BK and trying to obtain a mortgage

[kc0039]

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@fixingmistakes2009 wrote:

Hi Everyone!  

I'm in a bit of a pickle and don't know what to do or think.  I am 6 years post discharge of my BK.  I have been timely with my bills, nothing in collections, responsible with new credit, receiving credit lines increases, etc.  I thought I was good to go with starting the process of getting another home.  Upond applying for mortgages, the one thing they keep bringing up is my past BK.  First it was you don't make enough.  So I got two merit increase at my main job.  Second it was if you stay on your second job until October 2017 we can count it as an overall income with your first job.  So I'm still working my part time job.  So now it comes back to my BK and some automatic system that is being used that will not let me qualify for a loan.  I could go the FHA route but they will see my student loan payment which is $1500 and of course that throws my income to debt ratio completely out of whack but since I am on the pay as you earn program with the feds, my student loan payment is only $224 and after making 10 years of on-time payment or 120 total payments my loans are forgiven.  So my problem is has anyone else had these problems when they are getting close to the BK begin removed and not qualifying for a mortgage?  I am only asking becuase I have heard of people right after the discharge, they were able to get new cars, another mortgage, credit cards with no issue.  This is the second time I have started this process and only to be turned down again.

Thanks for any feedback

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With a conventional mortgage, you have to work two jobs in the past 24 months consecutively (This is the verbiage on Fannie's website). It doesn't state stay at the part time job 24 months in a row, you just need to be showing that you work 2 jobs for 24 months. What kind of BK? Chapter 7 or 13? Chapter 7 is 4 years from disimissal date. Chapter 13 is 2 years from d/c date. Seems like a lender issue, not you.

[fixingmistakes2009]

I have the p/t job time frame.  I was told to stay until October of this year since I had a small break of about 3-4 months in my p/t employment.  I was a Chpt 7.  I have read and was told 4 years as well.  So at this point I don't know what else to do but just wait until it is completely off my report.

[Anonymous]

Consecutively means in a row, a "small break" means it was not consecutive and was actually 1/4 - 1/3 of a year. How many lenders have you reached out to? Any of them a broker?

[fixingmistakes2009]

I know consecutive means in a row that is why she told me to stay at my part time until October because that would make up for those missed months.

I haven't. I don't want anyone else pulling my credit only to be turned down again. I know they would have to to get a better sense of my situation but I want to keep my credit score in tact as much as possible.

[StartingOver10]

The BK time period for a conventional mortgage is 2 years for a Ch 13 from the date of discharge.  There are even some lenders that can issue a mortgage during your BK. Not something you have to worry about since you have been discharged for 6 years.  I suspect you have been making applications to big box banks rather than mortgage lenders that only do mortgage loans and nothing else. Big box banks are very conservative now, much more so than the actual guidelines required by Freddie or Fannie. 

See this link from the stickies above:http://ficoforums.myfico.com/t5/Mortgage-Loans/BIG-changes-to-Fannie-Mae-s-policy-regarding-mortgage...

[fixingmistakes2009]

Thanks so much for the link!  

[me12345]

Your issue is NOT with the BK, Conventional guidelines are 4 years from date of discharge (2 years with extenuating circumstances) and 2 years from discharge date for an FHA loan.....Your 6 year old BK is a non issue in getting an approval. They will still ask you about it and may have you wright a "Letter of explaination" about it, because its listed on your credit report, but it will not keep you from getting an approval being that old.

You can get mortgages that are "Non-Prime" that will allow sooner timelines then this, however these are not "Conforming" loans and rates will be much higher.