Published On: November 3, 2014

Filed for bankruptcy? Need a new home? You may be eligible to finance a new home.

Each lender or mortgage insurance company has rules governing financing after a bankruptcy. These rules change regularly so never assume “no” one day or with one lender will be the same another day.

Bully tactics used to scare or coerce buyers.

According to an article in the New York Times, many individuals who filed for bankruptcy protection more than four years ago may now be eligible to apply for a mortgage.  According to Fannie Mae or the Federal Housing Administration the mandatory waiting periods to apply for a mortgage two to four years after the bankruptcy is discharged.  Individuals who filed for Chapter 7 bankruptcy must wait four years from the date of discharge (when their debts are wiped out) before applying for a conventional loan. The waiting period, according to Fannie Mae guidelines, is two years from discharge for Chapter 13 bankruptcies, in which debts are partially repaid under a court-approved plan.

Once you file for bankruptcy many mortgage companies, like Wells Fargo, will refuse to report your timely payments. These same lenders refuse to refinance your mortgage without first obtaining a bankruptcy court order called a “reaffirmation agreement”.

This just shows the lender’s lack of understanding how the law works for refinanced debts. There is nothing you can do except go to different lender for the refinance.

You need to keep in mind that federal guidelines change often, as to conventional.  Each lender may have different policies.  The moral – do you homework.  Warning – your credit score is affected each time you apply for new credit.  Therefore, apply for credit very sparingly.  Check out the Federal Trade Commission’s web site for consumers.

Rebuilding your credit should be done very carefully.  Make your current secured payments (house, car, furniture, etc) on time.  Once you file for bankruptcy many mortgage companies, like Wells Fargo, will refuse to report your timely payments.   These same lenders refuse to refinance your mortgage without first obtaining a bankruptcy court order called a “reaffirmation agreement”.   Some states, like Arizona, have a policy of not reaffirming home mortgages because Arizona has anti-deficiency protection for homeowners.  This just shows the lender’s lack of understanding how the law works for refinanced debts.  There is nothing you can do except go to different lender for the refinance.

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I realize that you are working very hard to get your life back on track.  Learn to “use credit, rather than credit using you”.  Do not fall into any bad habits like buying on credit unless you are financing a house or car.

By |Published On: November 3rd, 2014|Last Updated: May 29th, 2022|

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About the Author: Diane Drain

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

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“You folks are the BEST OF THE BEST in Arizona.” M.H.

You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.

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“My only regret is that I didn’t find Diane sooner.” K.H.

I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.

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Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.

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