Articles Tagged With: Bankruptcy

August 23, 2017

Can I Get An FHA Loan After Bankruptcy?

Can I get an FHA loan after bankruptcy? That question is a common one, and the answer depends as much on the borrower as it does on the rules of the FHA single family loan program. In general, those who experience bankruptcy will be required to wait out a “seasoning period” described in HUD 4000.1 (the FHA loan handbook). Depending on what type of bankruptcy you filed, borrowers may also be required to get court permission before attempting to proceed with a new home loan. Mandatory FHA Loan Seasoning Periods Following Bankruptcy Bankruptcy rules may vary depending on the type, but in general a borrower’s minimum waiting period will be 12 months from the time the bankruptcy is discharged. The waiting period does NOT begin from the filing date. FHA | more...

May 19, 2017

An FHA Mortgage Post-Bankruptcy?

By Joe Wallace

Is a mortgage loan possible after bankruptcy? When it comes to FHA home loans the answer is yes, as long as the borrower meets FHA loan standards and sits out a mandatory waiting period (which may vary depending on the bankruptcy, state law, and lender standards). One reader asked a question this week about bankruptcy and FHA loans: “My credit rating is 677 as of 5/18/2017. My income is established by a job that Ive held for over 15 years. My bankruptcy was completed in July of 2011. Can I qualify for an FHA mortgage?” There are many issues at work in situations like these including whether or not the borrower has established a satisfactory pattern of credit activity following the bankruptcy action. The mandatory waiting period (under FHA standards, | more...

May 15, 2017

FHA Loan Rules For Bankruptcy: Chapter 7 and Chapter 13

By Joe Wallace

We’ve had a number of reader questions in our comments section recently asking about scenarios for loan approval that involve bankruptcy and related issues. Can a borrower get a new FHA loan following a bankruptcy? Under what conditions? FHA loan rules in HUD 4000.1 address this issue with separate entries for Chapter 7 and Chapter 13. According to the FHA loan rule book, Chapter 7 requires the lender to observe the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a Borrower from obtaining an FHA-insured Mortgage if, at the time of case number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During this time, the Borrower must have: – re-established good credit; or – chosen not to incur new credit obligations.” HUD 4000.1 | more...

April 25, 2017

Bad Credit FHA Loans? A Reader Question

By Joe Wallace

A reader got in touch about bad credit home loans in our comments section this week. “I am looking for companies/banks/ or mortgage companies that help people refinance during bankruptcy 13 and bad credit.” Does the FHA single family home loan program offer “bad credit” FHA mortgages? This reader comment/question shows that there are still some misconceptions about how the FHA loan program works. There’s no such thing as a “bad credit” FHA mortgage. Borrowers either qualify for the home loan or they don’t. But what are the actual standards for FHA loan approval? That’s complicated. There is a baseline minimum set of FICO scores that a borrower needs to have to even be considered under the FHA loan program. For maximum FHA financing with a required minimum down payment | more...

August 26, 2016

FHA Loan Rules: Post-Bankruptcy

By Joe Wallace

There are many questions about FHA loans and bankruptcy. Here’s an example of the kinds of questions we answer on a regular basis about becoming eligible once more for an FHA mortgage in the wake of a bankruptcy discharge: “My credit score is low and I will be discharged from bankruptcy coming this November. What can I do to raise my credit score and qualify for a FHA loan?” It’s very important for borrowers in this situation to know that FHA loan rules in HUD 4000.1 require a minimum waiting time (also known as a ‘seasoning period’) before a borrower can apply for an FHA mortgage. This waiting time begins at the time the bankruptcy is discharged, not from when it was initially filed. The waiting time depends on the | more...

April 23, 2015

FHA Loan Rule Questions: Chapter 7 Bankruptcy

By Joe Wallace

A reader asks, “I had a Chapter 7 Bankruptcy discharged on 09/16/13. My home was not included in the BK. I have owned the home for 3 years and have never missed or been late on a payment. We are considering selling our current home and purchasing another one closer to where my wife and I work.” “We have over $100,000 in equity in our current home. We have a combined income of $240,000 a year. We have reestablished our credit and have scores in the high 600′s. We currently have an FHA loan. What is the waiting period to qualify for another FHA loan after CH. 7 BK discharge? I have heard 2 years. Is there any way to reduce this time?” The FHA has a Frequently Asked Questions | more...

January 29, 2015

FHA Refinance Loans: Another Chapter 13 Question

By Joe Wallace

We have gotten a large volume of reader questions about refinancing a home while in Chapter 13 bankruptcy. Here’s the latest: “We have current mortgage, never behind on payment. We like to refinance our home mortgage, but we are discharge from Chapter 13 before couple months! How long we have to wait and are we are qualified? Thank you in advance!” Let’s examine what the FHA official site has to say about FHA loans and bankruptcy. It’s important to note that all situations vary including the rules at one financial institution compared to another. Some lenders may be willing to work with certain borrowers in circumstances that others would not–just because the FHA loan rulebook has provisions for borrowers to apply for loans while the applicant is dealing with a bankruptcy or the discharge | more...

January 28, 2015

Chapter 13 Bankruptcy and FHA Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “Is It possible to refinance while in chapter 13 for a lower rate. We Don’t qualify for the government HARP program.” FHA loan rules for getting new loans when it comes to bankruptcy allow the lender to exercise some discretion depending on circumstances, but depending on the type of bankruptcy a borrower may also need the court’s permission to apply. Borrowers in Chapter 13 bankruptcy have some options according to HUD 4155.1 Chapter Four Section C which states: “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that –one year of the pay-out period under the bankruptcy has elapsed –the borrower’s payment performance has been satisfactory and all required payments have been made on time, and –the | more...

October 3, 2014

FHA Loans After Bankruptcy and Foreclosure: A Reader Question

By Joe Wallace

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 | more...

October 22, 2013

FHA Loans After Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “What is the length of time after filing bankruptcy that you have to wait to qualify for a FHA loan…during that waiting process, what are some of the things that I should be doing to make the approval process easier and making my credit better?” FHA loan rules and lender standards are both considerations in situations like these, as is the specific circumstances of the individual’s bankruptcy and other credit issues. Borrowers should know that FHA minimums are just that–minimums. Lenders can and often do require higher standards. That’s why it’s important to consider shopping around for a lender who may be more willing to work with you–one lender may not be able to help, while another can, depending on your situation. For the record, FHA loan | more...