Well, I guess we can't go FHA after all. Nick, please come in..

[STEPH1079]

I contacted a VA Broker to get some insight on the first steps we'd need to take, as our Ch.13 will be completed in May.
We have about 75k of equity in our house and wanted to do a cash out refinance. This is his response:

FHA guidelines do not allow cashout refinances for 2 years following bankruptcy proceedings. There is a manual exclusion for documented 1-time events such as major medical issues, etc. The new FHA secure has allowances for late mortgage payments ( which they did not allow prior to this), but there are some caveats with that program as well. In order to apply for FHA secure, you would need a history of on-time payments, an adjustable rate mortgage increase that CAUSED you to fall behind, and documented ability to pay the new mortgage moving forward. I have not seen anything relaxing the BK restrictions, and the only FHA loan I have seen approved within 12 months of BK was a severe medical issue causing loss of job and extensive medical bills.

There may be options other than FHA, including some programs which will buyout the chapter 13. I welcome the opportunity to speak with you to discuss some of these. I can work thru email as well if you can provide the basic information to give you some guidance about what the marker currently offers. I would need:

state
property type ( single family, owner occupied or second, townhome/condo/detached)
rough market value of the home (if appraised, how much and when)
loan balance and monthly payment
monthly income
other monthly debts
monthly income and available assets
credit score of (both) borrower(s)

Does this sound right? If so, what can we do?

[B12]

I have only seen an FHA owner occupied mortgage within a chapter 13 BK or shortly thereafter. The key to your denial is probably that you are trying to take cash out of the house.

[STEPH1079]

We haven't applied yet. Our Ch.13 isn't over until May 2008. I'm just trying to find a decent broker that we can work with. I'm due with our second baby in May as well, so I'd like to have as much completed as possible.

I heard that we can start the re-fi process before May, so that we can close in May when our BK is over.

I thought that as long as we fell withing the FHA guidelines, it wouldn't matter if we did a secure re-fi or cash-out.

[MTG_BANKER_OH]

I contacted a VA Broker to get some insight on the first steps we'd need to take, as our Ch.13 will be completed in May.
We have about 75k of equity in our house and wanted to do a cash out refinance. This is his response:

FHA guidelines do not allow cashout refinances for 2 years following bankruptcy proceedings. There is a manual exclusion for documented 1-time events such as major medical issues, etc. The new FHA secure has allowances for late mortgage payments ( which they did not allow prior to this), but there are some caveats with that program as well. In order to apply for FHA secure, you would need a history of on-time payments, an adjustable rate mortgage increase that CAUSED you to fall behind, and documented ability to pay the new mortgage moving forward. I have not seen anything relaxing the BK restrictions, and the only FHA loan I have seen approved within 12 months of BK was a severe medical issue causing loss of job and extensive medical bills.

There may be options other than FHA, including some programs which will buyout the chapter 13. I welcome the opportunity to speak with you to discuss some of these. I can work thru email as well if you can provide the basic information to give you some guidance about what the marker currently offers. I would need:

state
property type ( single family, owner occupied or second, townhome/condo/detached)
rough market value of the home (if appraised, how much and when)
loan balance and monthly payment
monthly income
other monthly debts
monthly income and available assets
credit score of (both) borrower(s)

Does this sound right? If so, what can we do?

You should be able to do a cash out depending on your credit through FHA there is no 2 year waiting period. As long as you have made all of your payments on time and do not have any new derogs you have a good shot. I would not buy out the BK now if you only have a few more months to finish it. Why include more debt in the home if it is going to be gond in 6 months unless you need to, I would get another opinion on this. I would not look into other opttions FHA is your best option if you can document all of your income. I would look at subprime as a last resort.

[Jfields47]

The problem is not qualifying for a loan that offers cash out. The problem is I highly doubt your trustee will allow you to have the cash. I have done transactions in the past where the trustee has swooped in and taken the proceeds from a refinance, so seek some advice from your attorney to see what the trustee will allow.

[STEPH1079]

How would the trustee be involved in this, when our plan is over in May? We are waiting until we are discharged before we do anything.

[MTG_BANKER_OH]

How would the trustee be involved in this, when our plan is over in May? We are waiting until we are discharged before we do anything.

The trustee will not be involved if you wait until you are discharged. They are going to request a pay history though but you can probably find that online or you can order from the trustee once your plan is up.