Articles Tagged With: Chapter 13 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...

March 15, 2017

Chapter 13 Bankruptcy: A Reader Question

By Joe Wallace

A reader got in touch recently about issues related to Chapter 13 bankruptcy and FHA mortgage loans. “I made all payments for 6 years on my chapter 13 and they said I have to wait 2 more years to be approved when my credit score is over 730. I dont get it I paid my dues and still have to wait.” The primary confusion here is associated with the FHA loan rules in HUD 4000.1 regarding “seasoning” periods that are required in the wake of certain types of negative credit events such as a bankruptcy. The rules vary depending on the type of bankruptcy you have filed, but in the case of this reader question, let’s examine what FHA loan rules have to say about Chapter 13 bankruptcy: “A Chapter | more...

July 14, 2016

FHA Loans and Bankruptcy

By Joe Wallace

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...

December 9, 2015

HUD 4000.1 On Post-Chapter 13 Bankruptcy Waiting Times For A New FHA Loan

By Joe Wallace

The recently-published rulebook for FHA single family mortgages, HUD 4000.1, contains new rules and guidelines for participating lenders, plus rules that have been updated, clarified, or restated from the previous editions of the rules. One important area of the new rule book pertains to potential FHA loan applicants who want to apply for a new loan following a Chapter 13 bankruptcy. We get many comments and questions each month involving scenarios where a borrower wants to apply for a new home loan following a bankruptcy. Since the publication of the new rules, what does the FHA/HUD have to say about filing for a new mortgage following a Chapter 13? From HUD 4000.1: “A Chapter 13 bankruptcy does not disqualify a Borrower from obtaining an FHA- insured Mortgage, if at the | more...

July 9, 2015

FHA Loans, Bankruptcy, and Short Sales

By Joe Wallace

There are many circumstances that can lead to bankruptcy and/or a short sale of the home. We get many reader questions about these scenarios. One recent question involves a married couple who were discharged bankruptcy three years ago, but are currently facing a short sale of their home. Does the couple qualify for a new FHA mortgage loan under such circumstances? There are many factors that could determine whether a lender is able to work with a borrower on a new FHA mortgage or not. One obvious one is credit rating and credit activity since the bankruptcy. Borrowers who have built up good credit since the discharge of the bankruptcy may find a lender willing to work with them–establishing reliable credit history after a “negative economic event” is one of | 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...