FHA- 2nd mortgages in BR Chapter 7- Discharged

[willipm]

I was discharged from Chapter 7 bankruptcy over 2 years ago. SInce then I got a loan modification on the first but did nothing with the second. I am current on the first and have rebuilt my credit up to 705. I now use this as a rental property. I have moved and want to buy a new home. I get various answers as to why I cannot qualify which center on no reaffirmation of previous home. FHA requires two years after discharge and 3 years after foreclosure or shortsale. Well, I did not foreclose or short sale. Why can I not get a new home loan? Finally, should I call Chase to settle the second? THANKS! -Paul

[Evan Bedard]

I was discharged from Chapter 7 bankruptcy over 2 years ago. SInce then I got a loan modification on the first but did nothing with the second. I am current on the first and have rebuilt my credit up to 705. I now use this as a rental property. I have moved and want to buy a new home. I get various answers as to why I cannot qualify which center on no reaffirmation of previous home. FHA requires two years after discharge and 3 years after foreclosure or shortsale. Well, I did not foreclose or short sale. Why can I not get a new home loan? Finally, should I call Chase to settle the second? THANKS! -Paul

Unfortunately, from my understanding because of the bankruptcy you may not be eligible for a new mortgage for at least two to three years after the bankruptcy occurred, whether it be a Fannie Mae, Freddie Mac, or even an FHA backed mortgage. In some rare cases it may take individuals up to five years before you will fully qualify for a new home loan. What answers are they giving you as to why you cannot qualify?

[willipm]

Unfortunately, from my understanding because of the bankruptcy you may not be eligible for a new mortgage for at least two to three years after the bankruptcy occurred, whether it be a Fannie Mae, Freddie Mac, or even an FHA backed mortgage. In some rare cases it may take individuals up to five years before you will fully qualify for a new home loan. What answers are they giving you as to why you cannot qualify?

I get several reasons but according to FHA people I should qualify. The FHA requirements say two years after discharge and three years after foreclosure or shortsale. Well, still own my home and I am two years past discharge. Makes me believe it is internal policies and not FHA. With this, however, coupled with the fact I want to heep that home, should I initiate settlement with Chase who owns the second? I figure if I can settle for $15k (owe 100k) I can then refinance my first which has a balance of $ 150k. Later, if I do need a larger down payment for a home, I could sell the rental property and make approx $80k off of it.

[Evan Bedard]

I get several reasons but according to FHA people I should qualify. The FHA requirements say two years after discharge and three years after foreclosure or shortsale. Well, still own my home and I am two years past discharge. Makes me believe it is internal policies and not FHA. With this, however, coupled with the fact I want to heep that home, should I initiate settlement with Chase who owns the second? I figure if I can settle for $15k (owe 100k) I can then refinance my first which has a balance of $ 150k. Later, if I do need a larger down payment for a home, I could sell the rental property and make approx $80k off of it.

That is a very good idea, do you know how much your property is worth at this time.. Here is a great thread that will show you everything you need to know about settling a 2nd.

Strategy for Settling Your 2nd

[willipm]

It is worth $240k. I am concerned I won't get a good deal as they stand to get $90k back if they were to ever foreclose.

[Evan Bedard]

It is worth $240k. I am concerned I won't get a good deal as they stand to get $90k back if they were to ever foreclose.

Well in that case a settlement will be very difficult to achieve.. The settlement usually works for those who are underwater because the second would be in no position to initiate foreclosure on the home.. But if there is equity and you do default on the loan, they could potentially foreclose to collect on their interests..

[willipm]

i was afraid of that. So therefore, maybe I should try to refinance both the first and second to keep it honest? If I walk away, will the foreclosure further damage my credit score since I already have a br on it?