Mortgage After Foreclosure Being On Title But Not On Note

This BLOG On Qualifying For Mortgage After Foreclosure Being On Title But Not On Note Was UPDATED On September 23rd, 2017

For home buyers with a prior foreclosure who are on the title but not on note of a home that is currently being foreclosed on, can they qualify for a new mortgage loan?

  • This case scenario is very common where a husband and wife are living on a home that is currently under foreclosure where only one of the are on title but not on note. 
  • Most mortgage lenders will consider this type of case scenario a bail, however there are mortgage lenders that will do a deal where you are on title but not on note that is delinquent. 
  • Even though homeowners are currently living in a house being foreclosed on, they can qualify as long as they are on title but not on note.
  • Waiting Period after foreclosure does not apply to those on title but not on note.

Case Scenario When On Title But Not On Note

I recently did a deal where the husband and wife were both on title and on the note several years ago, however, they got the home refinanced four years ago and the wife was just on the note but both the husband and wife were on title.

  • Then the Great Recession of 2008 hit this country and they both lost their jobs. 
  • They both had to file for bankruptcy but the home was not part of their Chapter 7 bankruptcy. 
  • After the bankruptcy, they fell behind on their mortgage and eventually the home went into foreclosure. 
  • They both waited the 2 year waiting period after the bankruptcy and were ready to purchase another home since their current home was in foreclosure. 
  • The fortunate part was that the husband was on title but not on note and he qualified for a new FHA mortgage loan even though he was living in a home that was being foreclosed upon. 
  • My client went to multiple mortgage lenders and they told them they had their own overlays concerning him being on title but not on note so they could not do the mortgage loan. 
  • Most mortgage lenders consider this type of case scenario a mortgage bail. 
  • My client somehow found me via researching on the internet and asked me whether I could do the deal. 
  • It was a no brainer for me because I have done many cases like these. 
  • The reason I can do deals like these is because I have relationships with wholesale mortgage lenders that have ZERO OVERLAYS and as long as we get a DU automated approval by Fannie Mae, I can process, underwrite, and close the loan.

Being On Title But Not On Note Is Not Fannie Mae/FHA Guideline

Being on title but not on note is perfectly legal and within Fannie Mae/FHA mortgage guidelines.

  • However, many mortgage lenders do consider this a bail and will not do the mortgage loan. 
  • I do have a handful of mortgage lenders that will do a type of deal like this as long as there are compensating factors. 
  • You also need to take into consideration that many mortgage lenders will require rental verification. 

Living in a house that is being foreclosed on mean living rent free and getting a rental verification is not possible so you need to choose a mortgage lender that do not require a rental verification.  Please contact me at 262-716-8151 or contact me at www.gustancho.com if you are in a similar situation like this and are ready to purchase a home and need a mortgage loan.

Gustan Cho NMLS ID # 873293

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