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FHA loan with a bankruptcy with extenuating circustances

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ohiosc
Member

FHA loan with a bankruptcy with extenuating circustances

Hello,
 
My husband and I are trying to get an FHA loan or another type of loan if possible.  The problem is that we have both filed chap 7 bankruptcy.  Mine is  a little over 2 1/2 years discharged and his is one year discharged.  He filed because he was in an accident and was not able to work for 6 months and was discharged from the reserves because of the surgery and lost that pay also.  When we filed we both were also in college and did not have jobs and now we are both teachers making a good income because we both have more than just a bachelors degree.  We both have no negatives since the bankrptcy and are dti is low (only like 33%).  My mid fico is 634 and his is in the low 600's.  Since he had extenuating circumstances will FHA make an exception to the 2 year bankruptcy requirement?  Or do we have any other options?
 
Thanks for any help!
Message 1 of 10
9 REPLIES 9
DallasLoanGuy
Super Contributor

Re: FHA loan with a bankruptcy with extenuating circustances

below is from the fha handbook. if it wasnt for the 2 b/ks i would say you have a good chance for the exception. was he included on the first one?
you would need an otherwise 100% perfect credit report since.
 

E. Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a

borrower from obtaining an FHA-insured mortgage if at least two years have elapsed

since the date of the discharge of the bankruptcy. Additionally, the borrower must

have re-established good credit or chosen not to incur new credit obligations. The

borrower also must have demonstrated a documented ability to responsibly manage

his or her financial affairs. An elapsed period of less than two years, but not less

than 12 months, may be acceptable if the borrower can show that the bankruptcy

was caused by extenuating circumstances beyond his or her control and has since

exhibited a documented ability to manage his or her financial affairs in a responsible

manner. Additionally, the lender must document that the borrower’s current

situation indicates that the events that led to the bankruptcy are not likely to recur.

Retired Lender
Message 2 of 10
ohiosc
Member

Re: FHA loan with a bankruptcy with extenuating circustances

He was not on both bankruptcies.  We both filed at different times before we married. 
Message 3 of 10
DallasLoanGuy
Super Contributor

Re: FHA loan with a bankruptcy with extenuating circustances

perfect credit since b/k may get some consideration...... based on the story i have heard from you.
 
Retired Lender
Message 4 of 10
DallasLoanGuy
Super Contributor

Re: FHA loan with a bankruptcy with extenuating circustances

it will be a manual underwrite and very strict adherence to guidelines
 
Retired Lender
Message 5 of 10
ShanetheMortgageMan
Super Contributor

Re: FHA loan with a bankruptcy with extenuating circustances

DallasLoanGuy is right, you have a chance of getting it to work out... from what you've laid out I think your chances of getting approved are fairly good.
Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 6 of 10
Anonymous
Not applicable

Re: FHA loan with a bankruptcy with extenuating circustances

Is being unemployed (willing to work but can't find a job)  for six months considered extenuating circustances?
Message Edited by countryfamilyhonor on 08-05-2009 03:25 PM
Message 7 of 10
rockymtngrl
Frequent Contributor

Re: FHA loan with a bankruptcy with extenuating circustances

From what I am hearing these days the only thing that would be considered for extinuating circumstances are major accident/illness/death of one of the primary applicants.
Message 8 of 10
Anonymous
Not applicable

Re: FHA loan with a bankruptcy with extenuating circustances

Good news, everyone!  My wife and I will close on a brand new 5 bd, 3 bath, 4K sq. ft heck of a house this wednesday!  The price: 211K, minus the 8K tax credit.  The rate is 5.25% VA home loan with U.S. Bank.  My average credit score: 645.  There's always hope if you can demonstrate that your BK was extenuating and that you've done much, much better after that.  So one and half year after bk, my dream is finally realized!!! 

 

 

[Edited to remove a personal email address.  Posting of personally identifying information is not permitted on the FICO forums.]

Message Edited by Lel on 01-30-2010 01:17 PM
Message 9 of 10
Jazzzy
Valued Contributor

Re: FHA loan with a bankruptcy with extenuating circustances


@Anonymous wrote:

Good news, everyone!  My wife and I will close on a brand new 5 bd, 3 bath, 4K sq. ft heck of a house this wednesday!  The price: 211K, minus the 8K tax credit.  The rate is 5.25% VA home loan with U.S. Bank.  My average credit score: 645.  There's always hope if you can demonstrate that your BK was extenuating and that you've done much, much better after that.  So one and half year after bk, my dream is finally realized!!! 

 


Congratulations! And, thanks for the update. This will give incentive to others in your same circumstances.

 

We love success stories!!!

Message 10 of 10
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