HUD Chapter 13 Guidelines During The Covid-19 Pandemic

This ARTICLE On HUD Chapter 13 Guidelines During The Covid-19 Pandemic Was PUBLISHED On June 9th, 2020

HUD Chapter 13 Guidelines During The Covid-19 Pandemic has not changed.

• There is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for FHA loans
• Borrowers in an active Chapter 13 Bankruptcy repayment plan can qualify for an FHA loan without having the Chapter 13 Bankruptcy discharged
• However, you need to be in the Chapter 13 repayment plan for at least 12 months
• Borrowers need to document they have made 12 months of timely payments to the bankruptcy Trustee with no late payments
• Borrowers can qualify for a purchase and refinance mortgage during the Chapter 13 repayment plan
• Borrowers with equity in their homes can do a cash-out refinance during the Chapter 13 repayment plan and pay off the 13 with the proceeds
• The team at Gustan Cho Associates is getting the countless calls from borrowers about why they are being told conflicting answers by other lenders about HUD Chapter 13 Guidelines During The Covid-19 Pandemic
• Many are told that manual underwriting is suspended by all lenders during the coronavirus pandemic which is not true
• Others are told HUD Chapter 13 Guidelines During The Covid-19 Pandemic has changed which is not true
• Other borrowers are told all credit score requirements have increased to 660 to 680 on all FHA loans due to the pandemic
• The bottom line is there are no changes with the HUD Chapter 13 Guidelines During The Covid-19 Pandemic
• Gustan Cho Associates is busier than ever taking FHA loan applications for borrowers in a current active Chapter 13
• Gustan Cho Associates is one of the very few national lenders with no overlays on government and conventional loans
• To qualify for a 3.5% down payment home purchase FHA loan, the borrower needs a 580 credit score
• All FHA loans during Chapter 13 and/or recently discharged without a two-year seasoning need to be a manual underwriting
• Manual underwriting guidelines apply
• Gustan Cho Associates are experts in FHA and VA manual underwriting

In this article, we will discuss and cover HUD Chapter 13 Guidelines During The Covid-19 Pandemic.

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

All lenders need to make sure borrowers meet the minimum HUD Guidelines on FHA loans.

• However, lenders can have additional mortgage guidelines on FHA loans that are above and beyond the minimum HUD Guidelines
• The additional lending requirements above and beyond HUD Guidelines are called lender overlays
• The coronavirus pandemic created turmoil on the secondary mortgage bond market which created liquidity issues
• Investors on the secondary mortgage bond market do not want to take on risk with buying mortgage bonds of lower credit score borrowers
• Lower credit score borrowers are often higher-risk borrowers
• This is why investors have no appetite in buying mortgages of borrowers with lower than 700 FICO
• This is also the reason why lenders have increased minimum credit score requirements on government and conventional loans
• Mortgage rates for borrowers with under 700 FICO are high due to pricing adjustments
• Not only are rates high for borrowers with under 700 credit scores but many borrowers need to buy discount points
• This set back with no demand for borrowers with under 700 credit scores is temporary until the mortgage markets stabilize
• Economists and mortgage experts believe mortgage rates and the secondary mortgage bond market should stabilize in the coming months
• Most lenders have increased minimum credit score requirements to 660 to 680 during the coronavirus pandemic
• The good news is Gustan Cho Associates has no lender overlays on FHA loans during the coronavirus pandemic

We still take mortgage loan applications from borrowers with under 620 credit scores. We are one of the very few lenders that approve manual underwriting on FHA and VA loans.

Qualifying For FHA Loans During Pandemic

Many borrowers are having difficulties finding a lender to qualify for an FHA loan during the COVID-19 pandemic. As mentioned earlier, HUD did not change any guidelines on FHA loans during and after Chapter 13 Bankruptcy. However, most lenders have increased credit score requirements to 660 to 680 FICO. Many lenders have halted and suspended doing manual underwriting on FHA loans during the coronavirus pandemic. Investors of the secondary mortgage bond market have no appetite for borrowers with under 700 FICO during the pandemic due to liquidity issues. Any borrowers in an active Chapter 13 or those who have their bankruptcy discharged and not seasoned for at least two years need to be a manual underwrite. Manual underwriting is considered riskier files and most lenders stopped doing them altogether. The great news is the team at Gustan Cho Associates is still taking mortgage loan applications on FHA manual underwriting. Gustan Cho Associates has no lender overlays during the coronavirus pandemic. Helping borrowers qualify for a mortgage during Chapter 13 repayment plan is our expertise. There is no waiting period after Chapter 13 Bankruptcy discharged date. Most lenders will require a one year to a two year waiting period after Chapter 13 discharged date. However, at Gustan Cho Associates, there is no waiting period after discharged date on FHA and VA loans. To qualify for a mortgage with a national mortgage company with no lender overlays on government and conventional loans, please contact us at Gustan Cho Associates at 800-900-8569 or 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, evenings, weekends, and holidays.