FHA: Including My House In My Chapter 7 Bankruptcy
You filed a Chapter 7 Bankruptcy and included a mortgage/ or property in Arizona and you want to know when you can qualify for an FHA Home Loan in Arizona.. Am I correct?
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What?
You may have even been told by a FHA mortgage loan lender in Arizona that after 2 years from the Chapter 7 Bankruptcy Discharge date you can qualify for an FHA Home Loan . Does that sound familiar? For the most part this information, technically, is true.
Like many others who have not been informed of the correct information, you now are being told that you do not qualify (After waiting for 2 years) and are left scratching your head as to what happened. The fact that you have included a mortgage/ or home home in your Chapter 7 Bankruptcy changes the well-known 2 year bankruptcy rule to the more conservative FHA 3 year foreclosure rule.
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Why?
The fact that there was an FHA mortgage and/or property included in the Chapter 7 will revert you to FHA’s 3 year foreclosure rule which is obviously the more conservative approach. Lenders will almost always take the most extreme situation and apply the guidelines from that point. The foreclosure simply is considered more serious than the Chapter 7 bankruptcy.
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How?
The Devil is in the details!
Here comes the tricky part! With the influx of foreclosures and the lack of proper staffing on behalf of the banks, most banks can and often have properties that will sit on their books and do not sell at the “Trustee Sale” for months, if not for a year. The “Trustee Sale” is considered the legal day the property goes into foreclosure. Therefore an Arizona FHA lender will look as to when the property actually sold vs. the Chapter 7 discharge date.
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What does this mean for you?
Unfortunately, FHA guidelines are sometimes very vague and much is left to interpretation. Enough that most FHA mortgage lenders will require you to wait 3 years from the “Trustee Sale” date which can leave you waiting up to 4 years (3 year from your Chapter 7 Discharge date plus the months it takes to sell the property at the “Trustee Sale”).
For example:
- Chapter 7 Discharge Date = 1/1/2009
- Trustee Sale = 5/1/2009
- Eligible for an FHA loan = 6/1/2012 (3 years and 5 months from Chapter 7 Bankruptcy Discharge Date)
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For more information, call Ted Canto at Academy Mortgage in Arizona today and I will guide you and provide with sound advice on how to qualify for an FHA home loan after your Chapter 7 Bankruptcy
ABOUT TED CANTO
Ted is an experienced Mortgage Advisor for the last 13+ years and is also known for his mortgage commentary and internet workshops within the real estate community. Also known as "The Mobile Mortgage Pro", Ted has honed the power of the smart phone, laptop, tablet computing, text, email and social media to ensure that he is always accessible to his clients' “wherever, whenever” to meet their needs. Ted has helped thousands of families finance their new home or refinance their current home in the Arizona and California market. Call, text, or email him to discuss your home financing @ 480.650.8602 or ted@tedcanto.com
Ted Canto
