Refi into a Conventional - Help me understand this

14 Replies

Is it possible to refi from an FHA to a conventional loan? I'm into year 6 and have not reached year 7 yet. I've had a foreclosure in the past. I want to figure out how to get my second home but I'm stuck. Any advice is appreciated.

@Paul Vang It depends on exactly how long ago your foreclosure was. Fannie Mae guideline says you have to wait 7 years for a conventional mortgage.

@Jared Bouzek thats what I was told.  I guess I have to wait til I reach the 7th year then. 

@Paul Vang Unless you can prove "extenuating circumstances" that led to the foreclosure and have a clean credit profile since then. You'll need a pretty rough story and documentation to prove the extenuating circumstances. That would be the only way to get an exception to the 7 year wait.

I'm not sure if this constitute an "extenuating circumstances" but my wife had a health condition and were in and out of the hospital.  Along with that, she was laid off. 

@Paul Vang Under those circumstances you may be able to get an exception if you find a lender willing to listen. You will be required to write a letter of explanation explaining the extenuating circumstances, provide documentation of the event(s) such as hospital bills, layoff notice, severance agreement, etc. In a basic sense, an extenuating circumstance is defined as being a "one-time" event that was beyond your control and caused significant financial hardship resulting in the foreclosure.

@Jared Bouzek I appreciate the input.  I'll look around to see if there are possibilities.  

Yup @Paul Vang , health conditions work pretty dang well as extenuating circumstances, just as @Jared Bouzek said. The key is that health conditions are one-time things beyond your control. Financial hardship caused by getting a new Lamborghini, by contrast, is not beyond your control.

Realistically, what I see jam people up in these scenarios the most is you having to go dig up six year old paperwork. 

@Chris Mason do you know of any lenders that will even look at a client with a foreclosure before the 7 years?  Can you name a few?

Originally posted by @Paul Vang :

@Chris Mason do you know of any lenders that will even look at a client with a foreclosure before the 7 years?  Can you name a few?

 Its luck of the draw for banks that assign underwriters through a round robin process but some banks like the one I am at, I have an assigned underwriter so the outcomes are more "predictable," when requesting grey area exceptions like exentuating circumstances(EC). These are underwriter calls so there is no black and white formula for them.

You may want to have all your documentation ready to colloborate the story along with a thorough description of the events explained through a letter leading up to the EC (health documentation + documentation of job loss).

This would give you the best chance at obtaining the EC.

@Paul Vang i have lenders that don't have the 7 year waiting period . Send me a pm if you still need to refi. 

@Gordon Cuffe thank you for the offer.  I'm working through one right now.  We'll see how it goes.  

@Paul Vang was your foreclosure a part of a bankruptcy?  If your foreclosure was a part of a bankruptcy then the bankruptcy waiting periods would apply which is 4 years from discharge or dismissal for a Chapter 7 and 2 years from discharge or 4 years from dismissal for Chapter 13.  That is the Fannie/Freddie guideline and it is within the right of a bank to be MORE conservative if they want.  So a bank could say "we require 7 years not matter what" and that would be ok with Fannie/Freddie but there are plenty of lenders who just stick with the minimum.  Private message me if you need help locating one in Cali.  Hope this helps! Thanks!

@Andrew Postell I'm working on one right now.  hopefully it goes through

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