separated in a community property state, the Legal Separation

·         Agreement signed by the judge is accepted the same as a divorce decree.

·         _ If the non-borrowing spouse has no Social Security number, due diligence must be

·         completed to assure that indeed there is no SS# assigned. Indications may show up on the

·         tax transcripts or other misc. documentation in the file. The required credit report is run with

·         only zero’s (0) in the SS# fields. It is not acceptable to run the credit report using an ITIN

·         number.

 

_ Short Sales: Evaluation of a borrower’s creditworthiness for borrower(s) who have pursued a

short sale

Collections: Underwriter discretion as to whether they will be required to be paid off or not. Must

not affect first lien position and cannot affect the ability to repay the mortgage debt. If the Underwriter

determines collection accounts may remain open, they must document an adverse credit waiver

and addressing the circumstances surrounding each collection account; specifically,

that the situation was temporary in nature, and beyond the mortgage applicant’s control.

_ Child care expenses are not required to be considered as a recurring liability when calculating

debt-to-income ratios. Child care expenses are utilized to calculate the adjusted gross income in

determining mortgage program eligibility.

Declared Disaster Areas _ From time to time, FEMA announces counties that are affected by natural disasters. For example after the Laguna Beach fire of 1993.

Certain areas of Orange County that are within the scope of this type of mortgage such as Silverado Canyon and Trabuco Canyon.

Property must be located in a rural area as defined by the RHS

o Populations of 10,000 or fewer

o Populations up to 20,000 if located outside a Metropolitan Statistical Area (MSA)

_ To determine if a property is located in a designated rural area, visit the RHS Web site at:

http://eligibility.sc.egov.usda.gov/eligibility/. Click on “Single Family Housing” under

“Property Eligibility”.

oBorrowers adjusted income may not exceed 115% of the Area Median Income (AMI)

_ To determine the income and eligibility limits, the following website walks through the household

members, income, etc. and determines if it fits within the 115% requirement:

http://eligibility.sc.egov.usda.gov. Click on “Guaranteed” under “Income Limits”.