October 3, 2014
A reader got in touch with us recently with a lengthy question. We won’t run the entire correspondence, but the question goes as follows:
“I filed Bankruptcy over 3 years ago and it was discharged in June of 2011. Included in that Bankruptcy was the current house we had purchased. On my credit report it clearly shows that the loan to that property was part of the bankruptcy and was discharged in June of 2011. We are trying to buy again under an FHA Loan and we were almost done when the underwriter found that the deed to the property we included in the bankruptcy did not get changed out of our name and into the bank’s name until…22 months later.”
“We were denied financing because that only left us in a waiting period of 1.5 years from the foreclosure. I am trying to understand this but how is it I am being denied because the bank did not do their part at the time of the bankruptcy discharged? Fannie Mae has addressed this by allowing the waiting period to start at the time of the Bankruptcy Discharge and not the foreclosed date as long as documentation can prove the home and lender where included in the bankruptcy discharge, which mine is. What can I do and does FHA have anything in the works to change this rule also?”
FHA loan rules include different minimum waiting periods for Chapter 7 and Chapter 13. The type of bankruptcy wasn’t mentioned in the reader question so it’s difficult to tell what may apply with any certainty. That said, minimum FHA waiting periods aren’t the only rules that may be in effect here–the lender’s standards for the new loan may play a part in loan approval or denial depending on circumstances.
The reader’s best chance for a loan may be to find another lender willing to work with the borrower’s circumstances. The answer to the reader’s second question, “Does the FHA have anything in the works” to change the waiting time requirements in light of circumstances mentioned above is an answer only the FHA can give–we aren’t privy to information not released to the general public.
For information or assistance on issues like these, contact the FHA directly at 1-800 CALL FHA.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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