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Mortgages while in Ch.13 Bankruptcy

Believe it or not, there are a lot of Mortgage Programs out there that will allow you to refinance your home while you are still in a Ch.13 Bankruptcy. The best one I have used so far is the FHA 203b normal mortgage that allows you to borrow up to 95% of your home's Appraised value.

They only require that you complete a few steps in order to get the loan:

Make sure you have paid your Ch.13 on time for at least the past 12 months (more is better)
Make sure you have paid your mortgage and student loans on time (These are not usually includued in the Ch.13)
Make sure you have your Attorney file for a Motion to Incurr Debt -basically asking the judge for permission to pay them off and save you money each month (may take up to 30 days).
Have your Full Bankruptcy Papers including the Schedules on hand.
Make sure your home has been maintained - the FHA Appraiser is a little more picky about the inspection.

Keep these things in mind and any other tips your mortgage professional has advized you - and you will be on your way to enjoying some great savings each month!

Posted by Brian Foxworth SC, GA, FL, & TN Mortgage Loans on 12/20/2006 03:42 PM

Comments (15)

ch 13, bankruptcy, mortgage, refinance

Post is included in group: South Carolina Mortgage Loans

15 Comments on Mortgages while in Ch.13 Bankruptcy

DEC

2006

Amen Brian you speak the truth. I handle a large of amount of subprime clients and have them follow the information you provided.

Brian, some good info. I started out with FHA mortgages back in 1994.... I learned it well. I love it when a client gets a sub prime loan and I come on in and do it FHA. But in regards to the appraisals, FHA is much more relaxed now.

DEC

2006

Eddy and Jeff - Thanks for the comments. My subprime AE's are not happy that I do mostly FHA loans now. I have to explain to them that FHA is just better for my clients -better rates, terms , and LTV's.

DEC

2006

Good info, I've done a few through FHA.

Thanks Karl. Merry Christmas!

MAR

2007

Lenders offering to refinance your loan even when circumstances under which the original loan was advanced have changed.. That is a window that borrowers whenout any credit rating will appreciate.. However, I will be very concerned about interest rates... so I will check the rates information with a fine tooth comb against my affordability if I was the borrower...

Bally - good point. Let me give you a real life example - I just closed an FHA Ch.13 buyout last week where the client had credit scores a little over 600 because she had paid everything on time since her Bankruptcy started. I closed her 95%LTV at 6.75% 30 year Fixed 7.00% APR (where she would have had only 80%LTV or no loan Subprime.) AND she saved over $250 each month because we paid off her 1st & 2nd mortgage along with her Ch.13 Bankruptcy. It passed the fine tooth comb test - she was so excited to be rid of her bankruptcy AND save money that she hugged me at Closing.

MAY

2007

is there a $ amount loan limit to the FHA 203b loan for individuals in CH13?

Thanks, Mac!

MAY

2007

Mac -No, there is not a loan limit because you have been in Bankruptcy - but there is a loan limit per state.

AUG

2007

While I'm grateful that the possibility of relief from my Ch. 13 is available, how can I be sure that it isn't a fraud. I was contacted just today about the FHA Ch. 13 Relief program. The last thing I need is to get into another financial fix which led me to file Ch.13 in the first place. What do I, as a consumer, need to ask when I am contacted again? Thank you. Yvonne

AUG

2007

Yvonne - You need to ask the person to send you a Good Faith Estimate and an Application. Then you can contact the Better Business Bureau and the Governing Body over that lender to check them out. Here in South Carolina - brokers are governed the SC Consumer Affairs Department who make sure that Consumers like you do not fall victim to Fraudulent Scams. In which state is your home located?

I live in Ohio. Where should I go; and should I discuss this with my attorney who handles my Ch. 13? Thank you.

SEP

2007

Yvonne - you can go to http://www.com.state.oh.us/dfi/dficont.htm to call re: the lender who is trying to refinance you. Once you check the lender out to your satisfaction, then contact your attorney since you will need to get a Motion to Incurr Debt started ASAP.

SEP

2007

I live in the state of GA and my husband and I just filed chapter 13. We will definitely try to refinance in a year, but wanted to know who would I contact to do that? Who handles FHA loans? I'm a little lost.

SEP

2007

Marie - You can contact me in a year to refinance. Any lender has the opportunity to offer FHA loans as long as they are willing to pay for all the extra audits and fees in order to become an FHA lender. You need to:

Have no 30 day lates on your Ch. 13, mortgage, and any other debts you have outside the Ch.13
Have no collections or tax liens since the filing of your Chapter 13
Keep all of your Ch. 13 paperwork in a safe place since you will need to present all of it when you refinance.
Make sure you do not get any new loans without consulting your bankruptcy attorney
Keep your home in good repair since FHA is more strict regarding the condition of your home

You should have no problems refinancing if you follow the above conditions.

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