Obtaining a mortgage while in a chapter 13 bankruptcy.

[CreditBob]

I wanted to share this information with everyone because i am currently in the middle of my chapter 13 bankruptcy plan. I also did some research by talking to my attorney and some lenders. With the court's permission and a lender that is willing to do so, you can get an FHA mortgage loan with 3 1/2% down. The only institution that will do this is Wells Fargo Bank mortgage department. You will have to petition the court through your attorney. I thought that this would be very useful information because this is the correct way to do it.

[StartingOver10]

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@CreditBob wrote:

I wanted to share this information with everyone because i am currently in the middle of my chapter 13 bankruptcy plan. I also did some research by talking to my attorney and some lenders. With the court's permission and a lender that is willing to do so, you can get an FHA mortgage loan with 3 1/2% down. The only institution that will do this is Wells Fargo Bank mortgage department. You will have to petition the court through your attorney. I thought that this would be very useful information because this is the correct way to do it.

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Your information is correct except that Wells is the only lender.  Guaranteed Rate (a non-bank mortgage lender) will also make those mortgage loans during a Ch 13 as long you qualify and have 12 months of on time payments with your trustee. Yes, you need trustee approval. There are other lenders too that will issue this mortgage during a ch 13.

[tricie17]

Than you for this news.  It helps in a ch13 situation.

[coreyb80]

Good info in this thread.  I recently filed 13 and I would like to purchase a condo in the next year and a half.  I was wondering if this would be possible and now I know.

[ShanetheMortgageMan]

Pretty much any FHA lender will do this (I can't think of one who won't), as long as they are willing to manually underwrite the loan.  You also need to have made 12 months of payments on the Ch 13 BK and all payments must have been made on time.

Keep in mind the the amount of time it takes the court to approve the request for new credit will vary, it can be as little as a couple weeks up to a couple months, just depending on busy the court is.  The trustee/attorney can advise how long it'll take in your jurisdiction.  In a market where closings are typically 30 days or less (like here in California) you'll want to submit the request to the court before you even make an offer, as a seller usually doesn't want to hear the offer is contingent upon court approval.  In markets with more patient sellers, or homes that have been listed for awhile, you'll find there is more time during the process to get it taken care of.

A lot of loan officers misread the guidelines regarding what happens after a Ch 13 BK is discharged, and will advise that you need to wait 2 years after the discharge in order to obtain FHA financing.  That is incorrect.  Within 2 years of a Ch 13 BK discharge, all you need to do is supply the BK paperwork (petition, discharge, schedules) and payment history showing all payments were made on time.