FHA Chapter 13 Guidelines on Mortgages in Texas

In this blog, we will discuss and cover FHA Chapter 13 Guidelines in Texas. We will also discuss how Texans have been hard hit due to the coronavirus pandemic and filed for bankruptcy. Many Texans are still in an active Chapter 13 Bankruptcy repayment plan and are recovering. Chapter 13 Bankruptcy repayment period is normally for five years before it can discharge. The great news for people in a current active Chapter 13 repayment plan in Texas is they can purchase a home now with an FHA loan. You do not have to wait until the Chapter 13 Bankruptcy has been discharged.

How The Coronavirus Outbreak Surged Bankruptcy Numbers in Texas

FHA Chapter 13 Guidelines during the COVID-19 pandemic crisis. The U.S. economy was booming prior to the coronavirus pandemic. The 2021 housing market forecast was expected to have been the strongest in history. Home prices were rising year after year. Both HUD and the Federal Housing Finance Agency (FHFA) have been increasing FHA and Conventional Loan Limits for the past four years due to rising home prices. 2022 FHA loan limits are now capped at $420,680. 2022 Conforming loan limits are now capped at $970,800.

FHA Chapter 13 Guidelines on FHA Loans in Texas

The housing market is booming in Texas. Homes throughout Texas have been surging double-digit annual numbers for many years with no signs of correction. There were more buyers versus inventory of homes and this trend is continuing. To help with the booming market was a booming mortgage market with historic low rates.

The 2022 housing forecast 2022 was supposed to be the best ever in the history of the United States. Texas is one of the top states leading with surging home sales. Despite the recent spike in mortgage rates and home sales in Texas, it is not making a dent for homebuyers in all counties in Texas.

How The COVID-19 Shutdown Has Skyrocketed Bankruptcy Filings to Historic Highs in Texas

When the coronavirus pandemic hit our Nation, the whole U.S. economy closed. Luckily, many state governors reopened their states in phases and all states have reopened. Texas was one of the very states that reopened after the national shutdown. Although every American was affected by the coronavirus shutdown including Texans, most have recovered. However, the damage was done and thousands of Texans had to file for bankruptcy.  The key question is the long-term negative impact on the U.S. economy from the aftermath of the global pandemic.

FHA Chapter 13 Guidelines on FHA Loans During Chapter 13 Repayment Period

Many in Texas have filed Chapter 13 Bankruptcy which is a court-approved restructured repayment plan normally over 60 months (5 years). Once the person has completed the 60-month payment plan, the trustee recommends a discharge to the bankruptcy court judge. The judge then discharges the Chapter 13 Bankruptcy which means any and all remaining balance on all debts are discharged. A bankruptcy discharge means all unpaid balances on the list of creditors will no longer be the responsibility of the petitioner.

The Shut Down of The U.S. Economy and Increase of Bankruptcy Filings Due To The COVID-19 Pandemic

The coronavirus pandemic shut the whole U.S. economy down in a matter of weeks. Millions of businesses closed until further notice. Many businesses have not reopened and are permanently closed. Millions of Americans have lost their jobs. Millions of Americans have filed unemployment claims. Unemployment rates were expected to top 20% but that never happened.

Best Expert Lenders in Texas on FHA Chapter 13 Guidelines

Gustan Cho Associates still originated and closed FHA loans throughout the coronavirus shutdown on FHA loans during and after Chapter 13 bankruptcy. Thousands of lenders have stopped doing FHA loans during or after Chapter 13 Bankruptcy during the pandemic and have strict layers of lender overlays on FHA Chapter 13 Bankruptcy FHA loans.

Gustan Cho Associates has not suspended manual underwriting on FHA and VA loans during the COVID-19 pandemic mortgage crisis. In this ARTICLE, we will discuss and cover the FHA Chapter 13 Guidelines During The COVID-19 Pandemic Crisis. Over 20% of our overall production volume is helping folks on FHA loans during and/or after Chapter 13 Bankruptcy.

FHA Chapter 13 Guidelines Versus Overlays By Lenders

The team at Gustan Cho Associates has been getting countless calls from borrowers to see why other lenders have halted taking loan applications for borrowers in the Chapter 13 repayment plan. Unfortunately, most lenders have halted manual underwriting on FHA and VA loans during the coronavirus pandemic and have not reopened manual underwriting loans. Many lenders have imposed lender overlays on credit scores, manual underwriting, FHA 203k loans, and debt-to-income ratios. The great news is that Gustan Cho Associates have not added any overlays on FHA, VA, USDA, or Conventional loans during the COVID-19 pandemic crisis.

Not All Lenders in Texas Have The Same FHA Chapter 13 Guidelines

Many lenders have stopped doing manual underwriting until further notice. A large percentage of Texas FHA Lenders will not do manual underwriting. Per FHA Chapter 13 Guidelines, all FHA loans during the Chapter 13 repayment plan need to be manually underwritten. Manual underwriting is similar to automated underwriting system-approved files. The main difference is lower debt-to-income ratio caps and the underwriter will put more emphasis on the borrower’s ability to repay. The coronavirus outbreak in February 2020, has put more restrictions and scrutiny on overlays on FHA loans.

Common Lender Overlays by Texas Lenders versus FHA Chapter 13 Guidelines on FHA Loans

There is a saying in the mortgage business about FHA Lenders Are Not Created Equal. Not all mortgage lenders have the same FHA Chapter 13 Guidelines. Just because a borrower fully qualifies for an FHA loan in Texas during the Chapter 13 repayment plan does not mean that all Lenders in Texas will be able to do it. Lenders can pick and choose whether or not there will be overlays on any credit items. Most lenders have also increased credit score requirements on FHA loans to 660 FICO.

Mortgage Options on Loan Programs in Texas

Some lenders have stopped taking applications during the coronavirus pandemic and have not reopened certain programs such as FHA 203k loans, Reverse Mortgages, Jumbo Mortgages, high balance government loans, and other mortgage programs. Gustan Cho Associates has been busy taking loan applications on borrowers who cannot qualify at other lenders due to lender overlays. If you meet the minimum agency FHA Chapter 13 Guidelines, you will qualify at Gustan Cho Associates. If you are told you do not qualify for an FHA during Chapter 13 Bankruptcy repayment, you will qualify at Gustan Cho Associates.

FHA Chapter 13 Guidelines During Repayment Plan 

To qualify for a 3.5% down payment FHA mortgage, borrowers need a 580 credit score. Borrowers can qualify for an FHA loan with under 580 credit scores. Borrowers with under 580 credit scores, would need to put down a 10% down payment. Gustan Cho Associates are one of the very few national lenders that still honor FHA loans with under 620 credit scores in Texas. Texas has a unique different rule on cash-out refinance than any other state. You are not allowed to do cash-out refinance on government-backed loans. FHA loans is one of three government-backed loans.

FHA Chapter 13 Guidelines on Manual Underwriting in Texas

HUD allows manual underwriting on FHA loans. Not all lenders will do manual underwriting. Gustan Cho Associates is one of the very few lenders in Texas that do manual underwriting. Gustan Cho Associates is one of the few Texas mortgage companies that originated manual underwriting during the coronavirus pandemic on FHA loans.

FHA Chapter 13 Guidelines on Trustee Approval For Mortgage

Borrowers can qualify for FHA loans during the Chapter 13 Bankruptcy repayment plan after one year into the plan. Timely payments to the bankruptcy trustee are required. Trustee approval is required. Most trustees will approve a home mortgage for home buyers during the Chapter 13 Bankruptcy repayment plan. It needs to be manual underwriting. There is no waiting period after the Chapter 13 bankruptcy discharge date. For any borrowers who have not had a bankruptcy discharged for at least two years, the file needs to be manually underwritten. Gustan Cho Associates is expert in manual underwriting.

Qualifying For FHA And VA Manual Underwriting In Texas

The mortgage process can be stressful at the best of times. However, many homebuyers have been through the ringer qualifying for a mortgage during the COVID-19 pandemic. The housing market in Texas is booming. Not all lenders offer mortgage programs in today’s wide variety of mortgage options on loan products. Not all lenders have the same lending requirements for government and conventional loans.

The great news is that Gustan Cho Associates Mortgage is a five-star mortgage broker with no lender overlays. Gustan Cho Associates has over 190 wholesale mortgage lenders. There is no other mortgage company in the nation with as many loan programs as Gustan Cho Associates has. If you need to qualify for a mortgage in Texas with a lender with no overlays, give us a call at Gustan Cho Associates at 800-900-8569. Text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.