Foreclosure Remains On Credit Report For Seven Years From What Event?

[Submersible]

I have spent the last seven years under the impression that foreclosure remains on my credit for seven years from the date the foreclosure was finalized. I was looking at my Transunion report today and noticed this legend: Adverse information typically remains on your credit file for up to 7 years from the date of the delinquency

The dates estimated for removal of the events from the credit report are a year earlier than I expected them to be. They say they say the events will be removed seven years from the month the first 30 day late payment was reported. I didn't check the other reports.

Is this correct? This could save me thousands in PMI alone, not to mention interest if rates go up next year.

 

[Submersible]

Maybe Transunion just does it differently than other credit reporting agencies. Fannie Mae says this: A seven-year waiting period is required, and is measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.

Why Fannie Mae thinks that foreclosure completion dates dates appear in credit reports is beyond me.

Anywho, I think I'm barking up the wrong tree here.

 

[Moe Bedard]

A foreclosure stays on your credit report for 7 years. The drop off date is 7 years from your last activity date or 1 or 2 months after the default date and or the activity date could be last payment, last agreement and it may reset to 7 years if you made an agreement w/ the mortgage servicer.

 

[Submersible]

Thanks, Maurice. That supports the notation on my Transunion credit report. So it looks like my 80/20 charged-off loans are going to be removed from the credit report a year earlier than I thought they would be.

How does the credit report translate to getting conventional financing? Am I good to refinance my FHA loan as soon as they are removed?

 

[Moe Bedard]

You are welcome.

It depends really on the length of time that has passed from the foreclosure and what that lender will accept in regards to these time frames. FHA allows anywhere from 3 years to as little as one year after foreclosure for new financing.

For one year, this new program is referred to as the “Back to Work” initiative and is designed for borrowers who lost 20% or more in household income that ultimately resulted in a foreclosure, short sale, bankruptcy or deed in lieu.

This program is specifically designed for borrowers who could no longer afford their mortgage payments due to an “extenuating circumstance,” such as a job loss or a 20% (or more) loss in income for a period of at least 6 months prior to the foreclosure, short sale or bankruptcy. Even borrowers who went through both a bankruptcy and foreclosure may qualify as long as they’ve fully recovered from the “economic event.”

FHA is allowing for the consideration of borrowers who have experienced an “Economic Event” and can document that certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control. To document the 20 percent loss of income, you must provide two years tax returns and W-2’s prior to the foreclosure or short sale, or a Verification of Employment (VOE) showing proof of your previous earnings.

You can read more about FHA’s Back to Work Mortgage Program at this link.

 

[Submersible]

In case anyone is interested in the answer, I spoke to my lender about this.

Foreclosure may fall off your credit report seven years from the month the loan is first reported as delinquent.
However, for purposes of refinancing a FHA to a conventional loan, you still have to wait for seven years from date the foreclosure is finalized.

 

[Michael Stoner]

I was having the same problem!