FHA Streamline after chapter 7 discharge

[LibertyJen]

I'm currently in an FHA mortgage, have equity in the home and just looking to stay in the home, lower my interest rate and remove a 2nd borrower who isn't interested in the property any longer. I'm in the process of a Chapter 7 and am exploring options for an FHA streamline refi ASAP. Quicken Loans said I could do an FHA Streamline immediately after discharge as long as my middle credit score is 620 or greater. The agent I spoke to said he didn't know if we'd be able to remove a 2nd borrower in a streamline and that it may require a credit dependent refi. I'm confused. Another lender (Loan Depot) was going to do a streamline no problem to remove the other borrower and lower my payment months ago, but they found a lien on the property from Discover card (which is one of the main reasons I'm filing Ch.7.) When I asked the Loan Depot about a streamline refi after Ch.7, I was told the waiting period was 24 months from discharge. Who is correct? Quicken says they go by federal guidelines only and do not add on any additional seasoning requirements. If this is the case, why are they requiring a 620 credit score when it's supposed to be a non-credit qualifying streamline refi? The guy I spoke to admitted he was no expert. He said reaffirming the loan would make things easier. I've never missed a payment in 14+ years, have equity, a stable income and equity in the home. I know reaffirmation is never recommended. I just want this refi really badly. I'm at a 6.5 interest rate and the refi would save me at least $250/month. Also, there is a buyer interested in the house for whenever I want to sell, so I'm not worried about being stuck here or on the hook for the mortgage if I move. Thanks in advance for any insight you can provide.

[LadyInTheRed]

Do not reaffirm your mortgage based on the advice of a guy trying to sell you a loan! There is no reason reaffirming your existing loan should make it easier to refinance after BK.

I have never read anything that says you can get an FHA loan (or any mortgage for that matter) right after discharge of a Chap 7. My understanding is that the waiting period is 2 years after discharge.

[LibertyJen]

Thanks for your reply, Lady. I wouldn't reaffirm based on what this guy on the phone says. He was surely no expert on anything and works for the bank. LOL. I know better than that. I've been a lurker here for a long time and have been researching and planning for years. The impression I'm getting is that to do an FHA streamline refi on an existing FHA mortgage doesn't involve a waiting period. I will do more research, call some more lenders and speak to my attorney more about this.

[babsthebear]

Straight from the FHA guidelines:

Streamline Refinance Non-Credit Qualifying
(a) Borrower Eligibility
A Borrower is eligible for a Streamline Refinance without credit qualification if all Borrowers on the existing Mortgage remain as Borrowers on the new Mortgage.

The only time you can get an exception is 1) When there is a divorce or death of one of the prior borrowers, or 2) you can prove that you have been making the payments out of an account that was not joint with the other borrower.

I'll just expand on this a little bit... The FHA Guidelines are sufficiently vague where it's truly up to the individual underwriter for determination. That a lender can unequivocally state that they have no overlays is impossible. One such example in your question would be the need for a credit score, even though it could be a non-credit qualifying streamline. I have found that many lenders will require "The Score," but then follow the guideline that the credit (aka Debt-to-Income) ratios are not calculated. It's definitely conflicting out there. And to add the Chapter 7 discharge to that, well it's not easy.

It's time to contact your existing servicer to see what they can do.