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Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end

ah_no_way
Member

Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end

Hello all, 

 

I have not seen a lot of information regarding the process of buying a home while on an active plan so I wanted to share my experience. We are currently on a 100% 5 year plan. We made our 12th on time payment on July 31st, and here's what the timeline looked like:

 

  • 8/1/2021 - Inquired @ New American Funding, but was I told they won't work with chapter 13 until after 2 years on current plan
  • 8/3/2021 - Filled out application with Rocket Mortgage. Advised that it was too soon, and they needed 90 days before they would consider me
  • 8/3/2021 - Inquired @ Guardian Mortgage who stated they are willing to work with situation. They definitely know what they are doing
  • 8/3/2021 - Inquired @ People's Bank Mortgage who also stated they can work with our situation. Given they have a dedicated the department to handle these cases we decided to go through the pre approval to see what they would offer
  • 8/9/2021 - Filled out application 
  • 8/25/2021 - Pre-Approval letter issued outlining that the closing day would need to be between 45-60 days, and that trustee approval would be required
  • 8/30/2021 - First offer was made on a home. Unfortunately, seller agent reached out to People's bank, and could not get anyone on the phone. This raised suspicion with the listing agent so they did not go with our offer
    9/2/2021 - Our broker requested that we try with their preferred lender (Local bank) as it makes the transaction much easier. We decided that changing lenders was our best option 
  • 9/7/2021 - Pre Approval issued 
  • 9/10/2021 - Offer accepted on a home (Having an amazing mortgage broker on your side will be key) 
  • 9/16/2021 - Motion to incur debt was filed (Hearing set 10/21 - In our case lawyer would not file anything until we had an offer accepted on a home) 
  • 10/21/2021 - Purchase approved with no objections (Current rent payment $1660, Estimated mortgage payment 1900 + 105 HOA) 
  • 10/25/2021 - Motion was docketed so I was able to go into PACER myself - Printed docs and sent over to title & lender
  • 10/28/2021 - Clear to close
  • 10/29/2021 - Successfully closed on the house

Obviously, the above does not include everything we had to go through in the last few weeks. Please be prepared to provide huge amounts of documentation. Make sure you are organized, and ensure you are providing everything right away. Before you even inquire for a mortgage make sure your checking accounts are clean. You will need to explain everything that happened that caused you to file for BK. They will want to ensure it will not happen again. In our case we no longer had child care costs so we were able to use those funds to cover the payment increase. Please know that the Trustee or Judge are not there to prevent you from making the purchase. They just want to see that the payment will not materially effect your BK plan. On plans that are not 100% it will be extremely difficult to get approval with a payment shock. 

 

This was very difficult. It gaves us a lot of stress, sleepless nights, and a ton of frustration but in the end it was well worth it.

 

 

Message 1 of 6
5 REPLIES 5
jmw1
Frequent Contributor

Re: Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end

Congrats on your new home!

 

Just one comment - You are in a 100% plan which makes it much easier for you to increase the housing payment. If you were in a <100% plan, you would have needed to reduce your housing payment to something close to your current rent.

Message 2 of 6
ah_no_way
Member

Re: Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end


@jmw1 wrote:

Congrats on your new home!

 

Just one comment - You are in a 100% plan which makes it much easier for you to increase the housing payment. If you were in a <100% plan, you would have needed to reduce your housing payment to something close to your current rent.


Thank you!!! Yes, are 100% correct! 

Message 3 of 6
FLLGuy
Regular Contributor

Re: Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end

@ah_no_way  - I've stalked your previous post under "Mortgage Loans" and I'm thrilled you took the time and outlined your process for others to benefit.  This is an awesome post for anyone contemplating purchasing a mortgage while in Chapter 13 - it can be done and is possible if your circumstance allows for it.  I totally agree with you the "Trustee" is not out to deny you as long as you're within the palatable range just as @jmw1 mentioned. 

 

 

Smiley Happy






Message 4 of 6
sml1997
Valued Member

Re: Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end

This is incredible and very encouraging. I am seven months into my process, and I have not seen anyone outline it like this. I am also on a five-year 100% repay. This gives me hope. I appreciate you detailing this for us and congratulations on your house. Well deserved!


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Message 5 of 6
ah_no_way
Member

Re: Chapter 13 Mortgage Approved Closed on 10/29 - Process beginning to end


@sml1997 wrote:

This is incredible and very encouraging. I am seven months into my process, and I have not seen anyone outline it like this. I am also on a five-year 100% repay. This gives me hope. I appreciate you detailing this for us and congratulations on your house. Well deserved!


Thank you! Feel free to reach out if you have any questions! You will need a lot of paperwork, but it can be done.Stay positive and good luck! 

Message 6 of 6
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