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21 Comments on Buying a Home While in a Chapter 13 Bankruptcy & made it look easy!!
Thanks Lenn... Funny thing is that they say if the chapter 13 had been paid off completely then it would be subject to lending "seasoning rules" and they usually have to wait 1 or 2 years from discharge.
Thanks, I will check and see how this works in the St Louis area.
Hate to be a downer on this one but if they are in 13 they shouldn't be allowed to purchase until they have gone through Dave Ramsey's steps to financial freedom and passed. Those that are in 13 do not know how to handle their finances and should not be going further in debt until they learn to mange it.
Hummm, I didn't know this. What type of financing? Did they have a large down-payment? What about their credit - was that an issue? Thanks for sharing...
It is sometimes very confusing to understand how these things can work, and yet we often have buyers that cannot qualify with very minor issues with their credit...jusy sayin'
Well…
Maybe an old dog CAN learn new tricks! Good information to salt away for the future.
Hey Art... I can't say that I totally disagree with you.
Hi Kimberly....it was a regular fha deal. Nothing special at all. :)
I totally agree Jeanne.... I can't say it makes sense....but it's a good option anyway.;)
Thanks for the information. I will share it with other clients who might be in similar situation.
Joe.
Who is the "they" in your comment #2 "they say???
In a past life, I did a huge amount of business with a bankruptcy law firm in MD. There was and is nothing in the bankruptcy code that precludes the purchase of real property while in a chapter 13 plan for "reorganization for wage earners". If the chapter 13 trustee sees a record of timely payments to the debtor's chapter 13 plan, they can approve the purchase of a home. Of course, in a 5 year chapter 13 plan, the trustee would want to see 2-3 years of timely plan payments and other evidence of feasibility.
Whether or not to approve a mortgage loan for individuals in a chapter 13 plan depends on an individual lender's company policy or overlays. Just as some lenders will approve an FHA-VA mortgage loan for borrowers with a 620 credit score, other lenders will require a 640 minimumm credit score.
Problem is, when we hear a loan officer say, "They need a 640 credit score", we may believe that is universal to the detriment of a buyer/client. Best to research other lenders to determine whether or not it is an FHA/Fannie/VA guideline or merely a specific lender overlay.
In one case, despite the "published requirements for mortgage loans following chapter 7 bankruptcy", I have had several VA borrowers approved within a month of receiving their discharge in bankruptcy. This despite the many tables we see published that require a 2-4 years waiting period.
It doesn't hurt to inquire of several lenders just what is their individual company policy regarding loan approval. They differ widely.
Folks "say" a lot of things because it's what they believe. Sadly, they may simply be repeating what they think and it may have no basis in fact.
I love all the knowledge my lender has. Any time we run into an issue we don't full know all their options on the money side, we give thier number to our lender and have her call the client and go from there.
Most excellent post to ponder and this business as well as life never disappoints...thank you for sharing this
Great additional comment Lenn!
I was retail lender before I became a long time wholesale mortgage lender. You are so right that guidelines vary substantially do to specific lender guidelines or overlays. Some lenders even have portfolio products that give them the ability overlook (or disregard) certain things if there are good compensating factors. I appreciate your valuable input to this post.
Thank you,
Joe
I would have thought that that would have been a nightmare! Congrats on the deal.
Joe,
Absolutely remarkable. Will wonders never cease! Hope not!
News to me too, thanks for the heads up. Always good to learn something new about the business everyday.
OK, now you let the cat out of the bag. That was one of my prospecting sources back when. I worked for a major Corporation for years and noticed some of the commercial companies had no trouble buying and selling in bankruptcy and wondered if the individual could do the same. So when I became an agent I found out and worked bankruptcy's and had it to myself basically for years in my marketplace because the ordinary agent thought they were untouchable and I wasn't telling anyone any different.
Well you were ahead of the majority of us Brian that's for sure. Nice Job!!
I have a feeling their still aren't that many hitting up the attorneys too hard.
Good luck my friend!
Hi Joe, Thanks for the post, great information.