Qualifying For Home Loan After Debt Settlement Versus Bankruptcy

This BLOG On Qualifying For Home Loan After Debt Settlement Versus Bankruptcy Was UPDATED On September 21, 2017

Home Loan After Debt Settlement:

Many folks who have gone through a period of financial hardship and fallen behind try to avoid filing for Chapter 7 or Chapter 13 Bankruptcy and try to go through a debt settlement program.

  • Home buyers can qualify for home loan after debt settlement.
  • Debt settlement is contacting your creditors and working out a repayment plan on your past due debts. 
  • There are various of debt settlement programs where it ranges from a reduced monthly payment, a discounted payoff, or a combination of discounted payoff and reduced payment plan. 
  • Many creditors will try to work with consumers who have fallen behind on their monthly payment obligations and try to work things out with them. 
  • I praise those who go through a voluntary debt settlement program because they are showing financial responsibility and trying to avoid filing bankruptcy to honor their debt obligations. 
  • However, and unfortunately, many mortgage lenders view debt settlement as a form of bankruptcy and will not take a look at a mortgage application that reports the mortgage loan client has gone through a debt settlement program.

Home Loan After Debt Settlement And Applying For Mortgage

I have countless of mortgage loan applicants who have gone through a period of financial hardship to an unfortunate economic event and had gone through a debt settlement program in order to avoid bankruptcy.  Many of these mortgage loan borrowers came to me after getting denied by other mortgage lenders for having gone through a debt settlement program.

Many Lenders Consider Home Loan After Debt Settlement Same As Bankruptcy

Many mortgage lenders consider mortgage loan borrowers who have gone through a debt settlement program the same as if they went through a bankruptcy.

  • Even though debt settlement is no violation of any HUD, FHA, FANNIE MAE, VA, nor FREDDIE MAC guidelines, many mortgage lenders have their own overlays when it comes to debt settlement programs. 
  • Some mortgage lenders consider debt settlement worse than bankruptcy. 
  • Under their views, someone who has gone through a debt settlement knows the system in negotiating debt settlement repayment and can always file for bankruptcy whereas someone who has filed bankruptcy cannot file another bankruptcy for a period of 7 years. 
  • Actually, these mortgage lenders favor bankruptcy over debt settlement. 
  • Unfortunately, many rules and regulations in the mortgage business does not make common sense. 
  • The good news is that there are mortgage lenders who are willing to work with mortgage loan borrowers who have gone through a debt settlement program and have re-established their credit and show stable employment.

Denied By Lender Because Debt Settlement

If you got denied by a mortgage lender because you went through a debt settlement program, please contact me.  I will be able to help you.  I represent dozens of mortgage lenders that do not have overlays on Fannie Mae guidelines and have experience in dealing with situations like these.  Many wholesale mortgage lenders who advertise they have no Fannie Mae guideline overlays still do.  From experience, I always take a mortgage application and go over the individual case scenario with a senior mortgage underwriter before I submit the full mortgage application and that is how I am able to get 100% mortgage loan approvals.  Please contact me at www.gustancho.com if you have been denied for a mortgage loan by another lender for having gone through a previous debt settlement program or have been denied for other reasons.  I am available 7 days a week on my cell at 262-716-8151 or email me at gcho@gustancho.com.

Gustan Cho NMLS ID # 873293

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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