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FHA loan after Chapter 13 dismissal

Hello, I was a home owner for 11 years, and like others, ran into some financial problems. I decided to enter a [url=http://www.mortgagefit.com/bankruptcy/chapter13.html]Chapter 13 bankruptcy[/url]. About 2 years into that plan, I decided to dismiss the Chapter 13, sell my house, rent for a year, then try to re-purchase another home.
My question is, On a FHA Mortgage, is there a waiting time, to get approval?
any help would be great. thanks

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Fozman68,

If you hadn't had the Ch 13 dismissed the credit clock would've started ticking from the time you filed the Ch 13...but since you had it dismissed, the clock started at the date you dismissed it.

To purchase a home with a FHA mortgage, you need to have 2 clean years of credit after the bankruptcy discharges, or in this case the date of dismissal.

Be sure to pay your rent on time, make sure you pay with a check or money order, so you can document it. Be sure to reestablish you other credit and definitely be sure to make all payments on time and not let anything go to collection.

After a bankruptcy, lenders will take a much harsher look at any lates or collections.

Hope this helps...for more tips, check out my blog...

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

kpatrick's picture
kpatrick | Joined: October 29, 2007 05:46 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hey Fozman68,

THat was me who answered you...but I forgot I wasn't logged in...sorry,

Kim

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I heard that an FHA loan could also be obtained while you are still in bankruptcy Ch 13, if no derogatory credit has been recorded in the past 12 months. Is that true?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Fozman,

Even I agree with Kim. To get the approval for an FHA mortgage, you will have to wait for 2 years after the bankruptcy has been discharged.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Fozman,

Welcome to this forum.

Kim is very right. To qualify for FHA mortgage, you must have 2 years of clean credit history. Make all the debt payments on time and try to improve your credit report. Bankruptcy has a huge affect on your credit report. So even if you make all the payments on time, it needs at least 2 years to come over from that affect.

Feel free to ask if you have any further questions.

Thanks,
Larry

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Since I can't get a FHA, are there still sub-prime mortgages available?
I've worked on my cr.report. I raised it from 495 to 648 (middle scores), in 11 months. I also plan on putting 20% down. What are my best options? I really don't want to rent another year.
thanks again.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

[quote:037c1d7e69]I heard that an FHA loan could also be obtained while you are still in bankruptcy Ch 13, if no derogatory credit has been recorded in the past 12 months. Is that true?[/quote:037c1d7e69]

Yes it is true, if you can get the court to agree to allow you to, and you have made at least 12 months of payments.

The general rule is this for Ch 7 BK's you have to wait 2 years. Ch 13 is 1 year from discharge date.

Hope this helps.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Fozman,

As Eric has already stated that you may still qualify for an FHA mortgage if the court allows you and if you have on-time payments for the last 12 months.

I suppose you have been regular with payments in the last 1 year and with a 648 score, I think you may try for the FHA mortgage.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

evolovik26's picture
evolovik26 | Joined: August 15, 2007 11:43 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

yeah definately check out FHA b4 going subprime rout will save you lots of $$$ and at the worst you will get a no.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

FHA Mortgage Loans is 1 yr for chapter 13...and 2yrs for chapter 7 or foreclosures.

This is stated in their guidelines.

You can have a 400 credit score...but you cant have any credit lates in the last 12months. Medical debt maybe overlooked.

Make sure to find a FHA lender who does 'manual underwrite' if you have a low score. There arent many FHA lenders that do manual underwrite

[size=9:be31223a3e][color=DarkRed:be31223a3e]edited per forum rules[/color:be31223a3e] [/size:be31223a3e]

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fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, just got word from my broker, says found 2 different offers for me, and one was a FHA Loan.
Just asked to have any balances over $250.00 on my c.rep. paid off.
did also say that the interest rate would be around 9%, but that the refi, on FHA, is easy.
thanks for everyones help.
fyi- company I'm working with is Eagle Natiionwide Mortgage.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

with FHA you shouldnt get a rate higher than 7.25% for a 30yr fixed!!

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Why are they already talking about a refi?

Be vary careful if they are giving you the line..."this is only temporary or a band-aid loan". If they are trying to do a subprime 2/28 or 3/27 loan and then [url=http://www.mortgagefit.com/refinance.html]refinance[/url] you to FHA in 1-2 years, be careful. This is a prime reason a lot of folks are going to foreclosure right now. What happens if you can't refinance? Your payment will go through the roof as you will be getting an adjustable rate. Now if they give you fixed rate, make sure it is not a 30 year loan DUE in 15 years. Or any other type of BALLOON loan.

Let me know if you have any questions.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Just to clarify, I was told that I could get approved for a FHA Loan, as long as I clear up my credit report, (not including medical).
Says there are 3 to clear up. Now 2 of these are over 6 years old, is this part normal? Anyway, my plan is this....
Instead of putting 10-20% down, pay off these old debts, get approved for FHA, put 3-5% down, and invest the rest somehow.
Any other input would be great, but let me thank everyone one more time.
Thanks!
Ken

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Fozman...the statement from your lender can be true for them...and it maybe false for others.

Most lenders who are FHA approved don't offer 'manual underwrite', and may not offer FHA loans to borrowers with scores less than 550.
If this is the case..then the broker/lender is trying to bring up your credit score to where it needs to be per their guidelines.

FHA's guidelines state that you may not have any credit lates in the last 12months.....or will need a good letter of explanation.
No foreclosures within 2yrs...no chapter 7 within 2yrs...and no chapter 13 within 1yr.

You would need to show at least 3tradelines that are positive within the last 12months. (some lenders may say less).

I'm a mortgage broker and work with over 440 lenders.
Not all of them offer FHA....and not all offer manual underwrite.
I probably only know of 1-2 that actuall go less than 500 credit scores.
FHA has no credit score requirement...but that doesnt mean the lender wont.

So it may be true with his lender....but you may shop around...and see that it may be done with another lender with the same rates.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, I took some advise, talked to another lender, to see about their rates, and manuel overwriting. Unfortunatly, I was told they couldn't help me. My credit score dropped somehow to 610, but the reason they couldn't help was because even though the bankruptcy was dismissed in 10/06, my credit report showed mortgage lates for 11/06 12/06 and 1/06, and shows foreclosure started 1/06, then paid off 3/06.
My question is this- FHA looks at 12 months of no lates, is this going to effeect me in 02/08, on getting final approval?
starting to worry, Ken

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I would've gotten a 2nd opinion. If these items are collections some FHA lenders will overlook them...especially if there over 6yrs ago.

Ask your lender if they do Manual Underwrite.
If they dont...this maybe one of the reasons why they're asking for so much.

Right now you shouldn't get higher than 6.25% on a 30yr fixed FHA mortgage

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

banker,

What is your deal with 6.25%? You have told in every one of your posts lateley that the going rate is 6.25%. Please stop as it doesn't help someone to not answer their question and just to write "you should get 6.25%"

If you are approved through manual underwriting your rate will be higher with those lenders than with a normal FHA loan, not 6.25%, more like 7.5%.

This has been my experience and yes, I have an in-house FHA underwriter, you need....

1. 12 months of current payments on everything
2. No judgements or liens
3. All collections, judgements, liens need to be paid off. (except medical bills)

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

OP -
Foreclosures require 2yrs for FHA....this is what is prohibiting you from taking out the FHA for now. If you have a BK 7..it's also 2yrs. BK13 is 1yr

Also, I work with over 440 lenders....find a lender that DOESNT charge to do MANUAL UNDERWRITE, and you will receive a rate for 6.25%.

Ask your broker if they deal with Taylor Bean Whitaker (wholesaler).
They dont charge for Manual underwrite......Their highest rate TODAY is 6.875%.

Normally, a lender may charge the broker 0.5% to perform Manual Underwrite. Of course the broker/lender passes the cost to the borrower.
This is why I like TBW (taylor bean)...no hits for loan amount..and no hits for manual underwrite!

good luck!

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

But when does TBW approve with collections? Could you pm me with your AE's name and phone #. I would greatly appreciate it.

I think he will probably have to take care of them or pay them off.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I didnt say anything about collections or judgments.

bottomline is that the OP wont be able to do FHA until 03/08...due to the FC.

Collections that are 2yrs old or more can be ignored.

You should hookup with TBW they have great rates.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

foz- i looked up the Foreclosure guidelines, and it states 3yrs.

Sorry for the confusion.
I have done a few around 2yrs, but they had valid reasons to why they went into FC.

If you dont have a valid reason the U/W will require 3yrs from when the FC was paid.

sorry once again!

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I WAS IN CHAPTER 13 FOR 2 1/2 YEARS, DECIDED TO SELL MY HOUSE, AND WAS TOLD BY MY REALTOR TO HAVE IT DISMISSED, SO THAT IT WOULD MAKE IT EASIER TO SELL. CHAP 13 DISMISSED 10/06. HOUSE SOLD, AND WENT TO SETTLEMENT 2/23/2007. I DIDN'T EVEN KNOW THAT THE FORECLOSURE WAS STARTED BACK UP. HAD THREATS OF A FORCLOSURE, BEFORE, THATS WHY I WENT FOR CHAP.13. ? DO I HAVE A CHANCE IN FEB. OR MARCH '08, TO GET A FHA LOAN?

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fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

sorry, that was me writing, forgot to log back in.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

depends what your credit report states about the foreclosure.

if it was in the last 3yrs then the answer is no. Sorry.

Be upfront with your loan officer and ask them about this.
Ask them about the Foreclosure on your credit report..and what are the guidelines.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It sas : Paid, Closed/Current, foreclosure was started.
I spoke with my broker and he told me to call the mortgage company, and ask them to take it off. Mortgage company asked me to put it in writing, and send to there "Customer Advocate Dept" fax.
Do I have a chance in this happening, or is there a better way?

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sounds like you did a short sale?
That means that your M-9 for FC should change to M-5 for a short sale.

Speak to the loss/mitigation department.
There the only one who can provide you the letter you need for the U/W.

In the meantime, dispute your credit report if the FC never happened.

I'm surprised your Loan Officer didnt cover this before.

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fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

banker,
This wasn't a short sale, and the FC never happened.
you say "speak to the loss/mitigation dept" . are you talking mortgage company that has listed this info on my cr.rep.?
"surprised at loan officer". yeah me too! Any good brokers in Delaware on this site, who want to help me?

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

it's up to the Underwriter.

the loss/mitigation will provide you a document that states that the foreclosure never happened.

dispute it on your credit report...and tell them it should say m-5...not an m-9

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fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

credit report says MTG 01
says CURRENT/FORECLOSURE WAS STARTED
Under MTG 01 says REAL ESTATE then under that XPN 01 (EFX,TRU)
does this mean I have to send a dispute letter to all three bureau's?
Thanks for all your help here. This is driving me crazy, but I wan't to get this done, and will do whatever it takes.

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

ask the broker.....it matters what his credit report states.

i would still get the documents from the loss/mitigation department.
(this make take a few days)

a DE Underwriter will need to make a decision on your loan.

1. No lates in the last 12months
2. BK 13 needs to have been dismissed/discharged 12months ago.
3. collections that are over 24months MAY not have to be paid.
4. all judgments need to be paid.
5. Foreclosure started but not processed will need to be approved by the DE U/W.
You will need to find out which company is reporting foreclosure was started.....sometimes it's only 2 companies. You can call the credit bureaus directly to find this out.....and dispute over the phone.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

(would still get the documents from the loss/mitigation department.
(this make take a few days) )
What do you mean by this? What company? what documents?

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

the mortgage company that you were late with or the one that is reporting the foreclosure was started.

ask them for a document stating that you never foreclosed.

make sure which credit bureau is reporting this.
if XPN -experian is showing mtg 01 then you wont need to dispute with them
if transunion or equifax is reporting foreclosure then you need to dispute it with them.

i had a customer that had the same thing reporting on the credit report....and the U/W stating they wanted to know what happened to the foreclosure proceedings. they wanted to make sure they didnt foreclose....

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fozman68's picture
fozman68 | Joined: November 14, 2007 10:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can someone tell me what the difference is between MTG01 and MTG 08?
I was reported as 01, but now it shows 08?
which is better?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Fozman,

MTG01 might stand for the mortgage which is perhaps under foreclosure (from your first post) . Have you gone through a foreclosure recently?

I think it will be better for you to talk to the bureau who has prepared your credit report.

Thanks

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

an fha rate at 9% is ridiculous - you need to consult with another lender. as far as using your minimum down payment, that is fine as long as you don't mind having a lack of equity for a while. remember, any money down will reduce your mortgage amount, which reduces your payment, which...and on and on...

as for paying off the old debts...yes, you need to pay them all in full in order to meet fha requirements.

you are working in the right direction, but i have to seriously question any lender who would tell you the fha rate is even remotely close to 9%. that makes no sense.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

greg1's picture
greg1 | Joined: January 29, 2008 09:38 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, this post certainly is filled with mixed opinions!

Let's revert to direct exerts from the 4155-1 rev.5

[quote:b387d6c55e]D. Previous Mortgage Foreclosure. A borrower whose previous principal residence or other real property was foreclosed or has given a deed-in-lieu of foreclosure within the previous three years is [b:b387d6c55e][u:b387d6c55e]generally[/u:b387d6c55e][/b:b387d6c55e] not eligible for a new FHA-insured mortgage. However, if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has re-established good credit since the foreclosure, the lender may grant an exception to the three-year requirement. Extenuating circumstances include serious illness or death of a wage earner, but do not include the inability to sell the house because of a job transfer or relocation to another area.[/quote:b387d6c55e]

So 3 years. But, I have closed one loan with less than 3 years out due to a documentable extenuating circumstance.

[quote:b387d6c55e]E. Bankruptcy. A [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]Chapter 7 bankruptcy[/url] (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. Additionally, the borrower must have re-established good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs. [b:b387d6c55e][u:b387d6c55e]An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.[/u:b387d6c55e][/b:b387d6c55e] Additionally, the lender must document that the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.

A [url=http://www.mortgagefit.com/bankruptcy/chapter13.html]Chapter 13 bankruptcy[/url] does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time). In addition, the borrower must receive permission from the court to enter into the mortgage transaction.[/quote:b387d6c55e]

This guideline is not crystal clear for your specific situation. However, an argument could be made that if you paid 12 months as agreed on your Chapter 13 re-payment plan, then dismissed the bankruptcy, then you should not be disqualified solely for the bankruptcy.

For all situations mentioned in this post and any going forward I suggest that all loan officers understand what you are up against and try to make your fight based on the 4155-1 rev.5. Point out specific exerts and reasons you feel the borrower qualifies. Then support your claim with clear documentation. Letters of explanation accompanied by supporting documentation.

The credit codes:

CURRENT RATING:

0 – NOT RATED BY CREDITOR
1 – CURRENT, PAYING OR PAID AS AGREED
2 – 30 DAYS OR ONE PAYMENT PAST DUE
3 – 60 DAYS OR TWO PAYMENTS PAST DUE
4 – 90 DAYS OR THREE PAYMENTS PAST DUE
5 – 120 DAYS OR FOUR PAYMENTS PAST DUE
6 – 180 DAYS OR FIVE+ PAYMENTS PAST DUE
7 – CHAPTER XIII WAGE EARNER PLAN
8 – REPOSSESSION
9 – CHARGE OFF OR COLLECTION ACCOUNT

I would suggest to your loan officer that they ask their credit provider to do a credit update on the mortgage account. They may remove the pre-foreclosure comment and if the account has a rating of 1 and not 8 (based on the 2 codes in your post) you may not be considered to have had a foreclosure. If the report shows an 8 you may want to file a credit dispute and see what the outcome is.

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livinginnky's picture
livinginnky | Joined: September 8, 2007 08:31 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Fozman,

[quote:6c2c5e7faf]can someone tell me what the difference is between MTG01 and MTG 08?
I was reported as 01, but now it shows 08?
which is better?[/quote:6c2c5e7faf]

Greg is correct, 01 is good, any other number is bad.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am in process of getting approve for a FHA loan, But I am hearing different things. I have just paid off my bankruptcy and waiting for the Discharge letter. The last 17 payments have been on time. But, I am told that the lenders are looking for no late payments while you were in bankruptcy. I have a middle credit score of 640 and my spouse middle score is 590. My question is, will I have to wait 1 or 2 years or there is a chance that I can be financed now.

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larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Oscar.

Welcome to the forum.

Sorry to say that you will have to wait at least for 2 year after you get discharged from BK to get approve for FHA insured loan. So improve your credit and save for your down payments and closing costs.

Best of luck,
Larry

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Leesimmons2's picture
Leesimmons2 | Joined: June 9, 2008 12:27 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Larry,

Is it 2yrs or just 1 yr for chapter 13 and Is it at the discretion of the bank to decide to make a person wait 1 or 2 yrs or finance him now?

This is the original question.

I am in process of getting approve for a FHA loan, But I am hearing different things. I have just paid off my bankruptcy and waiting for the Discharge letter. The last 17 payments have been on time. But, I am told that the lenders are looking for no late payments while you were in bankruptcy. I have a middle credit score of 640 and my spouse middle score is 590. My question is, will I have to wait 1 or 2 years or there is a chance that I can be financed now.

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Leesimmons,

Welcome to the forums.

If it's a ch13 bk, then you need to wait for at least 1 year to qualify for an FHA loan. But have you ever made late payments during the plan? and moreover, if your payments for the past 17 months are not without any lates, then I don't think it will be hard enough to get an FHA loan providing that you satisfy other criteria.

Take Care

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:34 | Post subject:

dgikas's picture
dgikas | Joined: July 19, 2008 01:56 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

It is amazing how much WRONG advice is in this thread...if you are NOT a broker/lender it would be best if you didn't give your "advice". And if you don't know FOR SURE, find out first then give your advice.

A Chapter 13 is 12 months from FILE FILE FILE date, NOT discharge date. So if you made the last 17 payments and you discharged the Chapter 13, the lender will want to see the pay history over the last 12 months of the Chapter 13.

Dealing with a "good" FHA lender/broker who KNOWS the guidelines and who knows how to argue these guidelines with the Underwriter is very important. On every file WE send in for a manual underwrite WE (the loan officer) write a letter of explanation on why WE feel the file should get approved in addition to a letter of explanation from the borrower for why THE credit problem arose and what they did to fix it and why it won't happen again.

Underwriters are PEOPLE, they "buy" good (TRUE) stories on manual underwrites. If you have a family with children, reference the fact you just want the supply a nice foundation in a new home for my children...etc

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brian1's picture
brian1 | Joined: June 14, 2008 05:14 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You need to have 12 months paid as agreed in the BK 13.
The court appointed trustee must also approve the mortgage.
It is very common to use fha to buy out the bk 13.
No other loan that I am aware of will consider this scenario.

Brian

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Funny how many people don't even know the rules of the agencies they work with.
As stated on the FHA site itself, the 2-year waiting period applies to Chapter 7 bankruptcy discharges. If your Chapter 13 has been discharged, they'll loan the next day, and will guarantee loans as soon as after a single year of on-time payments to the bankruptcy plan (with trustee/court approval).

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am confused, I just spoke with a large mortgage Co and she stated that I could get a FHA refianance next month when my chapter 13 discharge is a yr old? Is there an exception to cut the wait time down for 13 comparitive to 7 because of the three yrs of payments instead of just walking away ?

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We assume that means she is right that with our 690 FICO that the lower FHA 15yr fixed will be an option at 1yr not 2 which means a better rate to pay down quicker .

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

yes, jon, you should be able to obtain financing next month...i agree with what you were told.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi all, have read most of the posts on FHA and Chapter 13. I have done some digging, and on a Chapter 13 it says as long as you have 1 year of on time payments on your plan, you can qualify for an FHA as long as the trustee says it is okay. I filed Chapter 13 5 years ago, paid it off, got a discharge and made my payments on time everytime. I am now trying for an FHA loan...... My current debt to income ratio is around 23% with an average household annual income of 120,000. What do you think my chances are? We have made all payments on time for our current car payments, etc.... No lates at all. All replies would be appreciated.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

with good income, good ratios and good credit in the last 5 years, i don't know why you'd have any troubles, lake.

there are underwriters who have an aversion to bankruptcy, and you can't predict who they work for; but what you can arm yourself with right now is an explanation letter for the bankruptcy, reiterating all that you've just stated, along with the reasons for the bankruptcy and your success in making that work.
go for it.

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