Mortgage Process Experience

Mortgage Process Experience After Chapter 13 Bankruptcy

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers the mortgage process experience after Chapter 13 Bankruptcy. The experience does not have to be stressful. I had the pleasure and honor of meeting Mary B. as a borrower. Now we have become lifelong friends. Mary B., like many, fell victim to the 2008 Real Estate And Credit Meltdown. Due to the Great Recession of 2008, consulted with a Bankruptcy Attorney. Since she had a great reduction in income. Had outstanding debts where she needed time and help in restructuring her debts. She was advised to file for Chapter 13 Bankruptcy by her Bankruptcy Attorney. Back in 2010, Mary B. filed Chapter 13 Bankruptcy. Was assigned a Chapter 13 Bankruptcy Trustee.

How Debts Are Restructured During Chapter 13 Bankruptcy

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Her debts were restructured and entered into a Chapter 13 Bankruptcy Repayment Plan. Mary and Al worked very hard and satisfied her Chapter 13 Bankruptcy Repayment agreement. She had her Chapter 13 Bankruptcy discharged in November 2015. This article will discuss and cover Mortgage Process Experience After Chapter 13 Bankruptcy. John Strange explains the importance of rebuilding your credit to qualify for a mortgage after bankruptcy as follows:

Another important factor that lenders will consider when considering a loan application: your credit score. If your score has improved since filing for bankruptcy, it will show lenders that you’re working towards rebuilding your credit and making them more likely to approve your loan application.

She has made all her payments as agreed upon under her Chapter 13 Bankruptcy Repayment plan. However, two issues created havoc in her qualifying for an FHA Loan After her Chapter 13 Bankruptcy Discharge. One was a late car payment during her Chapter 13 Bankruptcy repayment period. The second major issue was that she had a mortgage loan on her home outside the Chapter 13 Bankruptcy Repayment plan. The home was sold and closed in December 2015. Unfortunately, there was a delay in closing her mortgage loan on her home. The mortgage lender, Bank of America, has reported her with a 30-day mortgage late, plummeting her credit scores and a mortgage late on the credit report in the past 12 months. Any late payments after a Bankruptcy and Foreclosure are a deal killer in getting a mortgage loan approval.

Mortgage Process Experience And How Do Mortgage Lenders View Late Payments

Late payments are extremely frowned upon by all lenders. Not just mortgage lenders but any other lenders as well as creditors. A consumer’s payment history determines the borrower’s financial responsibility. Most lenders look at the borrower’s payment history in deciding and predicting the likelihood of how timely borrowers will be in paying their future monthly debts. Most lenders will automatically disqualify any mortgage applicants who have had any late payments after a bankruptcy, foreclosure, deed-in-lieu of foreclosure, short sale, or loan modification. However, there is light at the end of the tunnel.

Mortgage Lenders With No Lender Overlays on FHA Loans

Gustan Cho Associates specializes in mortgage loan programs with no lender overlays on government and conventional loans. We often can help borrowers who had late payments after a bankruptcy, foreclosure, deed-in-lieu of foreclosure, short sale, and loan modification. Just because a mortgage loan applicant has high credit scores does not mean that they automatically qualify for a home loan. Credit payment history is equally important, especially timely payment history for the past 12 to 24 months.

Successful Mortgage Process Experience

Mary B. researched the internet and was looking for a mortgage lender with no overlays and contacted me after reading one of my many blogs on Qualifying For an FHA Loan After Chapter 13 Bankruptcy. Due to her recent late payment on her mortgage, her credit scores plummeted to under 600 FICO. I was not too concerned about her credit scores being under 600 FICO. This was because the minimum credit score required to qualify for an FHA Loan in California is 580 FICO. She met all of the minimum credit and income requirements. The recent late payment on her mortgage after a Chapter 13 Bankruptcy discharge concerned me. Plus a late payment for an auto loan that was over 30 days late into her Chapter 13 Bankruptcy Repayment Plan.

HUD Manual Underwriting Guidelines

HUD Manual Underwriting GuidelinesAll Chapter 13 Bankruptcy mortgage loan applications are manual underwriting if the Chapter 13 Bankruptcy discharge has not been discharged for at least two years. So the Automated Underwriting System will not tell me whether or not the late payment of her auto loan or the late payment right after her Chapter 13 Bankruptcy discharge date will become an issue. We contacted my FHA Underwriting Manager and our Director of Underwriting and ran over this case scenario with them. After thoroughly reviewing Mary B.’s file, the Underwriting bosses gave me the green light. They told me that they could overlook the late auto loan payment and the recent mortgage late payment after the Chapter 13 Bankruptcy discharge date.

Importance Of Compensating Factors On Manual Underwriting

This was because Mary had many compensating factors, including a second job as a university professor, where she was there for 18 months. That income was not used to qualify. She had more than enough reserves and her primary employment as director of accounting. She has been there for over 14 years. I then issued a solid pre-approval letter to Mary, and she went home shopping.

Mortgage Process Experience: Buying A Home From A Home Builder

Mary and I became great friends while she was shopping for a home. Mary and Al always called me if they had any questions, and we talked daily, not always about mortgages, and became best friends. Mary then found a home she loved, but the home was a new construction home. This was when her nightmares began. The builder she went to told her she needed to use the builder’s preferred lender to get closing cost credits and the builder’s incentives.

Homebuilders Steering Buyers To Their Preferred Lenders Due To Kickbacks

If she were to use me, the home builder would not give her any closing cost credits or builder’s upgrades. This practice is illegal and called Anti-Steering, where Home Builders Are Steering Home Buyers To Their Preferred Lenders. The home builder was pretty blatant about it. The preferred lender was WJ Bradley Mortgage Corporation. Mary and Al, who were extremely loyal to me, told me about this. I told them to go with them if WJ Bradley Mortgage Corporation can do their mortgage loan. This was because the home builder offered incentives only if they used their preferred lender, although it was illegal.

Alternatives to Mortgage After Bankruptcy

Another option is to apply for a secured loan, using collateral such as a savings account or personal property to secure the loan. Look around and compare rates and fees from multiple lenders before applying for a loan. There are also other alternatives to traditional loans after bankruptcy. You can try peer-to-peer lending, which connects borrowers and lenders online. Additionally, you can get a small business loan if you are self-employed or have a business. Another option is to use a credit card with 0% APR for a set period. Finally, apply for a cash advance from your employer or another source that will not require a credit check. These are just a sample of the options available after filing for bankruptcy. Take the time to analyze and compare your options and consider all the pros and cons before deciding.

Choosing A Lender With No Overlays

Choosing A Lender With No OverlaysWJ Bradley Mortgage Corporation guaranteed Mary they would have no issues getting their FHA Loan After Chapter 13 Bankruptcy discharge with the late mortgage payment approved and closed. Long story short, the loan officers of WJ Bradley Mortgage Corporation contacted Mary and told her that her mortgage loan got denied due to her late payment after the Chapter 13 Bankruptcy discharge date. To top it off, WJ Bradley Mortgage Corporation has completely shut its doors and is no longer in business.

Mortgage Process Experience With Lender Overlays

I thought I was lucky and would originate and fund Mary and Al’s FHA loan. However, at the last minute, my company lost our main investor, who had no lender overlays on FHA Loans After the Chapter 13 Bankruptcy discharge date. The two investors we had required a one-year waiting period after a discharge of a Chapter 13 Bankruptcy discharge date. I frantically searched for another lender where that did not have any waiting period requirements after a Chapter 13 Bankruptcy discharge date. Found one where I helped Mary’s family and the new lender coordinate the file transfer. Long story short, Mary’s family closed on their home yesterday, April 6, 2023. They now have the keys to their new home and called me yesterday to thank me. The mortgage process experience can be extremely stressful. However, if there is a will, there is always a way. Congratulations to Mary and the whole family on their new home closing in California.

How To Get a Lender  For the Best Mortgage Process Experience

If you should decide to buy before you begin looking for a home or during the mortgage process, and you do not have a great smooth mortgage process experience, we have vast experience working with buyers to get them ready to purchase their dream home. We can take you through your home loan’s buying and financing process. We also can connect you to title companies, home inspectors, contractors, attorneys, and real estate agents in your area that can help as needed. Call or text Ronda Butts at 407-460-7999 or email at for more information and further assistance. Ronda is an experienced referral agent, a dually licensed real estate agent, and a mortgage originator. She has successfully guided many homeowners through obtaining a home on both the lending and real estate side. She does not represent buyers or sellers but offers free consultation in 48 states at Gustan Cho by Associates connecting homeowners, buyers, and sellers to the needed sources.

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