Getting home purchase mortgage in Chapter 13?

[BubbaGump]

I'm in Massachusetts, in a Chapter 13 plan that's been confirmed for about 20 months or so. I'm looking to rid myself of the rent bill and get into a mortgage, however I'm having some trouble finding a lender that will overlook the foreclosure and bankruptcy that were both in the August 2009 timeframe.

Does anybody have a list of "sub-prime" (though that term seems to have disappeared about 4 years ago) mortgage lenders who can help one get back on their feet financially? My credit score (even in Ch. 13) is over 600, the co-borrower has a score of about 670. If anybody has any references to more forgiving than other mortgage lenders, it would be much appreciated.

[newbie2]

Your co borrower should just purchase on their own. You're in an active Chapter 13 AND you have had a recent foreclosure. It's not a matter of "forgiving" mortgage lenders. Mortgages and qualifying for them have changed drastically over the last 2-3 years. The lenders have much stricter guidelines, and there is nothing any of us can do about it. "Subprime" doesn't exist anymore. You need to put some distance between your foreclosure date and this bankruptcy.

[BubbaGump]

Alone, my SO can't qualify for a loan because of a high DTI. Combined, our DTI is in the 16% range with about 2 years of banked reserves. Just wondering if there's any lenders (Wells Fargo perhaps, any other lenders?) who routinely accommodate issues such as this and can make concessions based on extenuating circumstances (low DTI, high reserve, down payment, 3 years of good credit/rental history and extenuating circumstances that forced the foreclosures).

[Flamingo]

Alone, my SO can't qualify for a loan because of a high DTI. Combined, our DTI is in the 16% range with about 2 years of banked reserves. Just wondering if there's any lenders (Wells Fargo perhaps, any other lenders?) who routinely accommodate issues such as this and can make concessions based on extenuating circumstances (low DTI, high reserve, down payment, 3 years of good credit/rental history and extenuating circumstances that forced the foreclosures).

You cannot get a mortgage (or any loan/credit) in an active chapter 13 without trustee approval and finding a broker to work with you in an active Chapter 13 will be extremely difficult if not impossible because your chances of getting approved are probably zero not only due to the Chapter 13 but also to a recent foreclosure. Reality is a tough pill to swallow when someone wants something really bad and it's hard to tell someone how difficult it will be because they usually get defensive and think there is some way out. Having a BK and a foreclosure on one's credit report is the worst thing one can have on a credit report (or BK and repossession together). I suggest you speak with your chapter 13 attorney and go over all this with him to get an idea as to what you can and can't do as to your particular situation. The best thing to do is to pay all your plan payments on time and pay all rent/utilities, etc. on time, get discharged, save some money for a house downpayment which will help you and rebuild your credit slowly to show that you are creditworthy again.

[BubbaGump]

We have the trustee's blessing, along with all the usual credit-building already happening (e.g. rent, utilities, car and student loan payments). Didn't have a late payment on my credit history for 10 years until my ex walked out of the house with a burst pipe right behind her flooding the place out.

Presumably the trustee gave their bessing because it's an even swap (in terms of $ amount) for rent versus a mortgage and would not change the confirmed plan. Much like before Chapter 13, I'm current if not ahead on everything. The problem is that the trustee (obviously) doesn't offer any advise on lenders who can work with this situation, hence why I posed the question here.

If we're not credit worthy then we chalk ourselves up as being financial derelicts for the next 10 years and live in this leaking-roof crap tenement with a landlord that'll let the place flood before doing any repairs. Frankly, I hope it does flood in the next rain storm so I can buy new furniture and computer equipment on the insurance claim, or come up with 30% down I'd need to get a hard money loan at a usury interest rate just to [weakly] get a foot in the door and refinance in a couple years.

A word to the wise for anybody considering Chapter 13... had I known better at the time, I'd have skipped the Chapter 13 altogether and just gone through the 4 or 5 court battles to rid myself of the debt by the usual procedural under-handing since it seems that with little added effort, we'd have gotten just as far, if not a heck of a lot farther. It's really anti-motivating to save a ton of money (even despite the Chapter 13) and be powerless to do anything but squat on it interminably under the false pretense of having some sort of "fresh start" that realistically won't happen for another 5 years (if not more). That whole pro-bankruptcy marketing has proven little more than a monumental load of crap.

[newbie2]

A word to the wise for anybody considering Chapter 13... had I known better at the time, I'd have skipped the Chapter 13 altogether and just gone through the 4 or 5 court battles to rid myself of the debt by the usual procedural under-handing since it seems that with little added effort, we'd have gotten just as far, if not a heck of a lot farther. It's really anti-motivating to save a ton of money (even despite the Chapter 13) and be powerless to do anything but squat on it interminably under the false pretense of having some sort of "fresh start" that realistically won't happen for another 5 years (if not more). That whole pro-bankruptcy marketing has proven little more than a monumental load of crap.

If you have been able to save "a ton of money" while in a Chapter 13 plan then you are doing much better than many. You will also be able to discharge the debt from your foreclosure as well as any unsecured debt without having interest tolling daily that you would realistically never be able to pay off in less than 5 years.

Monumental load of crap? For you perhaps, but for the majority of us it has been a life saver.

[Flamingo]

Your Chapter 13 attorney should be able to give you several broker references who work with people in Chapter 13. Our attorney gave us one who was incredible and helped us refinance during our Chapter 13, buy out of the Plan (could do that at that time) and get necessary house repairs done (new roof, etc. that would not have lasted the remaining course of our 13 Plan). He also fought to get us a lower rate which he did and which matched the average going mortgage rate for good credit in early 2006. We were told that by paying all our Plan payments on time, mortgage payments on time, etc. to that point and also our prior credit prior to filing had a lot to do with that.

Most people cannot handle a Chapter 13 and the failure rate is high due to that - many people just cannot learn to live on a budget and have the patience to do a major lifestyle change and finish the Plan and get the discharge. The reward comes in the end...getting the reward during the Plan years is not impossible but very difficult. A Chapter 13 only stays on your credit report for 7 years after filing whereas a Chapter 7 stays on your credit report for 10 years after filing. Creditors do and will look upon one more favorably with a Chapter 13 than with a Chapter 7 as there was an attempt made to pay back owed debts (that is straight from the mouths of bank reps, our attorney and our broker when we refinanced).