HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

BREAKING NEWS: HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Guidelines

Gustan Cho Associates has no overlays on HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Crisis. GCA Mortgage is excited to share our chapter 13 FHA mortgage success stories during the COVID-19 coronavirus outbreak. We are still able to MANUALLY UNDERWRITE FHA mortgage loans during these tough times.

While most lenders and banks have raised their minimum credit score requirements, Gustan Cho Associates have not. Our investors are still able to help borrowers who are in an active Chapter 13 Bankruptcy or less than two years discharged from a Chapter 13 Bankruptcy. Or you may require a manually underwritten FHA mortgage for different reasons, we can still help you. Our investors have NOT added LENDER OVERLAYS during the pandemic. In this blog, we will detail the steps of obtaining an FHA mortgage during your Chapter 13 Bankruptcy. GCA Mortgage like to share a success story. We will discuss and cover HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Guidelines.

HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Guidelines Versus Lender Overlays

Even during these unsettling times, FHA mortgages for borrowers with lower credit scores and less than perfect credit are still available. As stated above, many lenders have added additional overlays to their mortgage products with the COVID-19 coronavirus outbreak. Gustan Cho Associates have not done so. We are still able to originate FHA mortgages during an active Chapter 13 Bankruptcy.

In the following paragraphs below are the steps of obtaining an FHA mortgage during your bankruptcy. In our experience, as long as your new mortgage payment is similar to what you’re paying in rent, the trustee should sign off.

Bankruptcy Trustee Approval To Sign Off For A Mortgage

The main concern and difference between obtaining an FHA mortgage while in an active Chapter 13 bankruptcy or not in an active Chapter 13 bankruptcy have to do with TRUSTEE APPROVAL. If you are currently in an active Chapter 13 bankruptcy, you must get written permission from your trustee to enter into a new mortgage. The trustee is on your team and does want you to buy a home. However, the trustee needs to make sure this is something that will fit your financial budget.

It is important to keep your mortgage payment close to your current housing expense. Otherwise, your bankruptcy may be reopened and reevaluated and your monthly Chapter 13 payment could increase. The trustee would want to know why all of a sudden you can afford a higher housing payment. If they re-examine your current financial picture, they may increase the amount you owe your creditors and increase your monthly Chapter 13 bankruptcy payment. The trustee approval process is required. Without written permission from the court, you may not close on your FHA mortgage.

HUD Chapter 13 Bankruptcy During The Covid-19 Pandemic Guidelines On Sellers Concessions

What are the guidelines On Sellers Concessions

We recommend asking for seller credit. Seller credit or seller concessions can help ease the burden of how much money you need to bring to the closing table. With mortgage rates all over the map, some lower credit score borrowers are required to pay discount points to obtain a mortgage. Sometimes these points can be represented as 2% of the loan amount or higher.

With an FHA mortgage, you can ask for up to 6% of the closing cost to be paid for by the seller. The more you asked for, the less money you need to bring to closing. Please keep in mind, you must meet your minimum investment requirement of 3.5%.

Please see our blog on SELLER CREDIT for more information.

Importance Of Credit Scores When Qualifying For A Mortgage During Chapter 13 Bankruptcy

Credit score. Credit scores are a major factor when obtaining an FHA mortgage loan. If you are in an active chapter 13 bankruptcy, your credit scores usually will hover between 580 and 600. You can do things to raise the score such as have a secured credit card and use it responsibly while you are still in your chapter 13 bankruptcy. You will want to ask your trustee permission to obtain this card and efforts to raise your credit score and prepare to buy a home. Please see our blog on CREDIT TIPS during chapter 13 bankruptcy. A higher credit score will lower your overall monthly payment or increase your buying power.

Mortgage Process During The Coronavirus Pandemic

Success story:

  • We know these past few months have been tough on the American people
  • We wanted to share a quick success story to give everybody a little hope
  • With local municipalities and some courthouses being closed for social distancing purposes, we have still been able to reach out for trustee approval
  • In the state of California, one of our borrowers was able to get in touch with the bankruptcy court in Woodland Hills
  • Even during the lockdown, he was able to get his bankruptcy payoff
  • In this particular case, the borrower used his annual bonus from his employer to pay his bankruptcy in full and close on a VA mortgage loan
  • There was some luck involved as the payoff was difficult to obtain but, it all worked out in the end
  • This client was able to put an end to a Chapter 13 repayment plan and buy a new house all on the same day

There is light at the end of the tunnel. As many states start to reopen, it is becoming easier to obtain bankruptcy-related information.

Qualifying For A Mortgage With A National Mortgage Company With No Lender Overlays

How to qualify for a mortgage at a national mortgage company without the lender's overlays

While many lenders are tightening their restrictions, Gustan Cho Associates is closing manually underwritten FHA mortgage loans. This is how we are able to help our clients who are currently paying an active chapter 13 bankruptcy. For more information on the mortgage process during the pandemic, please call Mike Gracz at 630-659-7644 or send an email to [email protected]. We are available seven days a week to answer your mortgage questions. Do not let your Chapter 13 bankruptcy be the reason that you do not buy a home.