Steve Currington: This is stevecurrington.com com and The Steve N’ Tyler Podcast, Episode number 39.
Narrator: Welcome to The Steve N’ Tyler Show, with stevecarrington.com and Tyler Whyburn.
Steve: Who negotiated the contract for you?
Tyler Whyburn: A Realtor.
Steve: Oh, you’re pretty smart.
Steve: Good for you man.
Narrator: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve Currington and Tyler.
Steve Currington: What up Tyler?
Tyler: Good morning.
Steve Currington: How is it going bro?
Tyler: It’s going.
Steve: It’s early Wednesday morning here in the Thrive Studios, where we record our podcast. And I hope your week is going well. Hey, we’re talking today about: How long do I have to wait to get to approved for a mortgage if I declare bankruptcy in the past? That’s a big thing. How many times a day, do you think we get that question, Tyler?
Tyler: We deal with it quite a bit.
Steve: Yes, it’s a lot. It’s just a lot, a lot of people call and ask. And here’s the thing, it’s not an easy answer. It’s really not. We talked about in a previous podcast that every loan program is different. So we’ll talk about that today, we’ll talk about, what the waiting time is for, say a Conventional Loan. We’ll talk about what the waiting time is maybe for an FHA loan, for USDA, for VA, for, do we say FHA?
Steve: Basically for every type of loan, because every type of loan happens to be just a little bit different on the rules. Tyler, starting with the simplest and most easy, and I’ll say pretty much across the board- Not across the board, but on most government loans, most of them. Well, let’s just say on FHA and VA, what’s our wait time? So “Hey Tyler, hey, I filed bankruptcy 12 months ago. Can I get a mortgage?”
Tyler: 12 more months.
Steve: 12 more months, so that’s a 24 month waiting period from the discharge date. Now listen, there are exceptions to every rule. [Chuckles] If you do have a bankruptcy in the last two years and/or maybe, it’s 25 months old and you included a property in that bankruptcy, how long do you have to wait?
Tyler: Ouch! So, we’re saying that the property was actually, it went back?
Tyler: They gave it back.
Steve: Tyler’s being funny because it’s kind of like our- I would you say it’s a pet peeve or it’s just kind of an interesting and funny thing, when people say, “Oh yes, yes, I had that car repossession but it was voluntary, I let it go back.”
Tyler: [chuckles] But they probably don’t even give you the word repossession. It’s just-
Steve: Oh, yes, yes, that’s a- Hold on, let me try to redo it. “Okay, so yes, that was my- I bought this car from this car dealer and I had it for a year and the transmission was messing up, so I let it go back.” Was that better?
Tyler: Sure. Yes.
Steve: [laughs] It’s like it got repossessed, you got foreclosed upon, you didn’t give the house back, regardless of whether you want to call it voluntary or involuntary. I guess, Tyler would voluntary be like, “Oh, okay, yes, thank you. Here’s the keys, I’ve gotten all my things out of the house.” An involuntary would be like kicking and screaming and the sheriff is there, and your fingernails are dragging on the wall and ripping off the paint off of the walls as they’re dragging your lifeless body from the house, would that be involuntary?
Tyler: Yes, that’s it, that would be involuntary.
Tyler: Whether it’s amicable or not, still shows up the same. It’s the same. It doesn’t matter.
Steve: It doesn’t matter if they have to drag you, kicking and screaming, or if you’re Mr. Cordial, it really doesn’t matter, it’s still going to be a foreclosure on your credit, right?
Tyler: Right. And back to the original question, if you included a house in that bankruptcy, you’re going to wait at least three years for most government loans.
Steve: Three years.
Steve: From the discharge to the bankruptcy. Now, if you have an FHA loan and they actually have to go through the foreclosure process and file a claim with FHA, then now you have- they call it a CAIVRS and that the CAIVRS stands for some big long term which I won’t bore you, go Google it.
But if you don’t have a clear CAIVRS, then you have to actually wait three years typically from the date of your CAIVRS claim, because sometimes, you might file bankruptcy, Tyler right, in like January of 2015 and then it’s usually discharged within 90 days.
So February, March, April, you get your discharge, and then your clock starts. But if your home was foreclosed on at the end of the discharge in April, and then it took the bank that held the loan five or six or seven months to file a claim with FHA, then now your date really is going to start that’s the day that claimed.
So we just had that happen. We had somebody that their bankruptcy was- For the people to tune in on Facebook Live Carl Myers or Ryan- Wow, we have two Myers on there. Wow, Ryan Myers and Carl Myers. We’re talking about how long you have to wait for a bankruptcy from the date of a bankruptcy, hey Bromley, on all different loan programs.
We’re really referring to a Chapter Seven, Bankruptcy, Tyler. So this is a Chapter Seven, full relinquishing bankruptcy, I guess you’d call it, the Chapter Seven wipes out all the debts. A Chapter 13 very different, isn’t it?
Steve: We’ll talk about that in a minute. But what we’re talking about is, “I filed bankruptcy, what is the timeframe that I can purchase a new home or get approved to buy a house or get a mortgage?” So on FHA, on VA, on those loan types you’re looking at 24 months, unless there’s a property included and then you have three years from the date of the- If there was a claim.
If you did a VA loan, you may not be able to do another VA loan because you lose your entitlement, you can actually lose either your full entitlement or you can lose what they call Partial Entitlement, and you may not even be able to get another VA loan, ever in your life. So be careful about that.
And then what about, if we had a Chapter Seven, then you’re looking at four years on a conventional loan. If you have a Chapter Seven and you’re trying to get a conventional loan, you’re looking at four years to qualify for a new mortgage. So it’s pretty much double time huh?
Steve: It’s double time if you’re doing a conventional loan. You can see every loan program is different. So it’s not a blanket answer, Tyler that says, “Hey, I’ve filed bankruptcy and what’s the standard number of months I have to wait?” What do you have to add to that, Tyler?
Tyler: I’m not sure what you’re looking for, but maybe what you are looking for, what we got to add to it too is, after the bankruptcy, what have you done, credit wise?
Steve: Yes, it’s not like, “My bankruptcy is 24 months old, so I automatically qualify. Hey, no Tyler, it’s 24 months old.”
Tyler: That’s great but you have been late on your credit card payment every single month for the last year- [crosstalk]
Steve: Because you’ve established one new account and that one account you’ve been late on.
Tyler: Right. You have to show that you’ve established your credit again, that you have done well.
Steve: Done well, that’s a sushi roll that you’ve done well. You’ve got to demonstrate to the credit bureaus and to your lender that you’ve reestablished credit that your- “Hey, the bankruptcy was a onetime thing, this happened, hey, that’s why the law is there, but I’m good now, I’ve got my act together and I’ve got some credit open.” Some people just stick their head in the sand is how I call it, and they don’t– Oops, I dropped Facebook Live. They don’t do anything with their credit. Once they file bankruptcy, they just ignore it. Nothing happens, right?
Steve: For two years, maybe three years, maybe four years, maybe five years. And then one day comes along that they say, “Okay, I’m ready to go buy a house,” they call us and we’re like, “Well, you still have a lot of that a residual negative stuff that’s affiliated with the bankruptcy that you had and you have no credit.”
We talked to a guy the other day that he didn’t even have a bankruptcy, but he just didn’t have literally had nothing since 2007, he had no open accounts. The only thing that he had since 2007 was derogatory counts. He just had negative. I don’t know, how he had a score, it didn’t even make really any sense.
So it’s not just that you have to file bankruptcy, have a two year waiting period and then you’re good to go and do an FHA loan. You’re going to have to have reestablished credit, you’re going to have to have demonstrated your ability to repay again. And trust me there are plenty of companies for a price that will lend you money immediately after bankruptcy.
You’re going to pay a higher interest rate, if it’s a credit card, you’re probably going to pay an annual fee, many times you’re going to have to do a secured credit card. Tyler, how many times we had people get secured credit cards?
Tyler: A lot.
Steve: Yes. Here’s the other thing too, as I said in the beginning, there’s exceptions to every rule. So there are times when you have what they call Extenuating Circumstances. Typically a medical issue, something major that happens that causes you to get late, which causes you to file bankruptcy.
Look, it says it in the guidelines, we looked at it the other day on conventional and unconventional, you can actually do FHA as well, you can do a mortgage after 12 months on a FHA if you have documented extenuating circumstances.
Tyler: Not lost a job. That’s not an extenuating circumstance.
Steve: No. “I got divorced” is not an extenuating circumstance because you chose to do that. Alan Brimley is asking on Facebook if we do loans on airplanes? No, we don’t, I can see you been working on your pilot’s license. Sorry.
So if you had a medical issue, maybe you got cancer and you were a fighter, you made it through, everything was good, but it ruined you financially and you filed bankruptcy. That might be something that happened that with documented medical bills, doctor’s note, that type of thing, that you can actually get a mortgage within that two year timeframe for example on FHA.
Tyler: It’s just going to be a lot of work though.
Steve: Yes, it is. And I won’t bore you guys with the- because we read this the other day, what the guidelines say, and it’s really an underwriter discussion. So you’re going to have to have an underwriter that that buys into what you’re doing and you’re going to have to document out the ying-yang. What does that mean ying-yang? You have to document out the-
Steve: Wazoo, or the other word out that, yes that.
Steve: Yes, that. Anyway, to recap some of that, on an FHA, we got two years, 24 months, on a conventional, I got four years, on a VA, I’ve got two years. USDA, we didn’t talk about USDA, three years, which is weird because USDA used to not even have a timing requirement. And then they went a little bit more aggressive than even FHA did.
Now USDA also has a provision that if you have extenuating circumstances that you can get a mortgage prior, but again, good luck because it’s a lot of documentation to figure that out. And everyone on Facebook is being funny. Are you on there? Are you watching us live on Facebook, while we’re recording? You don’t have to.
Alan Brimley is making things like that I pay cash for everything, I don’t need a mortgage, and I use cash to buy friends, Ryan Meyer says. [laughs] And maybe if I get these guys a loan, they’ll stop harassing me so much. Just kidding, both of them are great guys.
Bobby Thompson just jumped on here, another mortgage guy. He’s giving us facts on what the done well role comes from. [laughs] Anyway, the case that we are talking about, if you have like an extenuating circumstance, that doesn’t include getting over extended, having your business fail.
Anything that would have had something that you had control of, they’re not just going to say, “Okay, well, yes. Hey, I really tried my best to get this business going, Tyler and it didn’t work and so I had to file bankruptcy.” No. “Hey, times just got really tough and I had to file bankruptcy.” No. That’s not going to work.
Here’s what’s going to happen. You’re going to have to document a medical condition most of the time. Anyway, we’re talking today about filing a Chapter Seven bankruptcy and what the timing requirement is for a Chapter Seven bankruptcy, we’ll talk in a future podcast on specifically what a Chapter 13 or some other type of mortgage would have or time or requirement because they’re all different.
We talked about conventional is four years, FHA is two years, VA is two years, the USDA loan is three years. And then with extenuating circumstances, sometimes you get even before that, but you’re in have to document that at the wazoo, we decided is the term, the wazoo.
If you have filed bankruptcy, it doesn’t mean the end of the world. The advice that I could give anyone that would call me, is just to call me sooner. Right after you file bankruptcy, it’s like “Gosh, I did this and now I messed myself up and it’s going to be a couple years before I can buy a house.” Let’s get started on it now.
Because if you get with a professional, I can tell you all the stuff you need to do, so that you don’t call- Because it will happen though, people call me the day after their bankruptcy is 24 months old and they say, “Oh, my bankruptcy is 24 months old, now I’m ready to buy a house.” And then I pull their credit, of course, they don’t have any established credit, they’ve got lates on stuff, they got this, that, and then, now I can’t do it.
I’m saying call a lender, maybe a Tulsa mortgage lender, as soon as you file bankruptcy or as soon as that’s over, sometime in that timeframe, so that we can get started on it before your two years is up. Because when you’re trying to qualify for a loan, especially with us, here in Tulsa doing Tulsa Homeowner, Tulsa Mortgage Lender, the sooner that you can call me and the sooner that I can get started on your file the better, right Tyler?
Steve: Word. So anyway that’s Episode Number a lot of our podcast, the Steve N’ Tyler Show. I think we’re getting our numbers of how many podcasts we’ve got mixed up, I guess. But we’re talking about bankruptcy, don’t forget to check us out at getqualified.com, stevecurrington.com, tylerwhyburn.com, we’re your Tulsa mortgage lender and we’re out.
[00:17:23] [END OF AUDIO]