What are Extenuating Circumstance for Mortgage after Foreclosure?
If you have been a party in a foreclosure proceeding, you may find it difficult to receive a mortgage. However, there are some ways to get a mortgage even after a foreclosure. Insured mortgages are sometimes granted to individuals who have been foreclosed against if there were extenuating circumstances leading to the foreclosure. The Federal Housing Authority (FHA) is a government agency that will insure mortgages for persons with a previous foreclosure. Other private mortgage companies may allow borrowers to qualify for a mortgage after a foreclosure if they wait for a period of years, or if there were extenuating circumstances that led to the foreclosure.
What is a foreclosure?
A foreclosure is a legal process in which the party which holds a lien against the property takes ownership away from the party who is in possession of the property. This typically occurs after several months of nonpayment. The government may also foreclose for nonpayment of taxes.
What are extenuating circumstance for mortgage after foreclosure?
An extenuating circumstance is any situation that was beyond the borrowers control. Some examples of extenuating circumstances are:
3. Accident resulting in a serious injury
4. Job Transfer
5. Divorce, in limited circumstances
Different mortgage companies will have different standards for extenuating circumstances. Potential borrowers should be sure to consult with lenders to fully understand what are extenuating circumstance for mortgage after foreclosure for each individual company.
What are the next steps?
If the borrower believes he or she has a valid claim that extenuating circumstances were the cause of the foreclosure, the next step is to write a letter to the potential lender explaining the situation. Known as a “cry letter,” this document should include all proof that the extenuating circumstance actually occurred. Additionally, the borrower should include information establishing that the extenuating circumstance has been corrected and demonstrate that he or she has reestablished his or her credit since the foreclosure.
Since the collapse of the housing market, foreclosures have become more common. Many lenders are willing to work with borrowers who lost their homes due to extenuating circumstances and can otherwise demonstrate their credit worthiness. While it may take some extra time and effort, borrowers should not feel discouraged about qualifying for a mortgage after foreclosure. Remember, each lender has their own criteria for establishing extenuating circumstances. Research is key.