It is entirely possible to get a mortgage loan post-bankruptcy.

Charm,

First off, a realtor answering this question is not a good thing, even from some loan officers. Many answers from realtors are just from what they have seen or heard. I have been doing this for over 16 years, as a loan officer, and it's really no different now than it was back then. Just because some people have had trouble with some banks or lenders, doesn't mean that this is the norm. You just can't use the example about a buyers having 700 scores and having difficulty closing. It could have just been a loan officer that didn't know what they were doing.

It first comes down to the type of bankruptcy. FHA loans are the easiest to do when it comes to bankruptcies. Conventional loans have stricter guidelines. With a FHA mortgage, if you have a CH. 13, you just need to be in the BK for 1 year, making payments on time, decent credit, and maybe sometimes reestablished credit. Your BK payments have to be made on time, no lates allowed. Yet, you can still be in the Ch 13 BK... and you would need a letter from the trustee saying that you are allowed to buy.

With a ch. 7 bankruptcy, it has to be 2 years from the date of the discharge. The credit guidelines mentioned above, still has to be followed. We typically want to see some reestablished credit.

In both of these examples, in most cases with most lenders, you still need to have a 620 or higher credit score. And depending on your credit scores and cash reserves, you don't always have to have more new credit or reestablished credit. Every lender puts your loan through an automated underwriting system and if it comes back with an approval, that's it, you don't have to follow all the guidelines to the "t" per se. This approval is good enough.

Lastly, there are 3 ways that you could possibly get around the time frames of a BK, that is allowed by FHA, but up to the underwriter to allow this. You have to meet 1 of the 3 exemptions, reasons why you went into a bankruptcy. If you meet one of the 3, it could allow you to get financing before the ch 7 discharge was 2 years old.

Overall, I would be glad to answer any of these questions in detail. One word of advice is be careful on who you get some of your advice from. Not everyone truly knows what they are doing or what they are talking about. I am not trying to knock on anyone, but this is the reality of it. And if you read some of the answers below, some are correct, but are missing the 2nd part. Some are vague, and some are just based on past experiences of what they saw other clients go through. Believe it or not, this is still black and white, simple, if you are dealing with a very knowledgeable loan officer.

Thanks,
jeff

Jeffrey J. Belonger
Area Manager/Branch Manager

Infinity Home Mortgage Company, Inc
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Hi,
The answers you have gotten so far are ok under normal market conditions. However, reality is the banks are really tight right now and unfortunately are looking at everything. People with 700 fico scores are having a bit of trouble closing their deals. If a person has gone bankrupt and has well over 2 years of re-established credit, there is a possibility to go through FHA and purchase a home. FHA seems to almost be the only game in town right now. Obama's plan is not working very well right now. So from a simple perspective; someone should have at least 2.5 to 3 years of re-established credit under their belt. Please do your shopping and ask lots of questions before paying an application fee, etc. It could be costly and time consuming. It would be horrible to pay all kinds of money and then at the end the bank pulls out.

Thanks

Two years minimum with spotless post-bankruptcy credit.
Ruth Bonapace
Bank of America Home Loans

Charm: This is a question that can only be answered by the people with money to lend. It is their money, after all. It can only be answered at the moment you ask. At that moment, they will look at where they are in terms of needing business and where you are in ability to pay them back. We could go on into the fact that the lender will most likely be selling the mortgage to a third party who will also have criteria about your financial soundness as well, although some lenders, such as some credit unions, may keep it in house, making their decision an easier and more local one.

The answer you received from Gina is very good and typical of her. She usually gives the detail(s) that answer(s) the question. What she does not do here is paint the picture of the absolute disaster that we have just encountered and are working through as we speak. The mortgage melt down is rumored to heading for phase two, another round of defaults as the three year ARM type mortgages come up for adjustment. Since it hasn't happened yet, how bad it will be is anyone's guess. I'd put it this way: IT AIN'T GONNA HELP, no matter if it is a small problem and not a great one.

I'm sure the best answer is to avoid the bankruptcy, if you can. It will make life easier.

On the other hand, as a personal experience, I sold a very nice house to a fellow a year out of bankruptcy. He had run a business into the ground and filed both business and personal bankruptcy. Afterward, he got refinanced in the business, got a MAJOR contract and was rolling in dough. He got a very expensive mortgage rate with a no payback for five years but got it and the house. (I believe he also avoided a bunch of taxes by doing so but I am not his accountant.) So, in any case, you will have to work the system to find the best solution for you. This may mean a good accountant and an equally good, financially oriented attorney.

Hope that, along with Gina's information, this helps.

Bill Holt

This is a blunt answer that I would tell my clients. It is not text book but what I have found:
Beyond the time period (I generally go with three years although many lenders will attempt to do it at 2) the banks look at
1) Have you re established good credit. Ideally you will need three positive trade lines with two years history
2) Any lates in the past year and you are toast unless there is a great reason that is believable
3) Why did you go into bankruptcy. There needs to be a reason and solution.
Bottom line the Bank wants to feel comfortable that it will not happen again.

Charm,

For at least 7-10 years a bankruptcy will stay on your credit report but you can apply for a FHA loan after two years of filing a Chapter 7 Bankruptcy. If you filed a Chapter 13, FHA will consider appoving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. http://www.fha.com/credit_issues.cfm

Hope that helps.

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116
Gina.Chirico@PrudentialNewJersey.com

To my knowledge 7 to 10 years, but as Shirley states lender makes the rules. Start by order a credit report by the 3 credit reporting agencies in order to determine if the bankrupcty still appears on your credit score. We are all entitled to 1 credit report per year from these companies.

Love and Peace,
Francesca

Do not let anyone give you an answer to this because the truth is that the lender can make the rules as they go along. So this year it may not affect you or drop off in 7 years but next year someone will change their policies and make it affect you for 10 years. It's really to bad things work this way but they do and as long as you need "their" help or money- we are at "their" mercy.