Articles Tagged With: Chapter 7 Bankruptcy

July 14, 2016

FHA Loans and Bankruptcy

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...

What you should know about FHA 203(h) Loans For Disaster Victims

January 14, 2015

FHA Loan Rules For New Loans Following A Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “My husband went bankrupt and it was discharged on may 7,2013 since then we have been bringing his credit up to 620 and my score is around 770 my question is on what month or day can we apply for a FHA loan and is our score good enough?” Unfortunately the answers to these questions depend greatly on a number of factors including lender standards. The waiting period following a bankruptcy–how long the borrower must wait before being allowed to apply for a new mortgage–depends on the type of bankruptcy and lender standards. FHA loan rules do provide a minimum waiting time depending on the type of bankruptcy, but these wait times are also dependent on circumstances. For example, here are the FHA loan rules for Chapter | more...

March 3, 2014

FHA Loan Waiting Periods Post-Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “In 2007 I applied for bankruptcy and got dismissed in 2008. The creditors didn’t accept my plan. In 2008 house got sold. I need to know the waiting period before applying for an FHA loan.” There are two types of bankruptcy mentioned by name in the FHA loan rules found in HUD 4155.1. One is Chapter 7, the other is Chapter 13. Since the reader didn’t mention which type of bankruptcy, we’ll quote both guidelines. For Chapter 7, HUD 4155.1 Chapter Four states: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have: –re-established good credit, or –chosen not | more...

November 13, 2013

FHA Loans and Bankruptcy Requirements: A Reader Question

By Joe Wallace

A reader asks, “My bankruptcy was discharged December 7 2011. Prior to filing I had very good credit, but was forced to retire because of cutbacks. I currently have a Fannie Mae insured mortgage through a local bank and want to go to a small house and sell my current one. Since filing discharge my wife and I have a good credit record. When I called the bank they now tell me FHA requirement is 3 years. Previously I was told 2 years. Who is right and what can I send the bank to show them the answer.” FHA standards say different things depending on the type of bankruptcy and the circumstances surrounding it, but in any case borrowers should know that lender requirements may exceed the FHA minimums–the bank | more...

June 18, 2013

FHA Loan Reader Questions: Chapter 7 Bankruptcy

By Joe Wallace

A reader asks, “I have a Chapter 7 and I want to apply for a FHA home loan. If my scores are in the high 600′s or 700′s? Do I still have to wait two years after my bankruptcy has been discharged to apply?” FHA loan rules on the subject of getting a loan after a Chapter 7 bankruptcy filing are found in HUD 4155.1 Chapter Four, Section C. The FHA loan rules say borrowers with a Chapter 7 on their credit record are not automatically barred from getting an FHA mortgage, but the following applies: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, | more...

February 15, 2012

FHA Loan Questions: Is There Any Way Around My Bankruptcy?

By Joe Wallace

A reader asks, “Bankruptcy filed just 2 years ago, is there a way around that? Have a descent (sic) income, employment and debt to income ratio.” There are two types of bankruptcy borrowers sometimes ask about in these cases. One is Chapter 7, where the borrower has debts discharged. The other is Chapter 13, where borrowers have a restructured payment plan enforced by court order. For Chapter 7, FHA loan rules require a minimum two year waiting period from the discharge of the bankruptcy before a borrower may apply for a new FHA mortgage. There is no workaround for this two-year minimum, even when the borrower has tried to reestablish good credit and employment in the wake of the bankruptcy. However, for those who have filed Chapter 13 bankruptcy, FHA | more...

January 26, 2012

FHA Loan Reader Question: Refinancing a “Private Loan”?

By Joe Wallace

A tricky FHA loan question came in recently asking about FHA refinancing, bankruptcy, and more. The reader asks; “I have a situation where i have filed BK chapter 7 and had my house foreclosed, at the same time i had a money lender purchase a house for me and put it in my name and I make payments to him, I have been making payments for 21 months all on time and with taxes and insurance. I would like to refinance through a regular lender and pay off the original loan…So how do I refinance this loan and when am I eligible to qualify? It has been over two years from filing chapter 7 and it will be two years from the foreclosure in Oct 2012. Any thoughts?” There are | more...

January 18, 2012

FHA Loan Reader Question: FHA Loans After Bankruptcy

By Joe Wallace

A reader asks a question about FHA loans and bankruptcy; “It will be two years since my bankruptcy discharged. I want to get a home and I am reading that the FHA will turn you down for post-bankruptcy late payments. Is this true?” According to the FHA official site at FHA.gov, the general rules for FHA loans post-bankruptcy include the following: “The FHA is generally more flexible than conventional lenders in its qualifying guidelines. In fact, the FHA allows you to re-establish credit if: – two years have passed since a bankruptcy has been discharged – all judgments have been paid – any outstanding tax liens have been satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue – three | more...