Re-established Credit

Post date: Sep 05, 2013 7:32:31 PM

Good Morning,


Apparently there are many borrowers ready to get back into the market after the drama of the last seven years.  Here is our policy if a borrower has had a Foreclosure, Bankruptcy, Short Sale and or Loan Modification with principal reduction:  Bottom line – 4 years, perfect credit, 4 lines re-established.


Re-established Credit


After a bankruptcy, foreclosure event, in order to meet the definition for an acceptable, re-established credit history, the following criteria must be met:


Time–Frame – Acceptable credit history must have been re-established for a minimum of 4 years. Exceptions to this policy may be considered under the following conditions:

• A shorter elapsed time of 2 years is considered to be an acceptable interval for re-establishing a credit record when the adverse action was a Chapter 13 bankruptcy.

• Two years is also considered an acceptable interval for re-establishment of credit, if the adverse action related to a Chapter 7, 11, or 13 bankruptcy, as long as the borrower can satisfactorily document that the bankruptcy–related action resulted from extenuating circumstances (reference RLU 404-10 - Extenuating Circumstances.)


Evidence of Re-Established Credit – Whether a bankruptcy or foreclosure occurred due to extenuating circumstances or financial mismanagement, the following requirements must be met:

• All accounts are current.

• Borrower has a minimum of 4 tradelines or 4 non-credit payment references.

• Each of borrower's minimum payment references has been active within the most recent 24–month period.

• If the derogatory credit included tradeline credit, then the borrower has re-established at least one tradeline credit.

• One of the payment references is housing–related. The housing-related reference is not required when the borrower meets the following criteria:

o Borrower has 4 re-established traditional tradelines showing on the credit report, each with a minimum 12 month history.

o One of the accounts has a significant balance with a payment (automobile payment or larger credit card)

o Borrower is making minimum 5% down payment from his or her own funds (includes EOM loans)

• If the borrower has monthly rent payments that weren't reported to the credit repositories, documentation must show that rent payments were timely during the most recent 12 months.

• There are no new public records for bankruptcy, foreclosure, unpaid judgments or collections.

• No 60–day late payments

• No more than two 30–day lates.

• No housing payments past due during the applicable time–frame.

• Evidence that the credit history does not contain multiple revolving accounts with high balances-to-limits or high overall utilization of revolving credit.



·         Rates remain unchanged. 

·         Purchase Special Extended

o   Available for all FULLY AM 3/1, 5/1, 7/1 and 10/1 ARMs (IO loans do not qualify)

o   Receive 0.25% improvement to RATE

o   O/O and Second Home (SFR, PUD and Condo) eligible

New Purchase Special to be announced soon.  Submit now to secure current special


I appreciate your business…Have a terrific day.