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Ch 13 and mortgage approvals

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Valued Member

Ch 13 and mortgage approvals

Is it possible to be approved for a mortgage prior to a Ch 13 being disharged?  My credit score is quite a bit higher than I expected and right now with the way home prices are dropping a mortgage payment would be almost half of what my rent is currently.  Even with a higher interest rate financially I would be in a better financial position than I am in now just renting.
Message 1 of 21
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Frequent Contributor

Re: Ch 13 and mortgage approvals

FHA will consider guaranteeing a loan if you've been paying on your Chapter 13 case at least a year and you have prior, written approval from your trustee -- who will check with your judge -- to seek such credit.
Message 2 of 21
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New Member

Re: Ch 13 and mortgage approvals

my fiance is in the same situation as crazynurse. he filed a bk 2/2007 and since then he has worked hard to re-build credit and his middle credit score is 667.  it is a good time to buy but we keep hearing it has to be 2 yrs after discharge. i'm wondering if people have been able to do this (letter from trustee enabled them to qualify before discharge)?
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Regular Contributor

Re: Ch 13 and mortgage approvals

I am wondering the same in regards to the letter from the trustee.  How likely is the trustee to give you approval to buy a home while you are still in the plan? 
Starting Score 563 10/2/11
Current Score 585 12/30/11
Goal 700
Message 4 of 21
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Frequent Contributor

Re: Ch 13 and mortgage approvals


@BellySF wrote:
...we keep hearing it has to be 2 yrs after discharge. i'm wondering if people have been able to do this (letter from trustee enabled them to qualify before discharge)?

 

The 2-year proviso is specifically directed at Chapter 7. Go to the FHA website and read the regs -- it spells it out: http://www.fha.com/credit_issues.cfm. There is no need for mystery here.

Message Edited by oldhack62 on 07-30-2009 07:07 PM
Message 5 of 21
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New Member

Re: Ch 13 and mortgage approvals

Much thanks for the link and clearing up the mystery.

 

Now, is there anybody out there that has actually been able to get a mortgage while in ch.13.??

Message 6 of 21
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Moderator Emeritus

Re: Ch 13 and mortgage approvals

Yes, our trustee approved and we were offered a new mortgage while in CH13.  They want what's best for you financially - that's a better deal for you and your creditors (and the trustee, too - remember he's getting paid).  Most CH13's are not completed - they are dismissed because people cannot make the payments.  Your trustee is cheering  for you!
Just puttin' syrup on something, don't make it pancakes.
Message 7 of 21
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Valued Member

Re: Ch 13 and mortgage approvals

Thank you!  This gives me some hope.  I just renewed the lease at my apt so I will have 2 yrs worth of ch 13 payments under my belt.  Hopefully this will show my willingness to  turn things around.
Message 8 of 21
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New Visitor

Re: Ch 13 and mortgage approvals

Refinancing within a chapter 13 can be accomplished if the Trustee and mortgage payments have been paid on time during the bankruptcy. We are currently refinancing a debtor into a 5.5% FHA loan. He has been in his bankruptcy for one year and has made all his payments on time. However, purchasing a new home, while in the bankruptcy may pose problems unless you are in a 100% plan. The creditors may object to being paid less than the full amount that you owe and object to your motion, but it is certainly worth a try. The Bankruptcy judges and Trustees are on your side! They don't see that many success stories!

 

Message 9 of 21
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New Visitor

Re: Ch 13 and mortgage approvals

We were able to get a new mortgage 3 years into our Ch 13 plan. We filed old law; not sure if that matters. In fact, we sold a house that was included in our plan in 2005 and bought the new one in 2007. We had to get permission from the courts and trustee and our attorney was able to fast track it. We paid our new mortgage outside the plan.

 

Happy to announce that we were successfully discharged from ou 60 month plan in June 2009. It can be done, don't lose out hope.

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