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Get a mortgage after foreclosure
My home had a mortgage against me (wife). The house deed had both of our names on it. The house has since foreclosed. Is my husband liable for the mortgage or taxes. He is applying for a new mortgage, they brought up the foreclosure. Will he be approved?
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1 Reply
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I can share some information that might help you understand the matter, if you don’t mind. Your husband’s liability concerning the mortgage and/or taxes and how the potential foreclosure impacts his future mortgage possibilities hinges on many factors, such as the mortgage terms, state laws, and finances. I’ll explain it more and give you answers to your questions below.
Is your husband liable for the mortgage?
Mortgage Liability:
Based on your statement of “mortgage against me (wife),” if the mortgage was only in your name and your husband did not sign the mortgage note, he is generally not liable for the mortgage debt. The mortgage note outlines who must pay the loan; only those who signed it are typically held responsible. He could be eligible, however, if you reside in a **community property state** (California, Texas, Arizona, etc.), since debts incurred during the marriage might be considered mutual obligations by law.
Deed vs. Mortgage:
Having both names on the house deed means that both of you owned the property, probably as joint tenants or tenants in common. However, ownership (through the deed) and liability for the mortgage (through the note) are different. If your husband didn’t sign the mortgage note, he likely would not be liable for the debt. However, the foreclosure could still negatively impact his credit(see below).
Foreclosure Impact:
Your husband may not have been liable for the mortgage. Still, if his name were on the deed or associated with the property, the foreclosure would likely appear on his credit report. Lenders look up public records, and foreclosure is one of those recorded processes. This may cause issues when one is applying for a new mortgage.
As for your husband, is he liable for the property taxes?
- Generally, property taxes are linked with the property and not the mortgage.
- Because both of you were on the deed, you were jointly liable for property taxes for the duration of your home ownership.
But:
- In the case of a foreclosure, the new owner, who is typically the lender or a buyer at auction, is responsible for the future taxes on the property.
- Depending on state regulations and whether particular tax authorities issue collections against previous homeowners, unpaid property taxes from when you owned the home may still be pursued.
- For your husband’s case, if he didn’t pay taxes due to foreclosure, this information could be publicly available and negatively impact his credit or mortgage application.
- There are situations where outstanding taxes are handled during foreclosure (the lender clears the debt to enhance ownership).
- However, it is best to examine your foreclosure paperwork and contact the county tax office to be sure.
Will your husband get a new mortgage?
Your husband’s access to a new mortgage will probably be more difficult due to the foreclosure on your previous home. That being said, approval remains within the realm of possibility, subject to many different conditions:
Credit Impact:
- Assuming your husband was not included on the mortgage note, he will not suffer the consequences of the foreclosure being recorded as a derogatory mark associated with the loan.
- As long as he wasn’t tagged as an owner or had no financial responsibilities (like unpaid tax obligations), he would not incur the negative impacts of a lowered credit score due to the foreclosure, which may be tied to unrecorded public documents or secondary finances.
- A lender evaluates a prospective borrower’s credit file, checking reports, and payment histories.
- A foreclosure in public records could raise doubts regarding financial well-being, even if it is not directly linked to a credit score.
Lender Requirements
Waiting Periods:
- Most lenders await approval on new mortgages after a foreclosure.
- Conventional loans, such as Fannie Mae and Freddie Mac, have a waiting period of 7 years from the foreclosure date.
- This period can be shorter (e.g., 4 years) with a deed-in-lieu of foreclosure and short sale.
- For FHA and USDA loans, the waiting period is usually 3 years.
- VA loans have shorter waiting periods of about 2 years if there is good credit and recovery.
- As a co-owner of the foreclosed property, most lenders will still consider most lenders will still consider your husband’s financial history without regard to his name being on the mortgage note.
Debt-to-Income Ratio (DTI):
- LTIs will be based on your husband’s income and specific debts, evaluating the newly added mortgage.
- If his DTI and steady income are good, the mortgage has a better chance of approval.
Credit Score:
- If he has a foreclosure on his credit history, this will impact his credit score.
- This may result in higher interest rates or more stringent loan terms.
- Most lenders require a minimum credit score of 620 for conventional loans or 580 for FHA loans.
Documentation:
He might have to submit a clarification document regarding the foreclosure, which is now being mentioned. He needs to explain that the mortgage was in his wife’s name and give his financial history to demonstrate that he is a low-risk borrower.
Type of Loan:
Compared to conventional loans, FHA, VA, and USDA loans are more forgiving to borrowers with a foreclosure history.
If your husband is eligible for any of those, he might have better chances of approval.
Down Payment and Reserves:
Increased down payment and cash reserves can alleviate the lender’s worries about foreclosure.
Steps to Enhance Approval Odds
Check Credit Reports:
- He should access free credit reports from all three bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
- This way, he can check if the foreclosure is listed and contest any errors (like being the debtor when he didn’t sign the note).
Talk to a Broker specializing in Mortgages:
Brokers have contacts with lenders who would accept someone with a prior foreclosure and can suggest appropriate loan programs customized to their needs.
Gather Documentation:
Provide evidence where the mortgage was in your name exclusively (like mortgage and foreclosure documents) and that your husband has been solvent and financially responsible since that date.
Enhance Financial Profile:
Illustrate fiscal prudence by settling existing liabilities, avoiding new credit inquiries, and increasing savings.
Joint Loan Implications:
Credit and foreclosure history will play a major role in determining eligibility if the loan is sought jointly. Suppose the husband’s credit score is significantly reduced due to other factors. In that case, it may be more advantageous for him to proceed independently.
Considerations
Laws for the State:
Each state’s mortgage liability, community property, and tax liabilities differ. For instance, in community property states, while only one spouse signed, debts accrued during the marriage might be considered joint. Could you seek legal counsel in your jurisdiction to help clear these issues?
Deficiency Judgment:
Suppose the foreclosure sale didn’t recoup the entire mortgage amount. In that case, the lender may have sought a deficiency judgment based on the state’s rules. If it exists, could you verify where the judgment lies, if solely against you or your husband? This determination may influence your spouse’s financial standing.
Tax Implications:
Suppose the bank forgives a mortgage debt after foreclosure. In that case, a 1099-C (Cancellation of Debt) form will probably be issued, which can have tax consequences. While this usually impacts the person on the mortgage (you), in the case of joint filing, your husband can be affected, too.
Recommendation
Your husband’s chances of getting approved for something hinge on how the foreclosure was reported, his financial situation, and the lender’s rules. To gain clarity:
- Retrieve details from the lender about the concerns flagged regarding the foreclosure and their reasons.
- Contact a mortgage expert (like a loan officer or a broker) who can evaluate the credit and income details alongside the foreclosure to determine eligibility.
- If necessary, consult a real estate lawyer to ascertain your husband’s potential liability concerning the outstanding mortgage or tax debt left behind after the divorce, particularly if you live in a community property state.
You would have to contact the lenders directly to obtain the loan pricing and terms for specific mortgage products because I don’t have real-time access. If you gave me more information, such as your state, the foreclosure date, or your husband’s credit score, I could give you a more customized response. Would you prefer I focus on collecting more details or responding to a specific question?
https://gustancho.com/waiting-period-to-qualify-for-a-mortgage/
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Waiting Period To Qualify For a Mortgage After Foreclosure
Non-QM loans has no waiting period to qualify for a mortgage after foreclosure and bankruptcy with 20% to 30% down payment and no loan limit.