HUD Bankruptcy Guidelines After Chapter 7 And Chapter 13
This Article Is About HUD Bankruptcy Guidelines After Chapter 7 And Chapter 13:
HUD Bankruptcy Guidelines state that borrowers can qualify for FHA Loans after Chapter 7 and 13 Bankruptcy.
Many homebuyers, especially first-time home buyers, think that getting a mortgage is next to impossible after filing bankruptcy. This is not true. Bankruptcy will initially plummet consumer credit scores by 100 plus points. However, this big drop is a temporary drop.
Credit scores will go back up as the bankruptcy ages. Credit scores can go up faster if consumers get new revolving credit after the bankruptcy discharge. Secured credit cards are the easiest and fastest way to re-establish credit after bankruptcy.
In this blog, we will discuss HUD Bankruptcy Guidelines after Chapter 7 and Chapter 13 Bankruptcy.
Is It Possible To Get Mortgage After Bankruptcy?
Bankruptcy is a federal law that allows consumers a fresh start in their financial life.
A bankruptcy discharge will discharge most consumer debts so consumers can have a fresh start in life. Outstanding collections, repossession charge-offs, charge off accounts, foreclosure deficits, judgments, personal debts all get discharged in bankruptcy. Certain debts such as government debts, federal student loans, tax liens, and other non-exempt debts cannot get discharged in bankruptcy.
Homebuyers often re-establish themselves after a bankruptcy discharge. They often re-establish their credit, are successful with their current and/or new job, save money, and are ready to qualify for a home loan. Homebuyers can qualify for a home loan after bankruptcy.
Government and conventional loans require a mandatory waiting period after bankruptcy. Gustan Cho Associates has an alternative loan program, non-QM mortgages, where there is no waiting period after bankruptcy and foreclosure.
NON-QM Loans are becoming increasingly popular among our borrowers at Gustan Cho Associates.
Chapter 7 and Chapter 13 HUD Bankruptcy Guidelines
Here are HUD Bankruptcy Guidelines in qualifying for FHA Loans:
- There is a two year waiting period after Chapter 7 Bankruptcy discharge date to qualify for FHA Loans
- Borrowers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval via manual underwriting
- Chapter 13 Bankruptcy does not have to be discharged
- There is no waiting period after Chapter 13 Bankruptcy discharge date but needs to be manually underwritten if the discharge has not been seasoned for 24 months
According to HUD 4000.1 FHA Handbook:
If the credit report does not verify the discharge date or additional documentation is necessary to determine if any liabilities were discharged in the bankruptcy, the Mortgagee must obtain the bankruptcy and discharge documents. The FHA lender is also required to document that the Borrower’s current situation indicates that the events which led to the bankruptcy are not likely to recur. Lender standards will vary for these situations, so you will need to discuss any concerns you have with the loan officer to determine what lender requirements may apply in your circumstances.
For more information on this blog or other topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected] Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.