FHA Loan in Ch. 13 Denied because of Texas Home Equity Loan?
Hello all,
I'm new to forums so please bear with me - I've checked other threads to see if my specific issue has been addressed and I don't think it has.
We've attempted an FHA refi of our 3 year ARM that adjusted in Sept. 07. We filed Ch. 13 in Sept. 2006, have made all the payments timely to the trustee AND our mortgage payments. In short, we thought we met all the credit requirements. The broker just called and said the FHA can't do the loan because we have what is called a "Texas Cash Out Loan", or in other words, a home equity loan. Apparently, once you have this type of loan, it has to remain this type of loan according to Texas state law. This type of loan has a limit of 80% LTV.
Has anyone else run into this? Our interest rate is 10.85% right now and will adjust again next month to 11.62%. We're not behind yet, but we're struggling and it will only get worse. I've read about the FHA secure program, but I don't want to go into default just to take advantage of the program?
I have an appt. to meet with my attorney on Monday to discuss modifying the BK payment, which is $549/month for 60 months. Our plan base is 32414, of which about 22K is secured (IRS) My income recently adjusted which I'm sure the court will take and probably tell me I have to pay more even with the ARM adjustment. I don't have much confidence, do I?
I've called the Office of the Consumer Credit Commissioner to confirm this info and he said it's correct and I should "call my Congressman". So, I've called and written my Congressman. I was also told it's part of the Texas Constitution, which when I checked my Note is referenced at the top along with the section.
Any suggestions on what to do now? We are attempting a loan modification with our mortgage co., but one of their restrictions on loan mods is that you can't be in BK! They have sent a form to our attorney that he needs to sign and return so we can discuss a loan mod. with them, so that's promising at least...
We don't have enough equity in our home to pay off our Ch. 13 with the 80% LTV restriction, and I wouldn't do it if we did. All we want is to get into a fixed rate for our current loan and continue to make payments on our BK. I feel trapped in this loan. Without going into details, we have fought very hard to hold onto our home. For it all to come to this is frustrating
Any advice/help is greatly appreciated! And thanks for letting me vent! 
I'm new to forums so please bear with me - I've checked other threads to see if my specific issue has been addressed and I don't think it has.
We've attempted an FHA refi of our 3 year ARM that adjusted in Sept. 07. We filed Ch. 13 in Sept. 2006, have made all the payments timely to the trustee AND our mortgage payments. In short, we thought we met all the credit requirements. The broker just called and said the FHA can't do the loan because we have what is called a "Texas Cash Out Loan", or in other words, a home equity loan. Apparently, once you have this type of loan, it has to remain this type of loan according to Texas state law. This type of loan has a limit of 80% LTV.
Has anyone else run into this? Our interest rate is 10.85% right now and will adjust again next month to 11.62%. We're not behind yet, but we're struggling and it will only get worse. I've read about the FHA secure program, but I don't want to go into default just to take advantage of the program?
I have an appt. to meet with my attorney on Monday to discuss modifying the BK payment, which is $549/month for 60 months. Our plan base is 32414, of which about 22K is secured (IRS) My income recently adjusted which I'm sure the court will take and probably tell me I have to pay more even with the ARM adjustment. I don't have much confidence, do I?
I've called the Office of the Consumer Credit Commissioner to confirm this info and he said it's correct and I should "call my Congressman". So, I've called and written my Congressman. I was also told it's part of the Texas Constitution, which when I checked my Note is referenced at the top along with the section.
Any suggestions on what to do now? We are attempting a loan modification with our mortgage co., but one of their restrictions on loan mods is that you can't be in BK! They have sent a form to our attorney that he needs to sign and return so we can discuss a loan mod. with them, so that's promising at least...
We don't have enough equity in our home to pay off our Ch. 13 with the 80% LTV restriction, and I wouldn't do it if we did. All we want is to get into a fixed rate for our current loan and continue to make payments on our BK. I feel trapped in this loan. Without going into details, we have fought very hard to hold onto our home. For it all to come to this is frustrating
Any advice/help is greatly appreciated! And thanks for letting me vent!
