Refinance Primary Home Post Forclosure

Galaxieman

LoanSafe Member
Jun 4, 2012
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Hi All,

I'm looking for some advice regarding a refinance of my current home. Here is my back-story:

2005 - Bought condo (20% down) and short sold in 2012.

2006 - Bought (2) Rental Properties 100% financed. Foreclosed and deeds transferred in 2011. Primary was with Aurora Loan Services. I believe that the 2nds (Ocwen & GMAC) became SOJL and I periodically get settlement letters from whatever Collections agency has the debt.

2008 - Bought primary residence with after getting married to wife. Put 10% down and am currently ~75% LTV. Loan is with Freddie Mac

I am looking into refinancing the loan on my primary residence to get a better rate and have some extra $ to put back into the property. I understand that the waiting period for a foreclosure is 7yrs with Freddie Mac for a conventional mortgage, so I was looking at the possibility of an FHA loan. What has me confused is none of my foreclosures (1st or 2nds) are showing up on my credit report that was both pulled by the refinance company and also myself. These were less than 7yrs ago but nothing is showing up.

Anyone have an idea why this might be? Should I pursue refinance as if I don't have a foreclosure?
 
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Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
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Hello,

Even though the mortgages do not show up on your credit report, they will need to be disclosed to a lender when applying for a new loan as part of the application and underwriting process.

You might be able to do a conventional mortgage refinance and have some other options as well. I alerted our LoanSafe mortgage expert, Erik Sandstrom to your question and he should answer you ASAP.
 

Galaxieman

LoanSafe Member
Jun 4, 2012
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How would I be able to do a conventional refinance, I thought the seasoning period was 7yrs post foreclosure with Freddie Mac loan?
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
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It is 3 years after foreclosure due to extenuating circumstances, and a 7 year waiting period when it is not due to extenuating circumstances. I'm not sure based on the info you had given if you would qualify.

Here are the additional requirements after 3 years up to 7 years:

* 90% maximum LTV ratios2
* Purchase, principal residence
* Limited cash-out refinance, all occupancy types
 

Galaxieman

LoanSafe Member
Jun 4, 2012
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I'm not sure if I'd qualify for the extenuating circumstances, so FHA would be my only option.

It looks like I'd still save ~$100-$200 a month, but I'm not sure if there are any disadvantages of going from a conventional with 75% LTV to an FHA.

We're looking to sell in the next 1-2yrs so this would allow some extra $ available to put back into the house for the sale.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,851
466
1,000
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Southern California
www.loansafe.org
Yes, that sounds like your best bet. Just keep in mind that you will have closing costs and if you go above 80% LTV, you will also have to pay mortgage insurance. But at least you will get the cash you need to improve your home which may make sense in the long run when you sell.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
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Loan Safe Mortgage
Jan 14, 2011
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Hey Galaxieman,
Thanks for sharing your story! I have one BIG question to ask:

What happened to the 2nd mortgages that you say were SOJL? It sounds like you have not settled those liens and they are still out there?
How did you get a Freddie Mac backed loan right after foreclosing on a property?

In regards to the foreclosures, did you file bankruptcy and include the homes in the bankruptcy? That would be a reason why they wouldn't be showing up on your credit. Even though they are not showing up on credit we would still find out when running the Mortgage Electronic Registration System or MERS as we would call it.

I would love to see if you're FHA eligible but need a little clarification on exactly what is going on with those outstanding 2nd liens. Even though they are no longer attached to a property it does not mean they have disappeared. With nothing showing up on your credit, the only way to really determine the outcome (in my opinion) would be to submit the loan into processing/underwriting.