The "Great Recession" has taken its toll on many families finances over the last three years. Short sales, foreclosures and bankruptcies have become an issue for many who would never have considered missing a payment on anything in their lives.
I have been contacted recently by more and more clients who have had to resort to a financial "nuclear option" to move on with their lives. My heart goes out to these folks as many, if not most of them had some outside event force them into the protection of the bankruptcy court. There is not a ton of clear information out on the web as to exactly WHEN a borrower can take another turn at becoming a homeowner. So, to be clear the letter of the law for a CHAPTER 7 bankruptcy is that a borrower can apply for a home loan 24 months after the bankruptcy has been discharged.
If the borrower is in a Chapter 13 - the borrower needs to have been successfully making payments under the plan for a minimum 12 months. There are cases under which one can qualify sooner than 24 months. According to the FHA:
An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.
It is important for borrowers in this situation work with a diligent loan officer as getting a loan after a bankruptcy is as simple as just applying. The loan officer will have to guide the borrower and help them document, "that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur." This can be difficult as underwriters these days are very nervous about signing off on any loan they feel could have any chance of not performing.
If there is anything I can do to help you after a bankruptcy in getting on the track to homeownership please never hesitate to reach out to me.
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