Can someone here give me their two cents on this, please? My fiance and I both went through C7 BK in 2002 and 2003, respectively. So, he's been discharged for more than three years; I've been discharged for just over 2-1/2 years. We applied for a mortgage at GMAC about a month ago. We dealt with a local branch. The loan officer said we were approved at a 30-year fixed rate of 6.38% as long as we could show why we filed BK and had about 5% down on the house. Fine. Suddenly, we received a "Notice of Credit Termination" or denial or something stating that GMAC was no longer approving the loan. When I called and talked to our loan officer, she said the underwriters "changed their minds" based on the fact that FIVE YEARS hasn't passed since our BK's. Sound right?
Why are you going FHA? Why not go Conforming and bypass the FHA hassle ..? Fill me in on the details and I will try to advise... your scores, loan amount, income ect..ect..ect..
"Suddenly, we received a "Notice of Credit Termination" or denial or something stating that GMAC was no longer approving the loan." That would be an adverse action notice, and they should provide the specific reason for their denial of credit on request, including what credit reports they pulled that contained information used in that decision.
Actually, I'm rather curious about the "5" year issue. According to my underwriting manual, it only has to have been discharged for 2 years. And I've never had to have anyone justify a bk. If it was less than 2 years, we told the borrower that we could not process the loan. More than 2 years, it was not an issue. Because most people inform us right up front about any adverse credit issues, we usually won't even pull credit for anything less than 2. Also, I don't think I've heard of an underwriter "changing their mind" in the middle of a loan. Again, I would be more than happy to look into this for you.
Don't know if this would be of any help but I'm in the process of rebuilding my credit and found a great site that has lots of articles about mortgages and finances. It's worth having a look. Helped me with a lot of questions. www.mortgagefaqdirect.com
