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HUD Bankruptcy Guidelines After Chapter 7 And Chapter 13

Gustan Cho Associates
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HUD Bankruptcy Guidelines After Chapter 7 And Chapter 13

HUD Bankruptcy Guidelines
Gustan Cho Associates

This BLOG On HUD Bankruptcy Guidelines After Chapter 7 And Chapter 13 Was PUBLISHED On May 29th, 2019

HUD Bankruptcy Guidelines state that borrowers can qualify for FHA Loans after Chapter 7 and 13 Bankruptcy.

  • Many home buyers, 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?

Gustan Cho Associates

Gustan Cho Associates

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 a bankruptcy
  • Certain debts such as government debts, federal student loans, tax liens, and other non-exempt debts cannot get discharged in a bankruptcy
  • Home buyers 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
  • Home buyers 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

Gustan Cho Associates
Gustan Cho Associates

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 gcho@loancabin.com. Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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