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Two family members of ours haven't paid their mortgage for over 2 years. The bank finally started the foreclosure process, and the house failed to sell at auction, so the bank now owns it. They are moving out next month, but the foreclosure won't "hit" their credit report until May. They put in an offer on a new house that is $25K more than they owe on the existing house. They have gotten pre-qualified, but is a loan even possible? Will it possibly clear underwriting? Wouldn't the two year delinquency pose problems even if their income somehow was able to cover both loans (it's not)? Even worse, they're in the middle of bankruptcy, scheduled to be discharged at the end of next month. They expect to get the new loan the next month.
Generally speaking, I wouldn't really concern myself with other people's financial matters. However, the drama if this loan doesn't go through will be explosive, and since they're family, we can't exactly run from it.
Pre-qualified really doesn't mean anything. Pre-approved is another thing. I'm confused how they even got anyone to consider giving them a mortgage loan under these circumstances. Something doesn't sound right; are you sure they have actually applied for a loan and not just talked about doing it?
They have not formally applied for a loan, as they cannot until the BK is discharged at the end of next month. Pre-qualification is thrown around without much information needed, so I don't put much weight in that end of it.
I'm concerned they're completely delusional, and I genuinely don't believe they can get fully approved and close the loan. However, I'm wondering if there are any loopholes they may have found that I don't know about.
I think in the best case scenario, there is still a minimum 6 month wait after bankruptcy for some types of loans and a 1 year for others. There are private lenders who will make these loans but the interest are high, with all sorts of gotchas, and really tailor solely for the lender not the borrower. Some may be out right scams.
That makes about as much sense as a snake with sneakers. Are they trying to scam the 'system'?
Well they purposefully have not paid the other mortgage, and they are trying to rush to the new house before the foreclosure officially hits their report. In that sense, I suppose they are attempting somewhat of a scam.
I'm genuinely concerned about what is going on behind the scenes to facilitate this process. If they get the loan, my concern will only grow.
If they haven't paid in over 2 years, they would have a constant 90+ late showing on their credit. I can't imagine any lender would give a new mortgage to someone with a running 90+ late... they would be HIGH risk.
If they haven't paid in over 2 years, they would have a constant 90+ late showing on their credit. I can't imagine any lender would give a new mortgage to someone with a running 90+ late... they would be HIGH risk.
This.
No payment for 2 years will show on the credit report. This will not get approved. Especially when they see that it is a consistent mortgage 90+ days late payments.
That makes about as much sense as a snake with sneakers. Are they trying to scam the 'system'?
Quote:
Originally Posted by Robert20170
They sound like charming people, and no I don't believe they will make it past underwriting.
I swear, do not even get me started!! Btw, what state is this in?
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I swear, do not even get me started!! Btw, what state is this in?
