Trying to buy after a bankrupcy

I have a client that filled for bankrupcy and it was discharged 21 months ago. Their house was included in the bankrupcy (upon advise from their lawyer) eventhough they were able to keep paying it. They indeed kept the payments, never late. Now they want to buy a short sale house, for less than what they are paying now. They have a FHA loan with Chase and they are not able to get a FHA loan to buy they new property because they need to "close" the FHA loan number they currently have in order to get another one to purchase the new house.According to the lender, if they have not kept paying their house after the banckrupcy they would have been fine to buy the new one now. Of course, now that they want to sell their house the market wont support a price to satisfy the loan, it would have to be a short sale. And if they short sale their house then their credit will be affected to qualify for the new loan.

Any idea as to how to work this transaction? They need to have 24 months after discharge to qualify for a new loan. They can try to short sale their house, miss just one payment and have their closing all around the same time the closing of the new house take place.

Am I on the right direction?

Please advise.

Several ways to go here. Don't automatically assume that if they short sale their home, it will affect their credit. It depends n if they short sale and keep current on the payments. Many banks will allow u to short sale now and still be current on your payments. I've had several clients do this in their short sales. And then once it closed and they were after the 24 month waiting period, they bought again. OR here's another thing they can do. Most banks are regulated by Fannie and Freddie guidelines which state borrower has to wait 24 months etc before buying again. There are lenders out there that are NOT backed by Fannie or Freddie or their guidelines. Since these lenders are not backed by Fannie or Freddie, they write their OWN guidelines and many don't have this 24 mo waiting period, etc... among many other rules that are more flexible. I just had 3 clients close on properties they bought less than 24 mo AFTER doing a short sale on their primary residences. Go for it. It CAN be done.

Replies

Eric Mieles January 8, 2012 at 1:38am

Sheyanne is right I've had a couple deals where the clients were not 1 day late and were able to get it done.
Sheyenne Schultz January 8, 2012 at 12:31am

Several ways to go here. Don't automatically assume that if they short sale their home, it will affect their credit. It depends n if they short sale and keep current on the payments. Many banks will allow u to short sale now and still be current on your payments. I've had several clients do this in their short sales. And then once it closed and they were after the 24 month waiting period, they bought again. OR here's another thing they can do. Most banks are regulated by Fannie and Freddie guidelines which state borrower has to wait 24 months etc before buying again. There are lenders out there that are NOT backed by Fannie or Freddie or their guidelines. Since these lenders are not backed by Fannie or Freddie, they write their OWN guidelines and many don't have this 24 mo waiting period, etc... among many other rules that are more flexible. I just had 3 clients close on properties they bought less than 24 mo AFTER doing a short sale on their primary residences. Go for it. It CAN be done.
Jeff Payne January 6, 2012 at 6:43am

Do they have to have an FHA loan on the new one? Conventional might be the way to go
- magaly muskus-nasser > Jeff Payne January 6, 2012 at 7:02am
  
  Yes, they do need to go FHA (at least that's what their lender told them.) I'm trying to get them another lender for a second opinion
  - Jeff Payne > magaly muskus-nasser January 6, 2012 at 7:11am
    
    Why FHA? Do they have money for a downpayment?
    - magaly muskus-nasser > Jeff Payne January 6, 2012 at 2:38pm
      
      They have enough money for a 10% downpayment and 3% closing contribution was asked from seller. They don't want to use that money cause they want to keep it as a reserve in case they need to short sale their house and need to bring money to closing.
      
      I think what Brian responded below makes sense. I would have to write an addendum asking for a closing no earlier than March, that way the 24 mo after discharge of BR would have passed. I'm trying to find out from their lender if they can qualify based on both properties

This reply was deleted.