Home Loan With Bad Credit

Gustan Cho Associates

Great Recession Of 2008

Everyone can go through hardship at one or more time in their lives.  The Great Recession of 2008 has impacted many American families.  First and foremost, the Great Recession of 2008 has plummeted home values in every part of the United States.  Homeowners who counted on the equity built up in their homes for retirement had most or all of their equity in their home disappear and a large percentage of homeowners with equity had negative equity where their mortgage loan balances were higher than the value of their homes.  When a homeowner has mortgage balances higher than the value of their homes, it is often referred as upside down mortgages.  Never in history has foreclosures rates been so high.  Bankruptcy rates have sky rocketed to the highest number of bankruptcies filed in United States history.  The term short sale, which many Americans did not hear of the term, was extremely common and a often used word among not just realtors and mortgage professionals but among many in financial distress.  Complete industries were eliminated.  Sub prime mortgages were completely eliminated and nearly all large sub prime mortgage lenders went out of business and closed their doors completely.  Half of mortgage loan officers either left the business or had to make a switch to a different mortgage specialties.  Large percentage of full time real estate agents either left the field or had to get other jobs to maintain their income to support their families.  A record number of workers in the real estate industry such as contractors, construction workers, realtors, bankers, mortgage loan officers, attorneys, appraisers, title agents, were forced into bankruptcy and had no choice but to foreclose on their homes.  Millions of small businesses had to close their doors and these busines owners had to file bankruptcy and go through foreclosures.  Millions of workers who were hourly or salaried wage earners lost their jobs because the companies they were working for either closed their doors or down sized.  Never in history has unemployment rates been as high.

Economic Recovery

The economic recovery has been the longest in history.  To this date, the economy has not fully recovered.  Although unemployment numbers has greatly improved, the unemployment data is not accurate because many who lost their jobs or businesses have totally given up looking for jobs and their unemployment benefits have run out.  These folks are not counted on the unemployment data.  If you look around and look at the people you know, you will encounter many people who are still looking for work and are just getting by either by working a temporary job or jobs they are overqualified for.

Life After Bankruptcy And Foreclosure

The federal government realizes the damage the Great Recession of 2008 has done to hard working American families and have totally revamped the mortgage industry.  The United States Department of Housing and Urban Development, also known by many as HUD, is the parent of the Federal Housing Administration, FHA.  FHA has implemented home loan programs to help home buyers with prior bad credit as well as prior bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales become homeowners again.   Many hard working Americans who became victims of the Great Recession of 2008 and had to file bankruptcy or had to foreclose on their homes and thought they could never own a home ever again can now qualify for a home after bankruptcy and foreclosure.

Qualifying For Home Loan After bankruptcy

If you had a prior bankruptcy, you can qualify for a home loan after 2 years from the discharge date of your bankruptcy and re-established credit with a FHA loan.  Those with a prior bankruptcy can qualify for a conventional loan after 4 years from the discharge date of their bankruptcy with re-established credit.

Qualifying For Home Loan After Foreclosure

If you had a prior foreclosure, deed in lieu of foreclosure, short sale, you can qualify for a FHA insured mortgage loan after three years of the recorded date of your foreclosure or deed in lieu of foreclosure and 3 years from the short sale date of your short sale which is reflected on the HUD-1 Settlement Statement.

To qualify for a conventional loan after a foreclosure, the waiting period is 7 years from the recorded date of your foreclosure.  To qualify for a conventional loan after a deed in lieu of foreclosure or short sale, the mandatory waiting period is four years from the recorded date of your deed in lieu of foreclosure or the date of your short sale.

How Do Lenders View Late Payments After Bankruptcy And Foreclosure?

There are mortgage lenders that will not accept a mortgage loan applicant who had late payments after bankruptcy and foreclosure.  Most mortgage lenders want to see a borrower who had a prior bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure never to be late after their economic event.  Unfortunately, unexpected circumstances happen and people mean well but may encounter financial hardship after bankruptcy and foreclosure where they go in arrears on their payments where they get derogatory credit items reported on their credit report.  There are mortgage lenders that will approve mortgage loan borrowers with late payments after bankruptcy and foreclosure.  A detailed letter of explanation will be required why you had late payments after bankruptcy and foreclosure and documented facts needs to be provided.  For example, if you had late payments after bankruptcy and foreclosure due to loss of job, medical issues, divorce, or other extenuating circumstances, provide copies of documents along with the letter of explanation.  If you got injured and were out of work and due to this fact you had a loss of income and could not pay your bills, attach the hospital bills, doctors letter, or other hard facts along with your letter of explanation.  Mortgage lenders will understand extenuating circumstances and just want to make sure that you are not a financially irresponsible person.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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