How Do Lenders View Late Payments After Chapter 13 Bankruptcy

Qualifying For FHA Mortgage With Late Payments After Chapter 13 Bankruptcy

Mortgage lenders do not want to see any late payments after Chapter 13 Bankruptcy from mortgage loan applicants. Home Buyers can qualify for a FHA Loan After Chapter 13 Bankruptcy . There is no waiting period to qualify for a FHA mortgage loan after Chapter 13 Bankruptcy discharge date. However, all mortgage loans right after a Chapter 13 Bankruptcy discharge are all manual underwriting because the Automated Underwriting System cannot render an approve/eligible per DU FINDINGS until two years has passed since the Chapter 13 Bankruptcy discharge. I help home buyers all the time right after a Chapter 13 Bankruptcy discharge date without any waiting period, however, manual underwriting guidelines are required. We will discuss more on late payments after Chapter 13 Bankruptcy.

Credit After Bankruptcy

As a right hand rule, mortgage lenders do not want to see any late payments after Chapter 7 Bankruptcy and Chapter 7 Bankruptcy as well as any foreclosures and short sale. There are many mortgage lenders that will not accept any mortgage loan borrower with even one late payments after Chapter 13 Bankruptcy and Chapter 7 Bankruptcy until the late payment and/or late payments has seasoned for at least for seven years. However, one or two late payments after Chapter 13 Bankruptcy or Chapter 7 Bankruptcy is not a deal killer with mortgage lenders like myself where we will evaluate the circumstances of the late payments. The mortgage loan borrower will need to provide a detailed letter of explanation to the mortgage loan underwriter on why they had late payments and the circumstances of it.

Qualifying For FHA Loan After Chapter 13 Bankruptcy

Home buyers can qualify for FHA Loan After Chapter Bankruptcy discharge date without any mandatory waiting period. All FHA Loans After Chapter 13 Bankruptcy discharge date are all manual underwriting and manual underwriting guidelines will apply. Mortgage underwriters will require verification of rent . Verification Of Rent can only be used and is only valid if the renter has 12 months canceled checks which is payable to the landlord and has been timely for the past 12 months. If the renter has paid his or her rental payments online, then 12 months canceled checks will be required. On manual underwrites, there are no maximum debt to income ratio requirements under FHA Guidelines, however, many mortgage lenders may cap the maximum DTI to 43%. Manual underwrites means that the mortgage loan underwriter will manually review the whole mortgage package and if the borrower has late payments after Chapter 13 Bankruptcy, the mortgage underwriter will carefully review the circumstances of the late payment. I have a current case where the borrower has two late payments after Chapter 13 Bankruptcy and there were totally legitimate and did not show that the borrower had disregard to credit. The first late payment was during her Chapter 13 repayment period back in 2013 where the automatic withdrawal from her bank account was rejected due to a bank takeover so the auto finance company reported her 30 days late. The second late payment was on the home she currently sold in December of 2015 and the title company missed the pay off date by a few days and the mortgage lender reported her 30 days late on her credit report. These two types of late payments after Chapter 13 Bankruptcy is totally acceptable. However, if the borrower had total disregard of credit and was continuously had late payments after Chapter 13 Bankruptcy, then this can be an issue with a mortgage loan approval.

If you had late payments after Chapter 13 Bankruptcy and were told that you do not qualify for a FHA Loan by other mortgage lenders, please contact me at 262-716-8151 or email me at gcho@gustancho.com. We may be able to help you. We are available 7 days a week, evenings, weekends, and holidays.

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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