How long till credit score

Fred

LoanSafe Member
Aug 27, 2014
24
0
1
46
Had financial difficulties. Kept all bills current except HELOC and lst. HELOC had 39 delinquent payment and the 1st had 9.
The HELOC was with Bank of America who owned the paper and the 1st was with Bank of America who was servicing the loan for FANNIE MAE.

The HELOC filed notice of default. We applied for modification for HELOC and the bank did not offer any relief. The first which was owned by Fannie Mae came in and offered a reasonable modification even though we did not apply for one. I found that odd that the first was customer friendly while the HELOC told us to go play in the sand.

During this who ordeal, the market changed, the value of our house increased and we ended selling the house and paid the 1st and HELOC 100% of all principal, interest and other fees due.

We are now renting.

We have always paid all bills on time. We pay credit card debt off each month and have never had finances charges from them.

Since I sold the house, I have applied for a car loan at the credit union and been declined due to the delinquent 1st and HELOCS. Also applied to Rocket Mortgage and been declined and also applied to increase a credit card limit. (remember the credit card has always been cleared monthly) and was declined too. Before the mortgage delinquents my FICO score ran at 775-825. During the rough period it went down to a low of 630.
We sold the house in June of 2017. Since then, the FICO score has rebounded to 683.

If I keep my credit clean, how many months do you think it will take where lenders will approved a home loan when I apply, and other types of loans too.

Thanks in advance
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,100
181
63
San Diego, California
www.loansreduced.com
Hi Fred,
Thanks for explaining your situation, you're not alone.

I am the resident multi-state licensed loan officer here at LoanSafe and would be happy to guide you in the right direction and there were a few things that I wanted to clarify first and foremost as well as listing the details that are crucial to my analysis.

Details:
HELOC past due however paid in full at the sale of the home
FICO currently 683
Pays credit card debt off each month
Declined due to missed housing payments

Ok, based on the information above it sounds to me like you're being denied for the simple aspect that you were behind on a mortgage and must wait the seasoning needed for either FHA or conventional. Portfolio home loans are available now that can bridge the gap between being eligible for a traditional loan, feel free to e-mail me about that: [email protected].

For clarification here are the guidelines on missed mortgage payments:

FHA Guidelines on Housing Payment History:
Housing Obligation/Mortgage Payment refers to the monthly payment due for rental or Properties owned. A Mortgage/housing obligation Payment is considered delinquent if not paid within the month due.

Late Mortgage Payments for Purchase and No Cash-Out Refinance
The file must be downgraded to a Refer and manually underwritten if any mortgage trade line, including mortgage line-of-credit payments, during the most recent 12 months reflects:
  • three or more late payments of greater than 30 Days;
  • one or more late payments of 60 Days plus one or more 30-Day late payments; or
  • One payment greater than 90 Days late.

A Mortgage that has been modified must utilize the payment history in accordance with the modification agreement for the time period of modification in determining late housing payments

Cash-Out Refinance Transactions
The file must be downgraded to a Refer and manually underwritten if any mortgage trade line, including mortgage line-of-credit payments, reflects:
  • current delinquency; or
  • Any delinquency within 12 months of the case number assignment date.

A Mortgage that has been modified must utilize the payment history in accordance with the modification agreement for the time period of modification in determining late housing payments.

Conventional Guidelines on Housing Payment History:
Follow DU Approve/Eligible findings. The borrower must meet DU’s mortgage delinquency policy:

DU applies the following guidelines to the processing of loans with mortgage delinquencies:
If any borrower’s credit report contains a mortgage tradeline that is 60 or more days past due when the account was last reported by the creditor and the account was reported within the 12 months prior to the credit report date, the loan casefile will receive a Refer with Caution recommendation and will be ineligible for delivery to Fannie Mae.

If an account is reported on the credit report as a non-mortgage tradeline, and yet the account is listed on the loan application as a mortgage, DU will analyze the credit history of the tradeline as a mortgage.

For example, if the credit report identifies an account as a revolving account, and the account is listed as a HELOC on the loan application, DU will evaluate the credit history of the account as a mortgage. Any late payments in the credit report will be treated by DU as delinquent mortgage payments.

If there is a mortgage that is disclosed on the loan application but not reported on the credit report, or the mortgage is on the credit report with an outstanding balance but the payment history has not been reported in the last six months, DU will issue a message requiring the lender to confirm that the account is not two or more payments past due as of the date of the application and that it has not been past due by two or more payments in the last 12 months. If the lender determines that the borrower does have a mortgage that is past due by two or more payments or has been past due by two or more payments in the last 12 months, then the loan casefile is not eligible for delivery to Fannie Mae.

Borrowers may not bring past-due mortgage accounts current prior to closing in order to circumvent Fannie Mae’s policy regarding past-due mortgages. However, the lender may apply some discretion with regard to the application of this policy if it determines and documents that the past-due account status was not the fault of the borrower—for example, if the servicer misapplied or lost the borrower’s payment.

Loan casefiles will receive an Ineligible recommendation due to excessive prior mortgage delinquency if the borrower has a mortgage tradeline on his or her credit report that has one or more 60-, 90-, 120-, or 150-day delinquency reported within the 12 months prior to the credit report date.

The above policies will apply to all mortgage tradelines, including first liens, second liens, home improvement loans, HELOCs, and mobile home loans.

Portfolio Home Loans:
No Payment History Required, 10% down 2 years after short sale or foreclosure, 15% down day after short sale or foreclosure.

Summary:
As you can see above the payment history requirements do vary from program to program, FHA is a little more liberal on their guidelines and will allow for more missed payments than a conventional loan would. If you do not meet the payment history requirements you would want to find out when your last delinquency was and then base your eligibility for a traditional loan product roughly 12 months after you sold the home that had the derogatory lien(s).

RocketMortgage with Quicken isn't going to be the best route to take, to be honest I have gone through that myself and there wasn't really anything "Rocket" about it and the professionalism that I received from the person I worked with was almost non-existent. I hate saying this about a competitor but these people that you're calling at quicken are trained to get as many deals as they possibly can and will just push away any difficult file so they can get to the next one.

If you want to know more about the solution we can provide now, feel free to reach out and I would be happy to go over details otherwise we can strategize a plan of attack for the future.

Here is my info:
Erik Sandstrom - [email protected] - 800-779-4547
 
  • Like
Reactions: delta97