Boomerang Buyers, aka buyers that are returning to the housing market after short sale, foreclosure, or bankruptcy, must reestablish their credit but what exactly does that mean? Answers may vary between lenders but for the most part these are the general guidelines.
A spouse’s credit cannot be used to meet the requirements below.
If the bankruptcy, foreclosure or short sale is more than 7 years ago, the client does not need to meet re-established credit.
A minimum of 2 trade lines is required, one of which is housing related, such as a mortgage or rent payments.
If the client does not have any housing related trade lines a minimum of 4 trade lines is required.
The minimum trade lines used to verify re-established credit must be open for a minimum of 12 months prior to application.
The minimum trade lines used to verify re-established credit must have a date of last activity within the last 12 months.
Bankruptcy - max 0x30 on all accounts within the last 24 months and no new public records or collections within the last 24 months.
If the collection is a medical collection within the last 24 months it may be left unpaid, at the underwriter's discretion.
Foreclosure or short sale - max 0x30 on all accounts within the last 36 months and no new public records or collections within the last 36 months.
If the collection is a medical collection within the last 36 months it may be left unpaid, per the underwriter's discretion. The collection must not affect the client's ability to repay the mortgage.
Non-traditional sources of credit may be used to supplement the minimum tradeline requirements, if the client has a valid credit score. Non-traditional trade lines could be things such as cell phone bills, utility bills or verification of rent.
For more information email or call Garrick Werdmuller at 510.282.5456 or firstname.lastname@example.org.